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Notes to Accounts of Kirloskar Brothers Ltd.
Mar 31, 2025
(a) Terms/ rights attached to equity shares
The Company has only one class of equity shares, having face value of '' 2/- per share. Each holder of equity share is entitled to one vote per share and has a right to receive dividend as recommended by the board of directors subject to the necessary approval from the shareholders. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
For the year ended 31 March 2025 the board of directors have proposed final dividend of '' 7 (2024: '' 6) per share. This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.
The company had recognised profit or loss on purchase, sale, issue or forfeiture/ cancellation of own equity instrument to capital reserve.
The Company had recognised capital redemption reserve on redemption of preference shares from its retained earnings as per the then applicable provisions of Companies Act, 1956.
The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium.
The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
1. The quarterly returns or statements filed by the Company for working capital limits whenever availed with such banks and financial institutions are in agreement with the books of account of the Company
2. The Company has utilized loans for the specific purpose for which same are availed.
3. The Company is not declared as wilful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
4. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
Terms and conditions of the above financial liabilities:
Trade payables are non-interest bearing and are normally settled on 60-day terms except dues to micro and small enterprises which are settled in 45 days or contractual term whichever is earlier. Refer note 44(B) for ageing.
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NOTE 28 : CONTINGENT LIABILITIES |
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|
Particulars |
As at 31 March 2025 |
As at 31 March 2024 |
|
a) Claims against the company not acknowledged as debt |
||
|
i) Legal cases (Matter Subjudice) |
79.500 |
199.009 |
|
b) Other money for which the company is contingently liable for (Matter Subjudice) |
||
|
i) Central excise, service tax and GST |
1,023.623 |
1,031.144 |
|
ii) Sales tax |
165.066 |
171.413 |
|
iii) Income tax |
119.080 |
119.080 |
|
iv) Labour matters |
45.494 |
47.711 |
|
Total |
1,432.763 |
1,568.357 |
|
The Company does not expect any reimbursement in respect of the above contingent liabilities. It is not practicable to estimate the timing of cash flow if any with respect to above matters. NOTE 29 : COMMITMENTS |
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|
Particulars |
As at 31 March 2025 |
As at 31 March 2024 |
|
a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advances) |
794.535 |
755.893 |
|
b) Letters of credit outstanding |
865.753 |
653.436 |
D) Cost to obtain the contract
Amount recognised as asset as at 31st March 2025 is Nil (PY: Nil)
Amount of amortisation recognised in the statement of profit and loss during the year is Nil (PY: Nil)
Information about the Company''s performance obligations are summarised below:
The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 31st March are, as follows
NOTE 34 : EMPLOYEE BENEFITSi. Defined Contribution Plans:
Amount of ''63.238 Mn (PY - '' 59.138 Mn.) is recognised as an expense towards defined contribution plan and included in Employees benefits expense (Note-23 in the Profit and Loss Statement.)
g) The broad categories of plan assets as a percentage of total plan assets of Employeeâs Gratuity Scheme are as under:
Majority of plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. Company has also invested part of it''s fund with private life insurance company ICICI prudential.
The broad categories of plan assets as a percentage of total plan assets of Employeeâs Providend fund Scheme are as under:
Plan assets for providend fund includes investment in various government securities and corporate deposits and mutual funds.
Basis used to determine the overall expected return:
The net interest approach effectively assumes an expected rate of return on plan assets equal to the beginning of the year Discount Rate. Expected return of 7.2% (PY 7.4%) has been used for the valuation purpose.
o) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
1 Discount rate as at 31-03-2025 - 6.7% (PY- 7.2%)
2 Expected return on plan assets as at 31-03-2025- 7.2%( PY- 7.4%)
3 Salary growth rate : For Gratuity Scheme - 8% to 10% (PY - 10%). Impact for change in accounting estimate
along with other remeasuremnt impact is recognised in other comprehensive income.
4 Attrition rate: For gratuity scheme the attrition rate is taken at 8% to 10% (PY - 11%)
5 The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority,
promotion and other relevant factors, such as supply and demand in the employment market.
6 Weighted average duration of the Gratuity plan (based on discounted cash flows using mortality, withdrawal rate and interest rate) is 8.97 years and for Pension plan 6.2 years.
p) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.
2 Companyâs Pension Plan:
The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.
q) The Company expects to fund '' 71.620 Mn (P.Y '' 27.230 Mn) towards its gratuity plan in the year 2025-26
r) Sensitivity analysis
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the Present value of obligation(PVO). Sensitivity analysis is done by varying (increasing/ decreasing) one parameter at a time and studying its impact
The cost of the leave encashment and the present value of the leave encashment obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates.
Provision for warranty is made for estimated warranty claims in respect of products sold, which are under warranty at the end of the reporting period. These claims are expected to be settled as per schedule of warranty i.e. upto18 months. Management records the provision based on the historical warranty claims information and any recent trends that may suggest future claims could differ historical amount.
Provision for decommissioning and restoration cost
A provision has been recognised for decommissioning and restoration costs associated with windmills on lease hold land. The company is committed to restore the site at the end of useful life of windmills.
Provision for long term contract
A provision is made for the expected loss of the projects, where the estimated cost is more than the estimated revenue. Changes in estimated cost and estimated revenue are assessed by the management at the end of reporting period based on the price variation received/ given, change in the scope of project and revision of estimates regarding date of completion, expected costs to be incurred, changes in external circumstances such as applicable tax rates etc.
NOTE 39 : FAIR VALUE MEASUREMENTS
As per assessments made by the management fair values of all financial instruments carried at amortised costs (except as specified below) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest.
The Company has not performed a fair valuation of its investment in unquoted ordinary shares which are classified as FVTOCI (refer Note 5), as the Company believes that impact of change on account of fair value is insignificant.
NOTE 40: FINANCIAL RISK MANAGEMENT POLICY AND OBJECTIVES
Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company''s principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.
In order to minimize any adverse effects on the financial performance of the company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.
The company''s risk management is carried out by management, under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity. No major change in assumptions and methods used for risk assessments is made during the year.
Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty,
(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,
(iv) Significant increases in credit risk on other financial instruments of the same counterparty,
(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.
The company provides for expected credit loss in case of trade receivables, claims receivable as and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company etc.
For the security deposits and claims receivable, provision for expected loss is made considering 12 months expected credit loss. Provision for lifetime credit loss is made if there is significant increase in credit risk for such financial assets.
I n respect of trade receivable, company uses the simplified approach for the provision for expected loss. The lifetime expected loss provision is recognised based on the provision matrix as decided by the management, based on the historical experience of recoverability. The company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 1 year past due in case product business and 4 years past due in case of project business. In addition to this company also provides the expected loss based on the overdue number of days for receivables as per the provision matrix. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the company. In addition, the company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
C) Market risk - Interest rate risk
The company''s exposure to the risk of changes in market interest rates relates to borrowings with floating interest rates. To manage the risk, company has created balance portfolio of fixed and variable interest rate borrowings.
Change of 0.5%, in the base rates will have effect of '' 0.47 Mn on the company''s profitability.
The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.
The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of natural hedge between receivables and payables, use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the company''s policy.
NOTE 41: CAPITAL MANAGEMENT a) Risk management
The company''s objectives when managing capital are to
- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, change debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents, current investment and other bank balances) divided by Total âequity'' plus net debt.
NOTE 43 : CORPORATE SOCIAL RESPONSIBILITY EXPENDITURES
(a) Amount required to be spent by the Company during the current year is '' 42.442 Mn (PY - '' 31.967 Mn)
(b) Amount spent by the Company during the current year is '' 23.798 Mn (PY - '' 32.187 Mn) and a provision for '' 19.215 Mn is accounted for in current year towards ongoing projects pursuant to provisions of Sec 135(5) of The Companies Act,2013.
There is no shortfall as per provision of Sec 135 of The Companies Act 2013 either at the beginning or end of year.
The company as per its policy on Corporate Social Responsibility (CSR) and recommendation and approval of the CSR committee and Board has contributed '' 15 Mn towards projects on Education and Health undertaken by implementing agency, '' 4 Mn towards Medical Support, '' 4.8 Mn towards Skill Development and balance towards other miscellaneous eligible activities.
The company has not spent any amount towards construction or acquisition of asset.
The provision of '' 19.215 Mn accounted towards ongoing projects which would be used for the purpose of Education and health, Medical Support and Skill development
The audit trail feature at database level was enabled at Enterprise Resource Planning System (SAP) from the 01 Jan 2025.
The access to the database for accounting is restricted only to single CIC basis admin user (changes if any are allowed only with prior approval of committee of senior management) depending on Company''s operating and business needs after appropriately designing the internal controls and ensuring the operating effectiveness of such controls.
The Company uses services of third-party service provider (ADP India Private Limited) for payroll processing. Based on Service Organisation Control Type 2 report (âSOC report''), the audit trail feature at application level was enabled at the Human Resource Management System (HRMS) from 19 Dec 2024. Further, outsourced vendor is ISO 9001:2013 and ISO 27001:2013 certified. Rule A.12.4, of ISO 27001:2013 requires, maintaining the audit trail of all events / logs including the changes in payroll products - user access controls, change management, etc. Auditors of third-party service provider had verified these controls and issue certificate for ISO standards.
Further, there is no direct integration between third party payroll system and KBL accounting system. Processed payroll data received from third party service provider, is duly verified by KBL''s internal team before accounting the same.
Above mentioned does not impact the internal control environment of the Company.
1. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.)
2. The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
3. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
4. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
6. Company has not entered any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956
7. Company has not made any contribution to the political parties during FY 2024-25. (PY: NIL)
8. Previous year''s figure have been regrouped, wherever required.
Mar 31, 2024
Fair Value
The company obtains independent valuations for its investment property. The valuation model considers current prices in active market.
The main inputs used are the rental growth rates, expected vacancy rates, terminal yields and discount rates based on comparable transactions and industry data. All resulting fair value estimates for investment properties are included in level 3.
Fair value as at 31 March 2023 was '' 60.717 and there is no significant movement in fair value in FY 23-24.
* The investment in unquoted equity shares is ''200/- and therefore not seen in the above table.
All subsidiaries, joint venture and associate companies are incorporated and have place of business as India except, the Kirloskar Brothers International B.V. is incorporated and has place of business as Netherland.
** During the year, âThe Kolhapur Steel Limited'' (TKSL) issued 7,50,00,000 equity shares of Re. 1/- each to KBL pursuant to conversion of 7,50,00,000 preference shares of Re 1 each, as per the terms of the issue.
NCLT vide its order dated 23.02.2024 approved the consolidation of the Issued, subscribed and paid up equity shares in the share capital of subsidiary company âTKSLâ by increasing the value of the equity shares from Re. 1/- (Rupee One Only) each to '' 10,000/- (Rupees Ten Thousand Only) each by consolidating existing 10,000 equity shares of Re.1/- each into new 1 equity share '' 10,000/- (Rupees Ten Thousand Only) each. Thereby, KBL has made payment of'' 6.9 Million towards minority shareholders. Consequent to this, TKSL has now become wholly owned subsidiary.
(##) Company has made provision for investment in the subsidiary company viz. âThe Kolhapur Steel Limited'' and associate company viz. â KBL Synerge LLPâ. This provision is treated and disclosed as an exceptional item in FY 2023-24 and FY 2022-23
*** KBL Synerge LLP, a limited liability partnership was formed in year 2017 between Kirloskar Brothers Ltd, Mrs. Sneha Phatak and Synerge Overseas Pte. Ltd. KBL Synerge LLP was inoperative and did not carry out any operations and had applied for striking off its name to the Registrar of Companies, Pune. The said application has been approved on 3 July 2023 and accordingly the said LLP ceased to be an associate of the Company. Following were the details of total capital and share of each partner in it.
Amounts recognised in profit or loss
Write-down/(back) of inventories to net realizable value/ any loss due to it''s obsolete nature (net of reversal) amounted to ('' 24.097 MN) (PY 2022-23: ''34.126 MN) These were recognised as expenses during the year.
(a) Terms/ rights attached to equity shares
The company has only one class of equity shares, having face value of '' 2/- per share. Each holder of equity share is entitled to one vote per share and has a right to receive dividend as recommended by the board of directors subject to the necessary approval from the shareholders. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
For the year ended 31 March 2024 the board of directors have proposed final dividend of '' 6 (2023: '' 4.50) per share. This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.
The company had recognised profit or loss on purchase, sale, issue or forfeiture/ cancellation of own equity instrument to capital reserve.
The Company had recognised capital redemption reserve on redemption of preference shares from its retained earnings as per the then applicable provisions of Companies Act, 1956.
The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium.
