Kirloskar Brothers Investments Ltd Management Discussions

KIRLOSKAR BROTHERS INVESTMENTS LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS The Company commenced business in February 2011 after qualifying as a Core Investment Company - Non Banking Financial Company (CIC-NBFC). Majority of the investments of the Company is in the form of strategic investments in Kirloskar Group Companies. During the year under review the Company has formed an Investment Committee of the Board of Directors for considering the options for investment of available surplus funds. During the year under review, on account of acquisition of equity shares of Kirloskar Oil Engines Limited (KOEL) and Kirloskar Pneumatic Company Limited (KPC) and as a result of Amalgamation of Pooja Credits Private Limited with the Company, KOEL and KPC have become subsidiaries of the Company. Consequently, the dividends declared by the Company, to the extent of dividends received from KOEL and KPC are exempt from payment of Dividend Distribution Tax. COMPANY PERFORMANCE: During the financial year under review, your Company achieved an income of Rs. 156.20 Crores (previous year Rs. 30.57 Crores). The net profit after tax is Rs. 130.92 Crores (previous year Rs. 28.88 Crores). OPERATIONS OF THE COMPANY: The main operations of the Company are that of an investment company, and majority of the investments of the Company are in the nature of strategic investments in Kirloskar Group Companies. The investment pattern of the Company also complies with the requirement for the Company continuing to qualify as a Core Investment Company - Non Banking Financial Company (CIC- NBFC). The source of income for the Company is in the form of dividends as declared by these companies. HUMAN RESOURCES: As on 31 March 2012, the Company has 6 employees on its roll, including the Executive Director and Assistant Company Secretary. During the year under review, the organization structure and human resource policies have been put in place. CONCERNS AND THREATS: * Fluctuations in the securities market and global economic scenario, may pose a risk of devaluation of the investments made by the Company. * Only source of income for the Company is dividend, mainly from its Subsidiary Companies. * The risks and concerns associated with the businesses/operations of these investee companies, which may impact the performance of these companies, could result in variation in dividends declared by these companies. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has adequate internal control systems to ensure operational efficiency, accuracy and promptness in financial reporting and compliance of various laws and regulations. The internal control system is supported by the internal audit process. An Internal Auditor has been appointed for this purpose. The Audit Committee of the Board reviews the Internal Audit Report and the adequacy and effectiveness of internal controls periodically. CAUTIONARY STATEMENT: Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.