The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
1. The quarterly returns or statements filed by the Company for working capital limits whenever availed with such banks and financial institutions are in agreement with the books of account of the Company
2. The company has utilized loans for the specific purpose for which same are availed.
3. The Company is not declared as wilful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
4. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
Terms and conditions of the above financial liabilities:
Trade payables are non-interest bearing and are normally settled on 60-day terms except dues to micro and small enterprises which are settled in 45 days or contractual term whichever is earlier. Refer note 44(B) for ageing.
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NOTE 28 : CONTINGENT LIABILITIES |
|||
|
Particulars |
As at |
As at |
|
|
31 March 2024 |
31 March 2023 |
||
|
a) |
Claims against the company not acknowledged as debt |
||
|
Other legal cases |
199.009 |
225.688 |
|
|
Other money for which the company is contingently liable for (Matter Subjudice) |
|||
|
a) |
Central excise, service tax and GST |
1,031.144 |
1,047.213 |
|
b) |
Sales tax |
171.413 |
198.566 |
|
c) |
Income tax |
119.080 |
132.511 |
|
d) |
Labour matters |
47.711 |
37.543 |
|
Total |
1,568.357 |
1,641.521 |
|
The company does not expect any reimbursement in respect of the above contingent liabilities. It is not practicable to estimate the timing of cash flow if any with respect to above matters.
g) The broad categories of plan assets as a percentage of total plan assets of Employeeâs Gratuity Scheme are as under:
Majority of plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years. Company has also invested part of it''s fund with private life insurance company ICICI prudential.
Basis used to determine the overall expected return:
The net interest approach effectively assumes an expected rate of return on plan assets equal to the beginning of the
year Discount Rate. Expected return of 7.4% (PY 6.8%) has been used for the valuation purpose.
o) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
1 Discount rate as at 31-03-2024 - 7.20% (PY- 7.40%)
2 Expected return on plan assets as at 31-03-2024- 7.40%( PY- 6.80%)
3 Salary growth rate : For Gratuity Scheme - 10% (PY - 10%). Impact for change in accounting estimate along with other remeasuremnt impact is recognised in other comprehensive income.
4 Attrition rate: For gratuity scheme the attrition rate is taken at 11% (PY - 11%)
5 The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
6 Weighted average duration of the Gratuity plan (based on discounted cash flows using mortality, withdrawal rate and interest rate) is 7.06 years and for Pension plan 6.56 years.
p) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.
2 Companyâs Pension Plan:
The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.
q) The Company expects to fund '' 27.230 MN (P.Y '' 94.41 MN) towards its gratuity plan in the year 2024-25
r) Sensitivity analysis
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the Present value of obligation(PVO). Sensitivity analysis is done by varying (increasing/ decreasing) one parameter at a time and studying its impact
NOTE 39 : FAIR VALUE MEASUREMENTS
As per assessments made by the management fair values of all financial instruments carried at amortised costs (except as specified below) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest.
The Company has not performed a fair valuation of its investment in unquoted ordinary shares which are classified as FVTOCI (refer Note 5), as the Company believes that impact of change on account of fair value is insignificant.
NOTE 40: FINANCIAL RISK MANAGEMENT POLICY AND OBJECTIVES
Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company''s principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.
The company''s risk management is carried out by management, under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity. No major change in assumptions and methods used for risk assessments is made during the year.
Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly. The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty,
(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,
(iv) Significant increases in credit risk on other financial instruments of the same counterparty,
(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.
The company provides for expected credit loss in case of trade receivables, claims receivable as and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company etc.
For the security deposits and claims receivable, provision for expected loss is made considering 12 months expected credit loss. Provision for lifetime credit loss is made if there is significant increase in credit risk for such financial assets.
I n respect of trade receivable, company uses the simplified approach for the provision for expected loss. The lifetime expected loss provision is recognised based on the provision matrix as decided by the management, based on the historical experience of recoverability. The company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 1 year past due in case product business and 4 years past due in case of project business. In addition to this company also provides the expected loss based on the overdue number of days for receivables as per the provision matrix. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the company. In addition, the company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
C) Market risk - Interest rate risk
The company''s exposure to the risk of changes in market interest rates relates to borrowings with floating interest rates. To manage the risk, company has created balance portfolio of fixed and variable interest rate borrowings. Change of 0.5%, in the base rates will have effect of '' 1.956 MN on the company''s profitability.
The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.
The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of natural hedge between receivables and payables, use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the company''s policy.
NOTE 41: CAPITAL MANAGEMENT a) Risk management
The company''s objectives when managing capital are to
- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, change debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents, mutual funds and other bank balances) divided by Total âequity'' plus net debt.
NOTE 43 : CORPORATE SOCIAL RESPONSIBILITY EXPENDITURES
(a) Amount required to be spent by the Company during the current year is '' 31.967 Million (PY - '' 23.685 Million)
(b) Amount spent by the Company during the current year is '' 32.187 Million (PY - '' 24.165 Million)
There is no shortfall as per provision of Sec 135 of The Companies Act 2013 either at the beginning or end of year.
The company as per its policy on Corporate Social Responsibility (CSR) and recommendation and approval of the CSR committee has contributed ''25 Million towards Disaster Management Projects & Programs through it''s implementing agency Vikas Charitable Trust, '' 1.998 Million on Specialized Wildlife Technical Rescue Vehicle, '' 3.1 Million on Infrastructure Development for Educational Institutions and balance amount on Prevention of HIV transmission, bio-diversity restoration project, etc. The company has not spent any amount towards construction or acquisition of asset.
The access to the database for accounting and consolidation software is restricted only to single CIC basis admin user (changes if any are allowed only with prior approval of committee of senior management) depending on Company''s operating and business needs after appropriately designing the internal controls and ensuring the operating effectiveness of such controls. Audit trail function for database level is disabled by default in SAP! Enabling that feature, can affect the performance of SAP system as whole. Considering above facts, management has not enabled audit trail at database level.
The Company uses services of third-party service provider (ADP India Private Limited) for payroll processing and said organisation has provided SOC 1 report covering sustainability of the design and operating effectiveness of controls.
Further, outsourced vendor is ISO 9001:2013 and ISO 27001:2013 certified. Rule A.12.4, of ISO 27001:2013 requires, maintaining the audit trail of all events / logs including the changes in payroll products - user access controls, change management, etc. Auditors of third-party service provider had verified these controls and issue certificate for ISO standards. Further, there is no direct integration between third party payroll system and KBL accounting system. Processed payroll data received from third party service provider, is duly verified by KBL''s internal team before accounting the same.
Above mentioned does not impact the internal control environment of the Company.
1. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
2. The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
3. The Company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
4. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
6. Company has not entered any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956
7. Company has not made any contribution to the political parties during FY 2023-24. (PY: NIL)
8. Previous year''s figure have been regrouped, wherever required.
Mar 31, 2023
(a) Terms/ rights attached to equity shares .
The company has only one class of equity shares, having face value of '' 2/- per share. Each holder of equity share is entitled to one vote per share and has a right to receive dividend as recommended by the board of directors subject to the necessary approval from the shareholders. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
For the year ended 31 March 2023 the board of directors have proposed final dividend of ''4.5 (2022: ''3.00) per share subject to shareholders'' approval.
Capital reserve:
The company had recognised profit or loss on purchase, sale, issue or forfeiture/ cancellation of own equity instrument to capital reserve.
Capital redemption reserve:
The Company had recognised capital redemption reserve on redemption of preference shares from its retained earnings as per the then applicable provisions of Companies Act, 1956.â
Securities premium :
The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium.
General reserve:
The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
Retained earnings:
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
1. The quarterly returns or statements filed by the Company for working capital limits whenever availed with such banks and financial institutions are in agreement with the books of account of the Company
2. The company has utilized loans for the specific purpose for which same are availed.
3. The Company is not declared as wilful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
4. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
Basis used to determine the overall expected return:
The net interest approach effectively assumes an expected rate of return on plan assets equal to the beginning of the year Discount Rate. Expected return of 6.8% (PY 6.3%) has been used for the valuation purpose.
o) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
1 Discount rate as at 31-03-2023 - 7.40% (PY- 6.80%)
2 Expected return on plan assets as at 31-03-2023- 6.80%( PY- 6.3%)
3 Salary growth rate : For Gratuity Scheme - 10% (PY - 8%). Impact for change in accounting estimate along with other remeasuremnt impact is recognised in other comprehensive income.
4 Attrition rate: For gratuity scheme the attrition rate is taken at 11% (PY - 11%)
5 The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
p) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.
2 Companyâs Pension Plan:
The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.
q) The Company expects to fund ''94.41 MN (P.Y ''52.77 MN) towards its gratuity plan in the year 2023-24
r) Sensitivity analysis
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the Present value of obligation(PVO). Sensitivity analysis is done by varying (increasing/ decreasing) one parameter at a time and studying its impact
Compensated absences
The cost of the leave encashment and the present value of the leave encashment obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates.
Provision for warranty
Provision for warranty is made for estimated warranty claims in respect of products sold, which are under warranty at the end of the reporting period. These claims are expected to be settled as per schedule of warranty i.e. upto18 months. Management records the provision based on the historical warranty claims information and any recent trends that may suggest future claims could differ historical amount. â
Provision for decommissioning and restoration cost
A provision has been recognised for decommissioning and restoration costs associated with windmills on lease hold land. The company is committed to restore the site at the end of useful life of windmills. â
Provision for long term contract
A provision is made for the expected loss of the projects, where the estimated cost is more than the estimated revenue. Changes in estimated cost and estimated revenue are assessed by the management at the end of reporting period based on the price variation received/ given, change in the scope of project and revision of estimates regarding date of completion, expected costs to be incurred, changes in external circumstances such as applicable tax rates etc.
NOTE 39 : FAIR VALUE MEASUREMENTS
As per assessments made by the management fair values of all financial instruments carried at amortised costs (except as specified below) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest.
The Company has not performed a fair valuation of its investment in unquoted ordinary shares which are classified as FVOCI (refer Note 5), as the Company believes that impact of change on account of fair value is insignificant.
NOTE 40: FINANCIAL RISK MANAGEMENT POLICY AND OBJECTIVES
Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Company''s principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.
The company''s risk management is carried out by management, under policies approved by the board of directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity. No major change in assumptions and methods used for risk assessments is made during the year.
(A) Credit Risk
Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.
Credit risk management
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty,
(iii) Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,
(iv) Significant increases in credit risk on other financial instruments of the same counterparty,
(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.
The company provides for expected credit loss in case of trade receivables, claims receivable as and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company etc.
For the security deposits and claims receivable, provision for expected loss is made considering 12 months expected credit loss. Provision for lifetime credit loss is made if there is significant increase in credit risk for such financial assets.
In respect of trade receivable, company uses the simplified approach for the provision for expected loss. The lifetime expected loss provision is recognised based on the provision matrix as decided by the management, based on the historical experience of recoverability. The company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 1 year past due in case product business and 4 years past due in case of project business. In addition to this company also provides the expected loss based on the overdue number of days for receivables as per the provision matrix. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the company. In addition, the company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
C) Market risk - Interest rate risk
The company''s exposure to the risk of changes in market interest rates relates to borrowings with floating interest rates. To manage the risk, company has created balance portfolio of fixed and variable interest rate borrowings. Change of 0.5%, in the base rates will have effect of INR 5.756 MN on the company''s profitability.
NOTE 40 : FINANCIAL RISK MANAGEMENT POLICY AND OBJECTIVES (CONTINUED)
(D) Foreign Currency Risk
The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.
The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of natural hedge between receivables and payables, use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the company''s policy.
NOTE 41: CAPITAL MANAGEMENT a) Risk management
The company''s objectives when managing capital are to
- safeguard it''s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, change debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents, mutual funds and other bank balances) divided by Total âequity'' plus net debt.
NOTE 43 : CORPORATE SOCIAL RESPONSIBILITY EXPENDITURES
(a) Amount required to be spent by the Company during the current year is '' 23.6 Million (PY - ''26.2 Million)
(b) Amount spent by the Company during the current year is '' 24.2 Million (PY - ''26.4 Million)
The company as per its policy on Corporate Social Responsibility (CSR) and recommendation and approval of the CSR committee has contributed '' 6.5 Million towards education through its implementing agency Vikas Charitable Trust in the current financial year,
''12.47 Mn on Skill Development Programme, ''3.11 Mn on village bus project and balance amount on various projects for students and society at large (including WASH activity for students, bio-diversity restoration project, donation to village Grampanchyats etc) The company has not spent any amount towards construction or acquisition of asset.
NOTE 47 B: OTHERS
1. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
2. The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
3. The Company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with
the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or
invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
4. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
5. No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
6. Company has not entered any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956
7. Kirloskar Industries Limited along with Mr. Atul Kirloskar and Mr. Rahul Kirloskar (âthe requisionists''), collectively holding more than one-tenth of the paid-up share capital of the Company had requisitioned for an extra-ordinary general meeting (âEGM'') of the shareholders of the Company for appointment of an independent and reputed external entity as an independent forensic auditor for conducting a forensic audit to investigate and i) verify the expenses incurred by the Company on legal, professional and consultancy charges over the past 6 (six) years, and the affairs of the Company ii) verify all records, books of accounts, minute books, other documents of company and iii) examine the conduct of Board of Directors of company including independent directors. Accordingly, Notice dated 16th November 2022 for convening EGM along with statement setting out material facts was sent to the shareholders of the Company and the EGM was conducted on 8th December 2022 by the Company. As per the voting results of the said EGM, the resolution as proposed by the requisitionists was defeated since it was not passed by a the majority of the votes of the shareholders, present/ participating and voting.
8. Previous year''s figure have been regrouped, wherever required.
Mar 31, 2022
(a) Terms/rights attached to equity shares
The company has only one class of equity shares, having face value of '' 2/- per share. Each holder of equity share is entitled to one vote per share and has a right to receive dividend as recommended by the board of directors subject to the necessary approval from the shareholders. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
For the year ended 31 March 2022 the board of directors have proposed final dividend of '' 3.00 (2021: '' 3.00) per share subject to shareholdersâ approval.
There is no change in shares held by promotersâ during the FY 2021-22 and FY 2020-21. Details of shares held by promoterâs group are available on Companyâs website.
* includes 1,761,919 (PY : 1,761,919), 2% (2%) shares held in the capacity of a trustee.
For the period of five years immediately preceding the date as at which the balance sheet is prepared, no shares are
i. allotted as fully paid up pursuant to contracts without payment being received in cash
ii. allotted as fully paid shares by way of bonus shares
iii. bought back.
The company had recognised profit or loss on purchase, sale, issue or forfeiture/ cancellation of own equity instrument to capital reserve.
The Company had recognised capital redemption reserve on redemption of preference shares from its retained earnings as per the then applicable provisions of Companies Act, 1956.
The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium.
The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
1. The quarterly returns or statements filed by the Company for working capital limits with such banks and financial institutions are in agreement with the books of account of the Company.
2. The company has utilized loans for the specific purpose for which same are availed.
3. The Company is not declared as willful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.
4. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
Terms and conditions of the above financial liabilities:
Trade payables are non-interest bearing and are normally settled on 60-day terms except dues to micro and small enterprises which are settled in 45 days or contractual term whichever is earlier. Refer note 44(B) for ageing.
Basis used to determine the overall expected return:
The net interest approach effectively assumes an expected rate of return on plan assets equal to the beginning of the year Discount Rate. Expected return of 6.3% (PY 6.1%) has been used for the valuation purpose.
o) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
1 Discount rate as at 31-03-2022 - 6.80% (PY- 6.30%)
2 Expected return on plan assets as at 31-03-2022- 6.3%( PY- 6.1%)
3 Salary growth rate : For Gratuity Scheme - 8% (PY - 7%)
4 Attrition rate: For gratuity scheme the attrition rate is taken at 11% (PY - 7%)
5 The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
p) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.
2 Companyâs Pension Plan:
The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.
q) The Company expects to fund Rs 52.77 MN (PY Rs NIL) towards its gratuity plan in the year 2022-23.
r) Sensitivity analysis
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the Present value of obligation(PVO). Sensitivity analysis is done by varying (increasing/ decreasing) one parameter at a time and studying its impact
The cost of the leave encashment and the present value of the leave encashment obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates.
Provision for warranty is made for estimated warranty claims in respect of products sold, which are under warranty at the end of the reporting period. These claims are expected to be settled as per schedule of warranty i.e. upto18 months. Management records the provision based on the historical warranty claims information and any recent trends that may suggest future claims could differ historical amount.
Provision for decommissioning and restoration cost
A provision has been recognised for decommissioning and restoration costs associated with windmills on lease hold land. The company is committed to restore the site at the end of useful life of windmills.
Provision for long term contract
A provision is made for the expected loss of the projects, where the estimated cost is more than the estimated revenue. Changes in estimated cost and estimated revenue are assessed by the management at the end of reporting period based on the price variation received/ given, change in the scope of project and revision of estimates regarding date of completion, expected costs to be incurred, changes in external circumstances such as applicable tax rates etc.
Note 40: Financial risk management policy and objectives
Companyâs principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance companyâs operations and to provide guarantees to support its operations. Companyâs principal financial assets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.
In order to minimize any adverse effects on the financial performance of the company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.
The companyâs risk management is carried out by management, under policies approved by the board of directors. Companyâs treasury identifies, evaluates and hedges financial risks in close cooperation with the companyâs operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity. No major change in assumptions and methods used for risk assessments is made during the year.
(A) Credit Risk
Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.
Credit risk management
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty,
(iii) Financial or economic conditions that are expected to cause a significant change to counterpartyâs ability to meet its obligations,
(iv) Significant increases in credit risk on other financial instruments of the same counterparty,
(v) Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.
The company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the company etc.
For the security deposits and claims receivable, provision for expected loss is made considering 12 months expected credit loss. Provision for lifetime credit loss is made if there is significant increase in credit risk for such financial assets.
In respect of trade receivable, company uses the simplified approach for the provision for expected loss. The lifetime expected loss provision is recognised based on the provision matrix as decided by the management, based on the historical experience of recoverability. The company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 1 year past due in case product business and 4 years past due in case of project business. In addition to this company also provides the expected loss based on the overdue number of days for receivables as per the provision matrix. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the companyâs liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the company. In addition, the companyâs liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
C) Market risk - Interest rate risk
The companyâs exposure to the risk of changes in market interest rates relates to borrowings with floating interest rates. To manage the risk, company has created balance portfolio of fixed and variable interest rate borrowings.
Change of 0.5%, in the base rates will have effect of INR 11.822 MN on the companyâs profitability.
(D) Foreign Currency Risk
The company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.
The company evaluates exchange rate exposure arising from foreign currency transactions and the company follows established risk management policies, including use of natural hedge between receivables and payables, use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the companyâs policy.
Note 41: Capital management a) Risk management
The companyâs objectives when managing capital are to
- safeguard itâs ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, change debt. Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents, mutual funds and other bank balances) divided by Total âequityâ plus net debt.
The identification of suppliers as micro, small and medium enterprise as defined under the Micro, Small and Medium Enterprises Development Act 2006, was done on the basis of information to the extent provided by the suppliers of company.
Delay in payment is mainly on account of quality issues of vendors.
Note 43 : Corporate social responsibility expenditures
(a) Amount required to be spent by the Company during the current year is '' 26.163 Million (PY - '' 24.216 Million)
(b) Amount spent by the Company during the current year is '' 26.447 Million (PY - '' 24.763 Million)
The company as per its policy on Corporate Social Responsibility (CSR) and recommendation and approval of the CSR committee has contributed '' 11 Million towards education through its implementing agency Vikas Charitable Trust in the current financial year, '' 7.68 Mn on Skill Development Programme and balance amount on various projects for students and society at large (Technical lab development at RIT- Islampur, assistance during Covid-19 outbreak, WASH activity for students and donation to charitable organisation such as Annamitra foundation etc.) The company has not spent any amount towards construction or acquisition of asset.
Refer board report for detailed disclosure.
1. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
2. The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
3. The Company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
4. The Company has not traded or invested in Crypto Currancy or Virtual Currancy during the financial year
5. No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
6. Company has not entered any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956
7. Previous yearâs figure have been regrouped, wherever required.
Mar 31, 2018
1. Corporate information
Kirloskar Brothers Limited (UKBLUor UtheCompanyU)is a public limited company domiciled in India and incorporated under the provisions of the Indian Companies Act. KBL is engaged in providing global Quid management solutions. The core products of the Company are Engineered Pumps, Industrial Pumps, Agriculture and Domestic Pumps, Valves, and Hydro turbines.
(a) Terms/rights attached to equity shares
The Company has only one class of equity shares, having par value of Rs.2/- per share. Each holder of equity share is entitled to one vote per share and has a right to receive dividend as recommended by the board of directors subject to the necessary approval from the shareholders. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
For the year ended 31 March 2018 the board of directors have proposed dividend of Rs.2.50 (2017: Rs.1/-) per share subject to shareholders®approval.
The board of directors have declared interim dividend of Rs. Nil (2017: Nil) per share.
Capital Reserve:
The Company had recognised profitor loss on purchase, sale, issue or forfeiture/ cancellation of own equity instrument to capital reserve.
Capital Redemption Reserve:
The Company had recognised capital redemption reserve on redemption of preference shares from its retained earnings as per then applicable provisions of Companies Act, 1956.
Securities Premium Reserve:
The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium reserve.
General Reserve:
The Company has transferred a portion of the net profitof the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
Retained Earnings:
Retained earnings are the profitst hat the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders.
Terms and conditions of the above financial liabilities:
Trade payables are non-interest bearing and are normally settled on 60-day terms
Terms and conditions of the above financial liabilities:
1) Other payables are non-interest bearing and have an average term of six months
2) For explanations on the Group® credit risk management processes, refer note 40.
Note 2 : Income tax
(1) The major components of income tax expense for the year ended 31 March 2018 and 31 March 2017 are:
(a) Statement of profit and loss
(b) Statement of other comprehensive income (OCI)
Current tax related to items recognised in OCI during in the year:
(c) Tax on dividend
Board has recommanded dividend @125% per share i.e Rs.2.5 per share. The tax payable on dividend declared is Rs.32.609 MN.
1. The Company does not expect any reimbursement in respect of the above contingent liabilities
2. It is not practicable to estimate the timing of cash gow if any with resepct to above matters.
Note 3 : Employee benefits
i. Defined Contribution Plans:
Amount of Rs.44.661 MN. (Rs.43.405 MN) is recognised as an expense towards deanedcontribution plan and included in Employees beneats expense (Note-23 in the Profitnd Loss Statement.)
ii. Defined Benefit Plans:
a) The amounts recognised in Balance Sheet are as follows: Funded Plan
b) The amounts recognised in the Profit and Loss Statement are as follows: Funded Plan
c) The amounts recognised in the statement of other comprehensive income (OCI) : Funded Plan
d) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows: Funded Plan
Basis used to determine the overall expected return:
The net interest approach effectively assumes an expected rate of return on plan assets equal to the beginning of the year Discount Rate. Expected return of 7.60% (PY 6.8%) has been used for the valuation purpose.
o) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
1 Discount rate as at 31-03-2018- 7.60%
2 Expected return on plan assets as at 31-03-2018 - 6.8%
3 Salary growth rate : For Gratuity Scheme - 10%
4 Attrition rate: For gratuity scheme the attrition rate is taken at 7%
5 The estimates of future salary increase considered in actuarial valuation take into account ingation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
p) General descriptions of defined plans: 1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the beneatequivalent to afteendays salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The beneatvests after aveyears of continuous service.
2 Companyâs Pension Plan:
The Company operates a Pension Scheme for speciaedex-employees wherein the beneaciaries are entitled to deaned monthly pension.
q) The Company expects to fund Rs.23.07 Million (Rs.37.80 Million) towards its gratuity plan in the year 2017-18.
r) Sensitivity analysis
Sensitivity analysis indicates the inguence of a reasonable change in certain signiacant assumptions on the outcome of the Present value of obligation(PVO). Sensitivity analysis is done by varying (increasing/ decreasing) one parameter at a time and studying its impact.
Note 4 : Disclosure pursuant to Schedule V read with regulations 34(3) and 53(f) of the SEBI(Listing Obligations And Disclosure Requirements) Regulations,2015 :
A Loans and advances in the nature of loans for working capital requirements :
B Loans and advances in the nature of loans to firms/companies in which directors are interested: NIL
C Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company: NIL
Note:- Loans to employees including directors under various schemes of the Company (such as housing loan, furniture loan, education loan etc.) have been considered to be outside the purview of this disclosure requirements.
Compensated absences
The cost of the leave encashment and the present value of the leave encashment obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates.
Provision for warranty
Provision for warranty is made for estimated warranty claims in respect of products sold, which are under warranty at the end of the reporting period. These claims are expected to be settled in the next 18 months. Management records the provision based on the historical warranty claims information and any recent trends that may suggest future claims could differ historical amount.
Provision for decommissioning and restoration cost
A provision has been recognised for decommissioning and restoration costs associated with windmills on lease hold land. The Company is committed to restore the site at the end of useful life of windmills.
Provision for long term contract
A provision is made for the expected loss of the projects, where the estimated cost is more than the estimated revenue. Changes in estimated cost and estimated revenue are assessed by the management at the end of reporting period based on the price variation received/ given, change in the scope of project and revision of estimates regarding date of completion, expected costs to be incurred, changes in external circumstances such as applicable tax rates etc.
Note 5 : Fair Value Measurements
As per assessments made by the management fair values of all aiancial instruments carried at amortised costs (except as speciaedbelow) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest.
The Company has not performed a fair valuation of its investment in unquoted ordinary shares which are classiaedas FVOCI (refer Note 4), as the Company believes that impact of change on account of fair value is insigniacant.
Note 6: Financial risk management policy and objectives
Companyâs principal financial liabilities, comprise loans and borrowings, trade and other payables, and financialguarantee contracts. The main purpose of these financial liabilities is to ananceCompanyâs operations and to provide guarantees to support its operations. Companyâs principal financialassets include advances to subsidiaries, trade and other receivables, security deposits and cash and cash equivalents, that derive directly from its operations.
In order to minimize any adverse effects on the financialperformance of the Company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.
The Company® risk management is carried out by management, under policies approved by the board of directors. Companyâs treasury identiaes,evaluates and hedges financial risks in close cooperation with the Company® operating units. The board provides written principles for overall risk management, as well as policies covering speciac areas, such as foreign exchange risk,credit risk, and investment of excess liquidity.
(A) Credit Risk
Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.
Credit risk management
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The Company considers the probability of default upon initial recognition of asset and whether there has been a signiacanti ncrease in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a signiacant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:
(i) Actual or expected signiacant adverse changes in business,
(ii) Actual or expected signiacant changes in the operating resilts of the counterparty,
(iii) Financial or economic conditions that are expected to cause a signiacantchange to counterpartyis ability to meet its obligations,
(iv) Signiacant increases in credit risk on other financial inslments of the same counterparty,
(v) Signiacantchanges in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.
The Company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the Company etc. For the security deposits and claims receivable, provision for expected loss is made considering 12 months expected credit loss. Provision for lifetime credit loss is made if there is signiacant increase in credit risk for such financialassets.
In respect of trade receivable, the Company uses the simpliaedapproach for the provision for expected loss. The lifetime expected loss provision is recognised based on the provision matrix as decided by the management, based on the historical experience of recoverability. The Company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 1 year past due in case product business and 4 years past due in case of project business. In addition to this Company also provides the expected loss based on the overdue number of days for receivables as per the provision matrix. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
(B) Liquidity risk
Prudent liquidity risk management implies maintaining sufacientcash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company maintains gexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Companyâ liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash gows. This is carried out in accordance with practice and limits set by the group. In addition, the Companyâ liquidity management policy involves projecting cash gows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt anancing plans.
(C) Market risk - Interest rate risk
The Companyâs exposure to the risk of changes in market interest rates relates to borrowings with goating interest rates. To manage the risk, Company has created balance portfolio of axedand variable interest rate borrowings.
Change in 0.5%, in the base rates will have effect of INR 8.25 MN on the Companyâs profitability
(D) Foreign Currency Risk
The Company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including use of natural hedge between receivables and payables, use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the Company® policy.
(EGP- Egyptian Pound, GBP - Great Britain Pound, EUR- Euro, SEK- Swedish Krona, USD - US Dollar, VND-Vietnamese Dong, SGD- Singapore Dollar, JPY - Japanese Yen, AED-Arab emirates Dirham, XOF- CFA Franc) Sensitivity % are derived based on variation in the exchange rates over the period of last 5 years.
Note 7: Capital management (a) Risk management
The Companyâ objectives when managing capital are to :
- safeguard itâ ability to continue as a going concern, so that it can continue to provide returns for shareholders and beneats for other stakeholders, and
- maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, change debt mix. Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by Total âquityCplus net debt.
The Companyâ strategy is to maintain a gearing ratio within 30%. The gearing ratios were as follows:
Since year end the directors have recommended the payment of a anadividend of Rs.2.50 per fully paid equity share (31 March 2017 - Rs.1.00 ). This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.
Note 8 : Disclosure in respect of Micro, small and medium enterprises
The identiacationof suppliers as micro, small and medium enterprise deanedunder the Small, Micro and Medium Enterprises Development Act 2006, was done on the basis of information to the extent provided by the suppliers of Company.
Note 9 : Corporate Social Responsibility expenditures
(a) Amount required to be spent by the Company during the current year is Rs.7.034 Million (PY - Rs.6.624 Million)
(b) Amount spent by the Company during the current year is Rs.7.500 Million (PY - Rs.7.318 Million)
The Company as per its policy on Corporate Social Responsibility (CSR) and recommendation and approval of the CSR committee has contributed Rs.7.500 Million towards education through its implementing agency Vikas Charitable Trust in the current anancal year. The Company has not spent any amount towards construction or acquisition of asset.
Note 10 : Investment in subsidiaries
During the year, Board has approved additional investment of Rs.600 Million in its wholly owned subsidiary, Kirloskar Brothers International BV (KBIBV). Out of this, Company has made investment of Rs.343 Million (Euro 4.5 Million) in December 2017.
Note 11: Segment Reporting
Project report comprises of pumps and equipment supply to irrigation, water and power sectors. Product sigment comprises of pumps and equipment supplied to other sectors.
The Company do not have single major customer having transactions more than 10% of total revenue of the Company.
Note 12: Specified Bank Notes
Following is the disclosure of âSpeciaed Bank Notesâ(SBN) as required by the notiacation dated 30th March, 2017, issued by the Ministry of Company Affairs for the previous year ended 31st March 2017.
Note 13: Others
Previous yearâs figure have been regrouped, wherever required.
Mar 31, 2017
Basis used to determine the overall expected return:
The net interest approach effectively assumes an expected rate of return on plan assets equal to the beginning of the year discount rate. Expected return of 6.80% has been used for the valuation purpose.
1. Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
2. Discountrateasat31 March2017-6.80%
3. Expectedreturnonplanassetsasat31 March2017-7.80%
4. Salary growth rate: For Gratuity Scheme-9.50%
5. Attrition rate: For gratuity scheme the attrition rate is taken at 7.00%
6. The estimates of future salary increase considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
7. General descriptions of defined plans:
8. Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.
9. Company''s Pension Plan:
The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are entitled to defined monthly pension.
10. The Company expects to fund Rs 37.80 Million (Rs. 39.40 Million)towards its gratuity plan intheyear2017-18.
11. Sensitivity analysis
Sensitivity analysis indicates the influence of a reasonable change in certain significant assumptions on the outcome of the Present value of obligation (PVO). Sensitivity analysis is done by varying (increasing / decreasing) one parameter at a time and studying its impact
12: Disclosure pursuant to Schedule V read with Regulations 34(3) and 53(f) of the SEBI (Listing Obligations And Disclosure Requirements) Regulations,2015:
13. Loans and advance s in the nature of loan s to firms/companies in which directors are interested: NIL
14. Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company: NIL
Loans to employees including directors under various schemes of the Company (such as housing loan, furniture loan, education loan etc.) have been considered to be outside the purview of this disclosure requirements.
15. Contingent liabilities, if an y, incurred in relation to interest in Joint Ventures: R s. 13.282 Million (Rs. 14.490 Million)
16. Capital commitments, if an y, in relation to interest in Joint Ventures: R s 15.460 Million (Rs.49.721 Million)
17: Fair Value Measurements
As per assessments made by the management fair values of all financial instruments carried at amortized costs (except as specified below) are not materially different from their carrying amounts since they are either short term nature or the interest rates applicable are equal to the current market rate of interest.
Companyâs principal financial liabilities, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance company''s operations and to provide guarantees to support its operations. Companyâs principal financial assets include advances to subsidiaries. trade and other receivables, security deposits and cash and cash equivalents. that derive directly from its operations.
In order to minimize any adverse effects on the financial performance of the Company, it has taken various measures. This note explains the source of risk which the entity is exposed to and how the entity manages the risk and impact of the same in the financial statements.
The Company''s risk management is carried out by management, under policies approved by the Board of Directors. Company''s treasury identifies, evaluates and hedges financial risks in close cooperation with the Company''s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk, and investment of excess liquidity.
18. Credit Risk
Credit risk in case of the Company arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.
Credit risk management
Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:
19. Actual or expected significant adverse changes in business,
20. Actual or expected significant changes in the operating results of the counterparty,
21. Financial or economic conditions that are expected to cause a significant change to counterparty''s ability to meet its obligations,
22. Significant increases in credit risk on other financial instruments of the same counterparty,
23. Significant changes in the value of collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements.
The Company provides for expected credit loss in case of trade receivables, claims receivable and security deposits when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the Company. The Company categorizes a receivable for provision for doubtful debts/write off when a debtor fails to make contractual payments greater than 1 year past due. The amount of provision depends on certain parameters set by the Company in its provisioning policy where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized in profit or loss.
24. Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company maintains flexibility in funding by maintaining availability under committed credit lines.
Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is carried out in accordance with practice and limits set by the Company. In addition, the Company''s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
25. Foreign Currency Risk
The Company is exposed to foreign exchange risk mainly through its sales to overseas customers and purchases from overseas suppliers in various foreign currencies.
The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk, where the economic conditions match the Company''s policy.
26. Capital management
27. Risk management
The Company''s objectives when managing capital are to
- safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and
- Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio: Net debt (total borrowings net of cash and cash equivalents) divided by Total ''equity'' (as shown in the balance sheet).
28: Corporate social responsibility expenditure
29. Amount required to be spent by the Company during the current year is Rs. 6.624 Million
30. Amount spent by the Company during the current year is Rs. 7.318 Million
The Company as per its policy on Corporate Social Responsibility(CSR) and recommendation and approval of the CSR committee has contributed Rs. 5.493 Million towards Education through its implementing agency Vikas Charitable Trust, Rs 1.100 Million and Rs 0.725 Million towards Health Care & Education through Grampanchayat Kundal and Grampanchyat Ramanandnagar respectively in the current financial year.
In the Previous Year 2014-15, the Company based on the âFrequently Asked Questions'' on the provisions of Corporate Social Responsibility under Section 135 of the Companies Act, 2013 and Rules thereon issued by the Corporate Laws & Corporate Governance Committee of Institute of Chartered Accountants of India (ICAI) had appropriated CSR spend from Surplus. On 15th May 2015 ICAI came out with Guidance Note (34) changing the accounting treatment and therefore in the year 2016-17 CSR expenditure has been expensed out in the Profit and Loss account and disclosed under Other expenses.
31: Effective from 1 April 2014 the Company had charged depreciation based on the revised remaining useful life of the assets as per the requirement of Schedule II of the Companies Act, 2013. Due to above, depreciation charge for the year ended 31 March 2015was higher by Rs. 153 Million. Further, an amount of Rs.61 Million (net of tax of Rs.40 Million) representing the carrying amount of assets with revised useful life as nil had been charged to the retained earnings as on 1 April 2014 pursuant to the Companies Act, 2013.
32: During the year Kirloskar Systech Limited (100% subsidiary of the Kirloskar Brothers Limited ''KBL'') was merged with KBL. The merger is accounted as per guidance under Appendix C of Ind AS 103 (pooling of interest method) and the corresponding comparative periods are restated to give the effect of merger.(refer note 43 m)
33: First Time Adoption of Ind AS
Explanation of transition to Ind AS
These are Company''s first financial statements prepared in accordance with Indian Accounting Standards (Ind AS) as notified under Companies'' (Indian Accounting Standards) Rules, 2015. In preparing the financial statements for the year ended 31 March 2016 and balance sheet as at 1 April 2015 (Date of transition), the Company has adjusted amounts reported previously in financial statements prepared in accordance with Indian Generally Accepted Accounting Principles (Indian GAAP). This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements for the year ended 31 March 2016.
Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional and mandatory exceptions applied in the transition from Indian Ind AS optional exemptions
34. Property, plant and equipment, intangible assets and investment properties
Ind AS 101 permits a first-time adopter to elect to continue with carrying value for all its property, plant and equipment as recognized in the financial statements as at the date of transition to IndAS, measured as per the Indian GAAP and use that as the deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 and Investment Property covered by Ind AS 40. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their Indian GAAP carrying value.
35. Investments in subsidiaries
Ind AS 101 permits a first-time adopter to elect to continue with carrying value for all of its investment in subsidiaries as recognized in its Indian GAAP financials as deemed cost as at the transition date.
Accordingly, the Company has elected to measure all of its subsidiaries at their Indian GAAP carrying value.
36. Business Combination
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the date of transition or from the specific date prior to the date of transition. This provides relief from full retrospective application that would require restatement of all business combinations prior to the date of transition.
The Company elected to apply Ind AS 103 prospectively to business combinations occurring after the date of transition. Business combinations occurring prior to the date of transition have not been restated.
37. Arrangement containing lease
Appendix C to Ind-AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind-AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.
The Company has elected to apply this exemption for such contracts / arrangements.
Ind AS mandatory exceptions
38. Estimates
An entity''s estimates in accordance with Ind AS at the date of transition to the Ind AS shall be consistent with estimates made for the same date in accordance with Indian GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1 April 2015 are consistent with estimates as at the same date made in conformity with Indian GAAP The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required by Indian GAAP:
-Impairment of financial assets based on expected credit loss model
39. De recognition of financial assets and liabilities
Ind AS 101, requires first time adopter to apply the de recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de recognition requirements of Ind AS 109, retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities de-recognized as a result of past transaction was obtained at the time of initially accounting of transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from date of transition to Ind AS.
40. Classification and measurement of financial asset
Ind AS 101 requires an entity to assess classification and measurement of financial assets, on the basis of the facts and circumstances that exists at the transition date to Ind AS.
Explanation of transition to Ind AS
An explanation of how the transition from Indian GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flow is set out in the following tables and notes that accompany the tables. The reconciliations include- equity reconciliation as at 1 April 2015;
- equity reconciliation as at 31 March 2016;
- profit reconciliation for the year ended 31 March 2016; and
- cash flow reconciliation for the year ended 31 March 2016
In the reconciliations mentioned above, certain reclassifications have been made from Indian GAAP financial information to align with the Ind AS presentation.
41. Excise duty
Under Indian GAAFJ excise duty is reduced from gross revenues to report revenues net of excise duty.
Under Ind AS, revenue includes gross inflows of economic benefits received by a company for its own account. Excise duty collected, which is a duty on manufacture and a primary obligation of the manufacturer is considered as revenue with the corresponding payments to Government as expenditure. This adjustment does not have any impact on statement of profit and loss.
42. Variable consideration
Under Indian GAAFJ cash discounts and certain customer incentives such as award credits are reported separately as an expenditure in statement of profit and loss.
Under Ind AS, revenue is measured at the fair value of consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the entity. Customer incentives such as award credits and other loyalty programs are considered as separately identifiable component of the sale transaction in which they are granted (initial sale). The fair value of the consideration received or receivable of initial sale shall be allocated between the award credits and the other components of the sale. Allocation of initial sale value to be made with reference to the fair values of the components of sale. Such allocated fairvalue of award credit is deferred to be recognized subsequently as revenue when the award credits/ points are utilized or lapsed.
43. Project Revenue-Multiple element arrangements
Under Indian GAAR there is no specific guidance on multiple elements transactions. Under Ind AS, it is necessary to apply the revenue recognition criteria for each separately identifiable component of a single transaction in order to reflect the substance of the transaction. Revenue is recognized separately for each component as and when the recognition criteria for the component is fulfilled. Further under Ind AS, contract revenue is measured at the fairvalue of the consideration received or receivable. The amount of revenue and estimates should be revised as and when events occur and uncertainties are resolved. Thus, contract revenue is affected by a variety of uncertainties that depend on the outcome of future events.
Accordingly, the amount of estimated contract revenue is decreased as a result of penalties arising from delays.
44. Sales tax deferral liability
Under Indian GAAR a sales tax deferral liability, which is acquired from the third party for a consideration, is recorded as borrowings at transaction price. Amount paid for acquiring such sales tax deferral entitlement is recognized in statement of profit and loss in the year of acquisition.
Under Ind AS, acquired sales tax deferral liability is recorded as a financial liability. Such liability is measured at amortized cost using effective interest rate method. Amount paid for acquiring the sales tax deferral entitlement is treated as intangible asset and is amortized over the period of the benefit received.
45. Employee benefit expenses-actuarial gains and losses and return on plan assets
Under Indian GAAFJ actuarial gains and losses and return on plan assets on post-employment defined benefit plans are recognized immediately in statement of profit and loss.
Under Ind AS, re measurements which comprise of actuarial gains and losses, return on plan assets and changes in the effect of asset ceiling, if any, with respect to post-employment defined benefit plans are recognized immediately in other comprehensive income (OCI). Further, re measurements recognized in OCI are never reclassified to statement of profit and loss.
Employee benefit expenses - net interest income / expenses
Under Indian GAAFJ net finance cost/income on post-employment defined benefit plans (gratuity) is recognized in statement of profit and loss under ''employee benefit expense''.
Under lnd AS, net finance cost /income is recorded under âfinance cost /income''.
46. Provision for decommissioning, restoration and similar liabilities
Under Indian GAAFJ at the initial recognition of an asset, provision for decommissioning, restoration and similar liabilities is not recorded.
Under Ind AS, the cost of dismantling or removing the item or restoration of the site is included as part of initial cost of the property, plant and equipment. Accordingly, a liability equivalent to the present value of such costs is recognized, with equivalent amount capitalized as an additional cost of the component. Depreciation on asset and imputed interest on the provision is subsequently recognized in statement of profit and loss.
47. Warranty provision
Under Indian GAAFJ provision for warranty is recorded at transaction price.
Under Ind AS, warranty provision is discounted to its present value where the effect of time value of money is material. The imputed interest on the provision is subsequently recognized in statement of profit and loss.
48. Reclassification of lease
Under Indian GAAR there is no specific guidance for contracts that involve leases of land.
Under Ind AS, leases of land is recognized as operating or finance lease as per definition and classification criteria. Where the land lease is for several decades, generally it qualifies as a finance lease even though the right of ownership of the land may not transfer at the end of the lease term . Land leases for relatively shorter periods are treated as operating leases. In such cases lease rentals paid in advance are recorded as prepaid lease rentals as part of other current / non-current assets.
49. Proposed dividend
Under Indian GAAR dividend proposed after the date of the financial statements but prior to the approval of financial statements is considered as an adjusting event, and a provision for dividend is recognized in the financial statements of the period to which the dividend relates.
Under Ind AS, dividend declaration is considered as a non-adjusting event and provision for dividend is recognized only in the period when the dividend is approved by the shareholders in annual general meeting.
50. Deferred tax
Under Indian GAAR the deferred tax is recognized using the income statement / balance sheet approach i.e. reflecting the tax effects of timing differences between accounting income and taxable income for the period.
Under Ind AS, the Company has recognized deferred taxes using the balance sheet approach i.e. reflecting the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Also, deferred taxes is recognized on account of the above mentioned changes explained in notes (a) to (k)
51. Common control business combination
Under Indian GAAFJ for common control business combinations, restatement of prior period financial statements is not required.
Under Ind AS, for common control business combinations, the financial information in the financial statements in respect of prior periods should be restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination.
52. Investment property
Under Indian GAAFJ there is limited guidance on investment property.
Under Ind AS, investment property comprises of land or building held for earning rentals or for capital appreciation or both. Where a property is held for a currently undetermined future use, it is regarded as held for capital appreciation. Investment property is required to be measured at cost and is subsequently depreciated based on its useful life. Fair value of the investment property is to be disclosed at every reporting period end.
Mar 31, 2016
Basis used to determine the overall expected return:
Life Insurance Corporation of India (LIC) manages the investments of Employee Gratuity Scheme.
Expected rate of return on investments is determined based on the assessment made by the LIC at the
beginning of the year on the return expected on its existing portfolio, along with the estimated
incremental investments to be made during the year. Yield on the portfolio is calculated based on a
suitable mark-up over the benchmark Government securities of similar maturities.
a) Principal actuarial assumptions at the balance sheet date (expressed as weighted averages)
1 Discount rate as at 31 -03-2016 - 7.80%
2 Expected return on plan assets as at 31 -03-2016 - 9.00%
3 Salary growth rate: For Gratuity Scheme -10%
4 Attrition rate: For gratuity scheme the attrition rate is taken at 9.33%
5 The estimates of future salary increase considered in actuarial valuation take into account
inflation, seniority, promotion and other relevant factors, such as supply and demand in the
employment market.
b) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to
fifteen days salary last drawn for each completed year of service. The same is payable on
termination of service or retirement whichever is earlier. The benefit vests after five years of
continuous service.
2 Company''s Pension Plan:
The company operates a Pension Scheme for specified ex-employees wherein the beneficiaries are
entitled to defined monthly pension.
i) The Company expects to fund X 39,404,773 ^ 41,181,916/-) towards its gratuity plan in the
year2016-17.
C-1 Related Party Disclosures
(A) Names of the related party and nature of relationship where control exists
Sr. No. Name of the related party Nature of relationship
1 Karad Projects and Motors Limited Subsidiary Company
2 The Kolhapur Steel Limited Subsidiary Company
3 Kirloskar Systech Limited Subsidiary Company
4 Kirloskar Corrocoat Private Limited Subsidiary Company
5 Kirloskar Brothers International B. V. Subsidiary Company
6 SPP Pumps Limited Subsidiary of Kirloskar Brothers International B.V.
7 Kirloskar Brothers(Thailand) Limited Subsidiary of Kirloskar Brothers International B.V.
8 SPP Pumps (MENA) LLC Subsidiary of Kirloskar Brothers International B.V.
9 Kirloskar Pompen B. V Subsidiary of Kirloskar Brothers International B.V.
10 Micawber 784 (Proprietary Limited) Subsidiary of Kirloskar Brothers International B.V.
11 Kirloskar Brothers International PTY Ltd. Subsidiary of Kirloskar Brothers International B.V.
12 Certified Engines Limited Subsidiary of SPP Pumps Limited
13 SPP France S A S Subsidiary of SPP Pumps Limited
14 SPP Pumps, Inc. Subsidiary of SPP Pumps Limited
15 SPP Pumps France EURL Subsidiary of SPP Pumps Limited (up to 02.06.2015)
16 SPP Pumps Holdings LLC Subsidiary of SPP Pumps Limited (up to 20.07.2015)
17 SPP Pumps Management LLC Subsidiary of SPP Pumps Limited (up to 20.07.2015)
18 SPP Pumps (South Africa Pty.) Limited Subsidiary of Kirloskar Brothers International PTY Ltd.
19 Braybar Pumps (Proprietary) Limited Subsidiary of Kirloskar Brothers International PTY Ltd.
20 Rodelta Pumps International B.V. Subsidiary of Kirloskar Pompen B.V. (from 17.07.2015)
21 Rotaserve Overhaul B.V. Subsidiary of Kirloskar Pompen B.V. (from 04.01.2016)
22 SPP Pumps Real Estate LLC Subsidiary of SPP Pumps Inc.
23 SyncroFlo Inc. Subsidiary of SPP Pumps Inc.
(D) Names of related parties with whom transactions have been entered into:
1) Subsidiary Companies Karad Projects and Motors Limited
The Kolhapur Steel Limited
Kirloskar Systech Limited
Kirloskar Corrocoat Private Limited
SPP Pumps Limited
SPP Pumps (South Africa Pty.) Limited
SPP Pumps (MENA) LLC
SPP Pumps, Inc.
Kirloskar Pompen B.V.
Braybar Pumps (Proprietary) Limited
Kirloskar Brothers (Thailand) Limited
2) Joint Venture Kirloskar Ebara Pumps Limited
3) Key Management Personnel Mr. Sanjay Kirloskar
Mr. J. R. Sapre (up to May 31, 2015)
4) Relatives of Key Management Mrs. Pratima Kirloskar Wife of Mr. Sanjay Kirloskar Personnel Mr.
Alok Kirloskar Son of Mr. Sanjay Kirloskar
Mrs. Suman Kirloskar Mother of Mr. Sanjay Kirloskar
Ms. Rama Kirloskar Daughter of Mr. Sanjay Kirloskar
Ms. Preeti Sapre (up to May 31, 2015) Daughter of Mr. J. R. Sapre
5) Enterprises over which key
managerial personnel or their relatives Prakar Investments Private Limited exercise significant
influence
B Loans and advances in the nature of loans to firms/companies in which directors are interested:
NIL
C Investment by the loanee (borrower) in the shares of the Company or subsidiary of the Company :
NIL
Note:- Loans to employees including directors under various schemes of the company (such as housing
loan, furniture loan, education loan etc.) have been considered to be outside the purview of this
disclosure requirements.
c) Contingent liabilities, if any, incurred in relation to interest in Joint Ventures:
Rs,6,520,638/- (* 442,454/-)
d) Capital commitments, if any, in relation to interest in Joint Ventures: Rs, 22,374,462/-
(Rs,4,016,540/-)
C-2 Stock Option Schemes:
Under the Employees'' "Share a Vision" - Stock Option Scheme, 2007 (ESOS-2007), equity shares of Rs,
21- each would be issued and allotted against stock options, at an Exercise price of Rs, 200/- or
Rs, 21- per share based on performance and other eligibility criteria.
Subject to the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the terms of the ESOS - 2007, the options granted would
vest, after one year of the grant, in 3 annual installments of 30%, 30% and 40% and the same would
be exercisable within a period of 3 years from the date of vesting.
Ist tranche of options i.e. 30% of the total options have been vested on August 31, 2008. The
vesting of the IInd tranche (August 31,2009) stands cancelled due to non achievement of the
performance targets specified in the performance matrix. IIIrd tranche of options i.e. 40% of the
total options have been vested on August 31,2010.
The details of the grants under the Stock Option Scheme are summarized below.
C-3 Effective from April 1,2014 the Company has charged depreciation based on the revised
remaining useful life of the assets as per the requirement of Schedule II of the Companies Act,
2013. Due to above, depreciation charge for the year ended March 31,2015 is higher byRs,
153,496,015/-. Further, an amount of Rs,61,740,367/- (net of tax of Rs, 40,754,517/-) representing
the carrying amount of assets with revised useful life as nil, has been charged to the retained
earnings as on April 01,2014 pursuant to the Companies Act, 2013.
C-4 Kirloskar Brothers Limited(KBL) has infused additional Rs, 10 crores (Rs, 15 crores) by way of
preference shares during the current year in The Kolhapur Steel Limited its subsidiary company and
will continue to support its operations going forward as the KBL management is confident of its
growth and expects a turnaround in the near future.
C-5 Kirloskar Systech Limited (KSL), a wholly owned subsidiary of the Company has filed a Petition
to sanction the proposed scheme of amalgamation between KSL and the Company with the Honourable
High Court of Judicature at Bombay, on April 20, 2016. The said petition has been admitted by the
Honourable High Court subject to the compliance of certain conditions.
C-6 The figures have been regrouped / rearranged wherever necessary to confirm to current year''s
disclosure. Figures in bracket relate to previous year.
Mar 31, 2015
A) Rights of equity shareholder:
The company has only one class of equity shares, having par value of Rs.
2/- per share. Each holder of equity share is entitled to one vote per
share and has a right to receive dividend as recommended by the Board
of Directors subject to the necessary approval from the shareholders.
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
For the year ended March 31,2015 the Board of Directors have proposed
dividend of Rs. 0.50 (Rs. 2.50) per share subject to shareholders''
approval.
c) Details of share holders holding more than 5% shares
C-1 Contingent liabilities :
a) Claims against the company not acknowldged as debts
Alstom (Switzerland) Limited a foreign customer of KBL, has invoked
Arbitration clause as per contractual provisions and issued notice of
arbitration demanding a payment of EUR 5,295,000/- (7 359,080,425/-)
and GBP 3,215,000/-(Rs. 297,516,100/-) over quality issues. KBL''s
contention is that the pumps were supplied as per technical
specifications. KBL has replied to the Alstom''s notice of arbitration
and made a counter claim of EUR 1,161,688/- (7 78,779,872/-). Both
parties have appointed their respective arbitrators and the arbitrators
are yet to appoint the presiding arbitrator. Once the arbitral tribunal
is constituted, arbitration proceedings will commence.
Basis used to determine the overall expected return:
Life Insurance Corporation of India (LIC) manages the investments of
Employee Gratuity Scheme. Expected rate of return on investments is
determined based on the assessment made by the LIC at the beginning of
the year on the return expected on its existing portfolio, along with
the estimated incremental investments to be made during the year. Yield
on the portfolio is calculated based on a suitable mark-up over the
benchmark Government securities of similar maturities.
f) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages)
1 Discount rate as at 31-03-2015 - 7.80%
2 Expected return on plan assets as at 31-03-2015 - 9.00%
3 Salary growth rate : For Gratuity Scheme - 10%
4 Attrition rate: For gratuity scheme the attrition rate is taken at
9.25%
5 The estimates of future salary increase considered in actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
h) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled
to the benefit equivalent to fifteen days salary last drawn for each
completed year of service. The same is payable on termination of
service or retirement whichever is earlier. The benefit vests after
five years of continuous service.
i) The Company expects to fund Rs. 41,181,916/- (Rs. 31,085,773/-) towards
its gratuity plan in the year 2015-16.
2 Company''s Pension Plan:
The company operates a Pension Scheme for specified ex-employees
wherein the beneficiaries are entitled to defined monthly pension.
C-17 Related Party Disclosures
(A) Names of the related party and nature of relationship where control
exists
Name of the related party Nature of relationship
1 Karad Projects and Motors Limited Subsidiary Company
2 The Kolhapur Steel Limited Subsidiary Company
3 Kirloskar Systech Limited Subsidiary Company
4 Kirloskar Corrocoat Private Limited Subsidiary Company
5 Kirloskar Brothers International B V Subsidiary Company
6 SPP Pumps Limited Subsidiary of Kirloskar
Brothers International B.V
7 Kirloskar Brothers(Thailand) Limited Subsidiary of Kirloskar
Brothers International B.V
8 SPP Pumps (MENA) L.L.C. Subsidiary of Kirloskar
Brothers International B.V
9 Kirloskar P°mpen I3.V Subsidiary of Kirloskar
Brothers International B.V
(earstwhile Kirloskar
Brothers Europe B V)
10 Micawber 784 (Proprietary Limited) Subsidiary of Kirloskar
Brothers International
PTY Ltd.
11 Kirloskar Brothers International
PTY Ltd. Subsidiary of Kirloskar
Brothers International B.V
12 SPP Pumps France EURL Subsidiary of SPP Pumps
Limited
13 Certified Engines Limited Subsidiary of SPP Pumps
Limited
14 SPP Pumps (South Africa Pty.) Limited Subsidiary of Kirloskar
Brothers International
PTY Ltd.
15 SPP Pumps Holdings LLC Subsidiary of SPP Pumps
Limited
16 SPP Pumps Management LLC Subsidiary of SPP Pumps
Limited
17 SPP France S A S Subsidiary of SPP Pumps
Limited
18 SPP Pumps LP(doing business as SPP
Pumps Inc) Owned by Partnership
firm of SPP Pumps Holding
19 SPP Pumps Real Estate LLC Owned by SPP Pumps LP
20 Braybar Pumps (Proprietary) Limited Subsidiary of Kirloskar
Brothers International
PTY Ltd.
21 SyncroFlo Inc. Owned by SPP Pumps LP
(D) Names of related parties with whom transactions have been entered
into:
1) Subsidiary Companies :
Karad Projects and Motors Limited
The Kolhapur Steel Limited
Kirloskar Systech Limited
Kirloskar Corrocoat Private Limited
SPP Pumps Limited
SPP Pumps (South Africa Pty.) Limited
SPP Pumps (MENA) LLC
SPP Pumps LPd/b/a SPP Pumps , Inc.
Kirloskar Pompen B.V
Braybar Pumps (Proprietary) Limited
Kirloskar Brothers (Thailand) Limited
2) Joint Venture Kirloskar Ebara Pumps Limited
3) Key Management Personnel Mr. Sanjay Kirloskar
Mr. J R Sapre
4) Relatives of Key Management Personnel
Mrs. Pratima Kirloskar Wife of Mr. Sanjay Kirloskar
Mr. Alok Kirloskar Son of Mr. Sanjay Kirloskar
Mrs. Suman Kirloskar Mother of Mr. Sanjay Kirloskar
Ms. Rama Kirloskar Daughter of Mr. Sanjay Kirloskar
Ms. Preeti Sapre Daughter of Mr. J R Sapre
5) Enterprises over which key managerial personnel or their relatives
exercise significant influence : Kirloskar Proprietary Limited
C Loans and advances in the nature of loans to firms/companies in which
directors are interested: NIL
D Investment by the loanee (borrower) in the shares of the Company or
subsidiary of the Company : NIL
Note:- Loans to employees including directors under various schemes of
the company (such as housing loan, furniture loan, education loan etc.)
have been considered to be outside the purview of this disclosure
requirement.
c) Contingent liabilities , if any , incurred in relation to interest
in Joint Ventures : Nil (Rs 1,052,807/)
d) Capital commitments , if any , in relation to interest in Joint
Ventures : Nil (Rs 11,539,847/-)
e) List of Jointly controlled operations :
Name of the Jointly Description Ownership Country of
controlled operation Interest Incorpor-
ation
HCC - KBL Jointly controlled N A India
operations
KBL - MCCL Jointly controlled N A India
operations
KCCPL - IHP - BRC - Jointly controlled N A India
TAIPPL - KBL JV operations
IVRCL - KBL JV Jointly controlled N A India
operations
Maytas - KBL JV Jointly controlled N A India
operations
Larsen & Toubro - KBL JV Jointly controlled N A India
operations
KBL-MEIL-KCCPL JV Jointly controlled N A India
operations
KBL - PLR JV Jointly controlled N A India
operations
KBL - Koya - VA Tech Jointly controlled N A India
operations
KBL - PIL Consortium Jointly controlled N A India
operations
Larsen & Toubro - Jointly controlled N A India
KBL - Maytas operations
IVRCL - KBL - MEIL Jointly controlled N A India
operations
Pioneer - Avantica - Jointly controlled N A India
ZVS - KBL operations
AMR - Maytas - KBL - WEG Jointly controlled N A India
operations
Indu - Shrinivasa JV Jointly controlled N A India
Constructions - KBL - WEG operations
MEIL - KBL - IVRCL Jointly controlled N A India
operations
MEIL - Maytas - KBL Jointly controlled N A India
operations
KCCPL - TAIPPL - KBL Jointly controlled N A India
operations
KBL-SPML Jointly controlled N A India
operations
MEIL - KBL JV Jointly controlled N A India
operations
KIRLOSKAR - MEMWPL JV Jointly controlled N A India
operations
MAYTAS - MEIL - KBL JV Jointly controlled N A India
operations
Gondwana - KBL JV Jointly controlled N A India
operations
MEIL -PRASAD-KBL CONSORTIUM Jointly controlled N A India
operations
JCPL - MEIL - KBL CONSORTIUM Jointly controlled N A India
operations
KBL -PTIL UJV Jointly controlled N A India
operations
KBL - RATNA - JOINT VENTURE Jointly controlled N A India
operations
MEIL-KBL-WEG CONSORTIUM Jointly controlled N A India
operations
MEIL-KBL- ( KDWSP ) Jointly controlled N A India
operations
KBL and TCIPL JOINT VENTURE Jointly controlled N A India
operations
ACPL & KBL JV Jointly controlled N A India
operations
Kirloskar Brothers Ltd. JV Jointly controlled N A India
operations
ITD CEMENTATION INDIA Ltd JV Jointly controlled N A India
operations
GSJ - KBL JV Jointly controlled N A India
operations
JBL-KBL-GSJ JV Jointly controlled N A India
operations
KBL SYNERGE JV Jointly controlled N A India
operations
C-22 Stock Option Schemes:
Under the Employees'' "Share a Vision" - Stock Option Scheme, 2007
(ESOS-2007), equity shares of Rs. 2/- each would be issued and allotted
against stock options, at an Exercise price of Rs. 200/- or Rs. 2/- per
share based on performance and other eligibility criteria.
Subject to the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and
the terms of the ESOS - 2007, the options granted would vest, after one
year of the grant, in 3 annual instalments of 30%, 30% and 40% and the
same would be exercisable within a period of 3 years from the date of
vesting.
Ist tranche of options i.e. 30% of the total options have been vested
on August 31,2008. The vesting of the IInd tranche (August 31,2009)
stands cancelled due to non achievement of the performance targets
specified in the performance matrix. IlIrd tranche of options i.e. 40%
of the total options have been vested on August 31, 2010.
The details of the grants under the Stock Option Scheme are summarised
hereinafter.
C-23 The identification of suppliers as micro, small and medium
enterprise defined under "The Micro, Small and Medium Enterprises
Development Act, 2006" was done on the basis of information to the
extent provided by the suppliers of the Company. There were no
outstanding dues to micro, small and medium enterprises which were
outstanding for more than the stipulated period.
C-24 Effective from April 1,2014 the Company has charged depreciation
based on the revised remaining useful life of the assets as per the
requirement of Schedule 11 of the Companies Act, 2013. Due to above,
depreciation charge for the year ended March 31,2015 is higher by Rs.
153,496,015/-. Further, an amount of Rs. 61,740,367/- (net of tax of Rs.
40,754,517/-) representing the carrying amount of assets with revised
useful life as nil, has been charged to the retained earnings as on
April 01,2014 pursuant to the Companies Act, 2013.
C-25 During the year Company has purchased additional 40,000 shares at
fair value in its wholly own subsidiary Kirloskar Systech Ltd as part
of business strategy in exchange of certain fixed assets.
C-26 The net worth of The Kolhapur Steel Ltd. (TKSL), a subsidiary
company of Kirloskar Brothers Ltd. (KBL) has turned negative in
previous year and the company has made an application to Board of
Industrial Financial Reconstruction (BIFR) under Sick Industrial
Companies Act, 1985.(SICA). KBL has infused Rs. 150,000,000/- by way of
preference shares during the current year and will continue to support
its operations going forward as the KBL management is confident of its
growth and expects a turnaround in the near future. In view of the same
and taking into consideration the realizable value of TKSL''s assets,
diminution in value of KBL''s investment in TKSL is temporary in
nature and as such no provision for the same is considered necessary as
per AS-13, Accounting for Investment, notified under The Companies
(Accounts) Rules, 2014.
C-27 The company as per its policy on Corporate Social Responsibility
has spent Rs. 45,000,000/- towards education in the current financial
year through a registered trust and debited surplus account under
Reserves and Surplus.
C-28 The previous year''s figures have been regrouped / rearranged
wherever necessary to conform to current year''s disclosure. Figures
in bracket relate to previous year.
Mar 31, 2014
Corporate information
Kirloskar Brothers Limited (KBL) is a public company domiciled in India
and incorporated under the provisions of the Companies Act, 1956. KBL
is engaged in providing global fluid management solutions and is the
largest manufacturer and exporter of centrifugal pumps and valves from
India. The core businesses of the company are large infrastructure
projects (Water Supply, Power Plants and Irrigation), Project and
Engineered Pumps, Industrial Pumps, Agriculture and Domestic Pumps,
Valves, Motors and Hydro turbines.
Rs.
Figures as at the Figures as at the
end of current end of previous
reporting period reporting period
ending on ending on
March 31, 2014 March 31, 2013
C-1 Contingent liabilities not provided for in respect of:
a) Guarantees:
By the Company to Citibank N A. on behalf of SPP
Pumps Ltd., UK [USD-10,500,000] 629,055,000 572,775,000
By the Company to Weatherford
Oil Tool Middle East Ltd.
on behalf of SPP Pumps Ltd.,UK
[GBP- 89,785] 8,934,416 -
By the Company to Citibank N. A.
on behalf of Kirloskar Brothers
(Thailand) Ltd. [USD-3,000,000] 179,730,000 163,650,000
By the Company to Citibank N. A.
on behalf of Kirloskar
Brothers Europe B.V.
[USD- 5,000,000] 299,550,000 272,750,000
By the Company to Citibank N. A.
on behalf of Braybar Pumps
(Proprietary) Ltd. [USD-2,000,000] 119,820,000 109,100,000
By the Company to Citibank N. A.
on behalf of erstwhile Hematic
MotorsPvt. Ltd. (Now Karad Projects
and Motors Ltd.)[USD-6,000,000] 359,460,000 327,300,000
By the Company to Indian Overseas
Bank Ltd. on behalf of erstwhile
Kirloskar Constructions &
Engineers Ltd., Chennai
(Now Karad Projects and
Motors Ltd.) 500,000,000 500,000,000
b) Other money for which the Company is contingently liable for
i) Central Excise and Service tax
(Matter Subjudice) 1,104,102,095 667,822,343
li) Sales Tax (Matter Subjudice) 193,552,873 83,439,571
lii) Income Tax (Matter Subjudice) 738,708,203 738,172,539
iv) Labour Matters
(Matter Subjudice) 48,119,314 42,793,722
v) Other Legal Cases
(Matter Subjudice) 72,590,410 560,307,661
vil I etters of Credit
Outstanriinn 629.139.241 677 131468
C-11 Employee Benefits:
i Defined Contribution Plans:
Amount of Rs. 47,093,714/- (Rs. 41,338,375 /-) is recognised as an expense
and included in "Employees benefits expense" (PartA-22)inthe Profit and
Loss Account.
Basis used to determine the overall expected return:
Life Insurance Corporation of India (LIC) manages the investments of
Employee Gratuity Scheme. Expected rate of return on investments is
determined based on the assessment made by the LIC at the beginning of
the year on the return expected on its existing portfolio, along with
the estimated incremental investments to be made during the year. Yield
on the portfolio is calculated based on a suitable mark-up over the
benchmark Government securities of similar maturities.
f) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages)
1 Discount rate as at 31 -03-2014 - 9.20%
2 Expected return on plan assets as at 31 -03-2014 - 9%
3 Salary growth rate: For Gratuity Scheme -11 %
4 Attrition rate: For gratuity scheme the attrition rate is taken at 6%
5 The estimates of future salary increase considered in actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
h) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled
to the benefit equivalent to fifteen days salary last drawn for each
completed year of service. The same is payable on termination of
service or retirement whichever is earlier. The benefit vests after
five years of continuous service.
2 Company''s Pension Plan:
The Company operates a Pension Scheme for specified ex-employees
wherein the beneficiaries are entitled to defined monthly pension.
i) The Company expects to fund Rs. 31,085,373/- (Rs. 23,197,736/-) towards
its gratuity plan in the year 2014-15.
C-17 (D) Names of related parties with whom transactions have been
entered into:
1) Subsidiary companies
Karad Projects and Motors Limited
The Kolhapur Steel Limited
Kirloskar Systech Limited
Kirloskar Corrocoat Private Limited
SPP Pumps Limited
SPP Pumps (South Africa) (Pty.) Limited
SPP Pumps (MENA) LLC
SPP Pumps LP (doing business as SSP Pumps, INC)
Kirloskar Brothers Europe B.V.
Braybar Pumps (Proprietary) Limited
Kirloskar Brothers (Thailand) Limited
2) Joint Venture Kirloskar Ebara Pumps Limited
3) Key Management Personnel
Mr. Sanjay Kirloskar Mr. J R Sapre
4) Relatives of Key Management Personnel
Mrs. Pratima Kirloskar Wife of Mr. Sanjay Kirloskar
Mr. Alok Kirloskar Son of Mr. Sanjay Kirloskar
Mrs. Suman Kirloskar Mother of Mr. Sanjay Kirloskar
Ms. Preeti Sapre Daughter of Mr. J R Sapre
5) Enterprises over which key managerial personnel or their relatives
exercise significant influence
Kirloskar Proprietary Limited
C Loans and advances in the nature of loans to firms/companies in which
directors are interested: NIL D Investment by the loanee (borrower) in
the shares of the Company or subsidiary of the Company: NIL
Note:- Loans to employees including directors under various schemes of
the Company (such as housing loan, furniture loan; education loan etc.)
have been considered to be outside the purview of this disclosure
requirements.
c) Contingent liabilities, if any, incurred in relation to interest in
Joint Ventures : Rs. 1,052,807/- (Rs. 1,052,807/-)
d) Capital commitments, if any, in relation to interest in Joint
Ventures : Rs. 11,539,847/- (Rs. 4,809,255/-)
C-22 Employees Stock Option Schemes:
U nder the Employees'' "Share a Vision" - Stock Option Scheme, 2007
(ESOS-2007), equity shares of Rs. 21- each would be issued and allotted
against stock options, at an Exercise price of Rs. 200/- or Rs. 21- per
share based on performance and other eligibility criteria.
Subject to the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and
the terms of the ESOS-2007, the options granted would vest, after one
year of the grant, in 3 annual instalments of 30%, 30% and 40% and the
same would be exercisable within a period of 3 years from the date
ofvesting.
Ist tranche of options i.e. 30% of the total options have been vested
on August 31, 2008. The vesting of the IInd tranche (August 31, 2009)
stands cancelled due to non achievement of the performance targets
specified in the performance matrix. IIIrd tranche of options i.e. 40%
of the total options have been vested on August 31,2010.
The details of the grants under the Stock Option Scheme are summarised
below.
C-23 As per the information available with the Company till date; none
of the suppliers have informed the Company about their having
registered themselves under the "Micro, Small and Medium Enterprises
Development Act, 2006". As such, information as required under this
Act, cannot be compiled and therefore, not disclosed for the year
C-24 Exceptional item represents net foreign exchange loss.
C-25 During the year, Company has executed an agreement with Kirloskar
Systech Ltd. (KSL), a Company''s wholly owned subsidiary company for
transfer of certain assets as a part of business strategy.
C-26 The figures have been regrouped / rearranged wherever necessary.
Figures in bracket relate to previous year.
Mar 31, 2013
Corporate information
Kirloskar Brothers Limited (KBL) is a public company domiciled in India
and incorporated under the provisions of the Companies Act, 1956. KBL
is engaged in providing global fluid management solutions and is the
largest manufacturer and exporter of centrifugal pumps and valves from
India. The core businesses of the company are large infrastructure
projects (Water Supply, Power Plants, and Irrigation), Project and
Engineered Pumps, Industrial Pumps, Agriculture and Domestic Pumps,
Valves, Motors and Hydro turbines.
Basis used to determine the overall expected return:
Life Insurance Corporation of India (LIC) manages the investments of
Employee Gratuity Scheme. Expected rate of return on investments is
determined based on the assessment made by the LIC at the beginning of
the year on the return expected on its existing portfolio, along with
the estimated incremental investments to be made during the year. Yield
on the portfolio is calculated based on a suitable mark-up over the
benchmark Government securities of similar maturities.
a) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages)
1 Discount rate as at 31-03-2013 - 7.9%
2 Expected return on plan assets as at 31-03-2013 - 9.0%
3 Salary growth rate : For Gratuity Scheme - 10%
4 Attrition rate: For gratuity scheme - 15%
5 The estimates of future salary increases considered in actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
b) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled
to the benefit equivalent to fifteen days salary last drawn for each
completed year of service. The same is payable on termination of
service or retirement whichever is earlier. The benefit vests after
five years of continuous service.
2 Company''s Pension Plan:
The company operates a pension scheme for specified ex-employees
wherein the beneficiaries are entitled to defined monthly pension.
A Loans and advances in the nature of loans to firms/companies in which
directors are interested: NIL
B Investment by the loanee (borrower) in the shares of the Company or
subsidiary of the Company : NIL
Note:- Loans to employees including directors under various schemes of
the company (such as housing loan, furniture loan, education loan etc.)
have been considered to be outside the purview of this disclosure
requirements.
A-1 Employees Stock Option Scheme :
Under the Employees'' "Share a Vision" - Stock Option Scheme, 2007
(ESOS-2007), equity shares of Rs. 2/- each would be issued and allotted
against stock options, at an Exercise price of Rs. 200/- or Rs. 2/- per
share based on performance and other eligibility criteria.
Subject to the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and
the terms of the ESOS - 2007, the options granted would vest, after one
year of the grant, in 3 annual instalments of 30%, 30% and 40% and the
same would be exercisable within a period of 3 years from the date of
vesting.
Ist tranche of options i.e. 30% of the total options have been vested
on August 31, 2008. The vesting of the IInd tranche (August 31, 2009)
stands cancelled due to non achievement of the performance targets
specified in the performance matrix. IIIrd tranche of options i.e. 40%
of the total options have been vested on August 31, 2010.
The details of the grants under the Stock Option Scheme are summarised
below.
A-2 As per the information available with the Company till date none
of the suppliers have informed the company about their having
registered themselves under the "Micro, Small and Medium Enterprises
Development Act, 2006". As such, information as required under this
Act, cannot be compiled and therefore, not disclosed for the year.
A-3 The Income Tax department based on its survey, had raised
additional tax liability on the Company, which has been paid during the
quarter ending March 31, 2013. The short provision for tax in respect
of earlier years, consequent to the additional tax claim, has been
appropriately provided and disclosed by the Company in the financial
for the year ended on March 31, 2013.
A-4 The figures have been regrouped / rearranged wherever necessary.
Figures in bracket relate to previous year.
Mar 31, 2012
1. Figures as at the Figures as at the
end of current end of previous
reporting period reporting period
ending on ending on
March 31, 2012 March 31, 2011
C-2 Contingent liabilities not
provided for in respect of :
a) Guarantees:
By the company to ICICI Bank Ltd.
on behalf of SPP Pumps Ltd., UK, 570,192,000 506,170,000
(GBP 7,000,000)
By the company to Barclays Bank
Ltd. on behalf of SPP
Pumps Ltd., UK - 289,240,000
(GBP 4,000,000)
By the company to Citibank N.A.on
behalf of SPP Pumps Ltd, UK 534,135,000 578,480,000
(USD 10,500,000)(GBP 8,000,000)
By the company to Indian
Overseas Bank
Ltd., on behalf of Kirloskar
Construction and Engineers Ltd.,
Chennai 800,000,000 800,000,000
By the company to Bank of
Maharashtra
on behalf of Gondwana 82,500,000 82,500,000
By the company to Citibank
N. A. on
behalf of Kirloskar Brothers 152 610,000 44,820,000
(Thailand) Ltd.,
[ (USD 3,000,000 (1,000,000) ]
By the company to Citibank
N. A. on
behalf of Kirloskar Brothers
Europe B V (USD 5,000,000) 254,350,000 -
By the company to Citibank N. A.
on behalf of Braybar Pumps 101,740,000 -
(USD 2,000,000)
By the company to Citibank
N. A. on
behalf of Hematic Motors Pvt Ltd. 254,350,000 -
(USD 5,000,000)
b) Central Excise and Service tax
(Matter Subjudice) 209,270,117 35,401,656
c) Sales Tax (Matter Subjudice) 89,608,533 91,450,224
d) Income Tax (Matter Subjudice) 871,135,476 861,935,476
e) Labour Matters
(Matter Subjudice) 40,055,045 40,864,825
f) Other Legal Cases
( Matter Subjudice ) 560,307,661 535,279,635
g) Letters of Credit Outstanding1,170,034,222 3,273,973,870
C-12 Employee Benefits :
i Defined Contribution Plans:
Amount of Rs. 36,509,153/- (Rs. 41,627,171/-) is recognised as an expense
and included in "Employees benefits expense" (Part A-22) in the Profit
and Loss Account.
f) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages)
1 Discount rate as at 31-03-2012 - 8.5%
2 Expected return on plan assets as at 31-03-2012 - 9.0%
3 Salary growth rate : For Gratuity Scheme - 10%
4 Attrition rate: For gratuity scheme the attrition rate is taken at
15%
5 The estimates of future salary increases considered in actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
h) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled
to the benefit equivalent to fifteen days salary last drawn for each
completed year of service. The same is payable on termination of
service or retirement whichever is earlier. The benefit vests after
five years of continuous service.
2 Company's Pension Plan:
The company operates a pension scheme for specified ex-employees
wherein the beneficiaries are entitled to defined monthly pension.
C-23 Employee Stock Option Scheme
Under the Employees' ÃShare a Visionà à Stock Option Scheme, 2007
(ESOS-2007), equity shares of Rs. 2/- each would be issued and allotted
against stock options, at an Exercise price of Rs. 200/- Rs. 2/- per share
based on performance and other eligibility criteria.
Subject to the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and
the terms of the ESOS Ã 2007, the options granted would vest, after one
year of the grant, in 3 annual instalments of 30%, 30% and 40% and the
same would be exercisable within a period of 3 years from the date of
vesting.
Ist tranche of options i.e. 30% of the total options have been vested
on August 31, 2008. The vesting of the IInd tranche (August 31, 2009)
stands cancelled due to non achievement of the performance targets
specified in the performance matrix. IIIrd tranche of options i.e. 40%
of the total options have been vested on August 31, 2010.
The details of the grants under the Stock Option Scheme are summarised
below.
C-24 As per the information available with the Company till date; none
of the suppliers have informed the company about their having
registered themselves under the "Micro, Small and Medium Enterprises
Development Act, 2006". As such, information as required under this
Act, cannot be compiled and therefore, not disclosed for the year.
C-25 On September 13, 2011 the Company has formed a subsidiary company
in Egypt namely SPP Pumps (MENA) LLC through its Wholly Owned
Subsidiary - Kirloskar Brothers International B. V., Netherlands (KBI
BV). KBI BV holds 100% equity in SPP Pumps (MENA) LLC.
C-26 In terms of the Scheme of Arrangement and in accordance with the
Honorable Bombay High Court orders dated April 23, 2010, 2,500 equity
shares of Rs. 2/- each were reduced against earlier 10,000 equity shares
of Rs. 2/- each, earlier kept in abeyance.
C-27 On May 14, 2011, Company has sold its 100% investment in its
subsidiary Gondwana Engineers Limited to Doshion Veolia Water Solution
Pvt. Ltd., Ahmedabad for Rs. 474,400,000/-.
C-28 Kirloskar Construction and Engineers Ltd. had assigned claims of Rs.
735,118,217/- to Kirloskar Brothers Ltd. After all out efforts to
recover the claims, the Company is of the view that claims of Rs.
65,117,000/- are recoverable, claims of Rs. 147,725,744/- are to be
provided for in view of the pending legal cases and claims of Rs.
485,487,034/- are considered as irrecoverable at the year end.
The Company management has therefore decided to give effect to the
above in its books of accounts. C-29 The figures have been regrouped /
rearranged wherever necessary. Figures in bracket relate to previous
year.
Mar 31, 2010
1 Interest paid -others Rs.251,349,429/- (Rs.256,796,495/-) is net of
Rs.23,369,940/- (Rs.27,020,156/-) being interest received from
customers and on deposits. [Tax deducted at source Rs.2,219,806/- (Rs.
1,724,577/-)]
2 Net gain (loss) on foreign currency transactions on revenue accounts
recognised in the Profit and Loss Account is
Rs.61,235,183/-(Rs.107,867,741/-).
3 Contingent liabilities not provided for in respect of:
2010 2009
Rupees Rupees
a) Guarantees:
By the company to ICICI Bank Ltd.
on behalf of
SPP Pumps Ltd. (GBP 3,500,000) 239,540,000 257.320,000
By the company to Barclays Bank Ltd.
on behalf of
SPP Pumps Ltd. (GBP 4,000,000) 273,760,000 294,080,000
By the company to Citi Bank N A.
on behalf of
SPP Pumps Ltd. (GBP 8,000,000) 547,520,000 588,160,000
By the company to Indian Overseas Bank
Ltd. on behalf of Kirloskar Constructions
& Engineers Ltd., Chennai 800,000,000 800,000,000
By the company to Bank of Maharashtra
on behalf of
Gondwana Engineers Limited 145,000,000 145,000,000
By the company to Citi Bank N.A.
on behalf of Kirloskar Brothers
(Thailand) Ltd, (USD 500,000) 22,640,000 -
b) Central Excise (Matter Subjudice) 30,627,618 14,347,263
c) Sales Tax (Matter Subjudice) 89,009,579 89,056,373
d) Income Tax (Matter Subjudice) 522,425,350 395,323,477
e) Labour Matters (Matter Subjudice) 37,474,843 39,278,282
f) Other Legal Cases (Matter Subjudice) 585,161,252 18,792,301
g) Letters of Credit Outstanding 2,201,793,248 2,366,640,832
4 Employee Benefits :
i Defined Contribution Plans:
Amount of Rs. 50,678,337/- (Rs. 43,120,522/-) is recognised as an
expense and included in "Payments and Benefits to Employees" (Schedule
21) in the Profit and Loss Account.
Basis used to determine the overall expected return:
Life Insurance Corporation (LIC) manages the investments of Employee
Gratuity Scheme. Expected rate of return on investments is determined
based on the assessment made by the LIC at the beginning of the year on
the return expected on its existing portfolio, along with the estimated
incremental investments to be made during the year. Yield on the
portfolio is calculated based on a suitable mark-up over the benchmark
Government securities of similar maturities.
f) Principal actuarial assumptions at the balance sheet date (expressed
as weighted averages)
1 Discount rate as at 31-03-2010 - 7.5%
2 Expected return on plan assets as at 31 -03-2010 - 9%
3 Salary growth rate: For Gratuity Scheme -10%
4 Attrition rate: For gratuity scheme-19%
5 The estimates of future salary increases considered in actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
h) General descriptions of defined plans:
1 Gratuity Plan:
The Company operates gratuity plan wherein every employee is entitled
to the benefit equivalent to fifteen days salary last drawn for each
completed year of service. The same is payable on termination of
service or retirement whichever is earlier. The benefit vests after
five years of continuous service.
2 Companys Pension Plan:
The company operates a Pension Scheme for specified ex-employees
wherein the beneficiaries are entitled to defined monthly pension.
Notes :
a) Licensed Capacity includes registered capacities for activities
existing prior to the Industries (Development Regulation) Act, 1951,
but does not include licenses held for captive capacities.
b) It is not practicable to indicate precisely installed capacity of
each type of product manufactured by the Company, as the capacity of
various facilities avaiiable is overlapping for each product. Besides,
the Company manufactures a very large range amongst the licensed
products which, in turn, is decided by actual demand from time to time.
Also the Company buys components, parts and other services from
outside. The installed capacities as indicated above are estimates as
certified by the Managing Director and accepted by the Auditors.
c) In terms of notification no. 477E dt. 25-7-91 issued by Department
of Industrial Development, industrial licenses are not required for the
products manufactured by the Company except centrifugal pumps
manufactured at Dewas below 10 cm x 10 cm which are reserved for small
scale sector. Revalidation of industrial license in this range of pumps
is under process.
C Loans and advances in the nature of loans to firms/Companies in which
directors are interested: NIL
D Investment by the loanee (borrower) in the shares of the Company or
subsidiary of the Company: NIL
Note: Loans to employees including directors under various schemes of
the company (such as housing loan, furniture loan, education loan etc.)
have been considered to be outside the purview of this disclosure
requirements.
Product Warranty
Accruals have been made in respect of warranties given by the Company
for the sales made and services rendered during the year based on past
experience.
6. Stock Option Scheme
a) The grant of options to the employees under the Stock Option Scheme
is on the basis of their performance and other eligibility criteria.
The Options are vested over a period of three years subject to the
discretion of the Management and fulfilment of certain conditions.
b) The maximum term of ESOP is three years from the vesting date. The
ESOP will be settled in the form of Equity Shares.
7. As per the information available with the Company till date; none
of the suppliers have informed the Company about their having
registered themselves under the "Micro, Small and Medium Enterprises
Development Act, 2006". As such, information as required under this
Act, cannot be compiled with and therefore, not disclosed for the year.
8. A Scheme of Arrangement between Kirloskar Brothers Limited
(Company), Kirloskar Brothers Investments Limited (KBIL) and their
respective shareholders, was duly approved by all the requisite
regulatory authorities including Honourable High Court of Judicature at
Bombay.
The Company has complied with the conditions stipulated in the High
Court order and effective-date of the scheme is March 2, 2010. The
appointed date of Scheme of Arrangement is April 16, 2009. As
contemplated in the scheme, certain specified investments, as listed in
the Scheme of Arrangement, held by the Company stand transferred to and
vested in KBIL without any further acts, deeds and actions.
The subscribed and paid-up equity share capital of the Company which
was Rs. 211,528,710/- consisting of 105,764,355 equity shares of Rs.
21- each stands reduced to Rs. 158,646,532/- consisting of 79,323,266
equity shares of Rs. 21- each. This excludes further subscribed and
Paid-up equity share capital of Rs. 20,000/- consisting of 10,000
equity shares of Rs. 21- each, issued and allotted under the Companys
Employees Stock Option Scheme during the year. These 10,000 shares are
kept in abeyance for want of specific Bombay High Court orders for
giving effect to terms of scheme with regard to capital reduction in
the Company.
Pursuant to the scheme, the carrying cost of investments transferred
and the amount of the reduction in the share capital of the Company has
been charged / credited to the General Reserve. The Company has also
written off the amount of the original investment made during the
current year in KBIL. Pursuant to the scheme, every shareholder in the
Company has been issued specified shares in KBIL.
9. On September 19, 2009, Bettervalue Holdings Private Limited
(BVHPL) has sold all the shares held of Kirloskar Brothers Limited,
through inter se transfer amongst the group, to other promoters. As a
result, BVHPL has ceased to be the holding company of Kirloskar
Brothers Limited.
10. On November 12, 2009, Kirloskar Brothers Limited has acquired
additional shares of the following companies and has become the holding
company of these companies:
- Kirloskar Corrocoat Pvt. Ltd.
- Hematic Motors Pvt. Ltd.
- Pressmatic Electro Stampings Pvt. Ltd.
- Quadromatic Engineering Pvt. Ltd.
Prior to the above acquisition of additional shares, Kirloskar
Corrocoat Pvt Ltd was only a joint venture company and the other
companies were fellow subsidiary companies.
11. On February 15, 2010, Kirloskar Brothers Limited (KBL) has sold
the shares held in its Wholly Owned Subsidiary - SPP Pumps Ltd (SPP) to
its Wholly Owned Subsidiary based in the Netherlands, namely Kirloskar
Brothers International B.V (KBI). KBI has issued 1000 shares of Euro
100 each to KBL at a premium, towards the consideration for transfer of
SPP shares to them by KBL.
12. The figures have been regrouped / rearranged wherever necessary.
Figures in bracket relate to previous year.
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