Dear Members,
 
 The Directors present the 41st Annual Report on the business and
 operations of Kinetic Engineering Limited and the Audited Financial
 Accounts for the financial year ended 31st March, 2012.
 
 Financial Highlights
 
 During Financial Year 2011-12, the total revenue was Rs. 101.93 crore,
 while the net loss after tax was Rs. 6.93 crore.
 
 During Financial Year 2011-12, the materials cost reduced from 66.07 %
 to 64.68 % over the last year and the operating cash profit improved
 from (294) lac to 154 lac.
 
 In financial Year 2011-12 the company also registered an EBITDA of Rs.
 9.32 crore.
 
 During the Financial Year 2011-12 there was a marginal reduction of the
 revenue from operations - Rs. 83.07 crore in FY 2011-12 against Rs.
 90.93 crore in FY 2010-11. This reduction has been due to a few
 temporary reasons - mainly due to the reduction in demand from Mahindra
 Two Wheelers Limited, as well as from the Tata Motors. The demand from
 both these customers is expected to normalise and increase in the
 coming months.
 
 As you may be aware, your company entered the field of auto-components
 few years ago, after totally restructuring its operations from
 manufacture of two- wheelers to manufacture of various automotive
 components, and assemblies; and hence this marks a landmark in the
 company''s continued vision to become a substantially large player in
 the auto- component field.
 
 
 Research & Development
 
 Research and development is viewed as crucial for development of the
 Company. These activities add in expanding and upgrading the product
 portfolio and improving the offerings to the customers.
 
 Conservation of energy
 
 Some of the measures for conservation of energy undertaken during the
 period under review were:
 
 1.  By continuous monitoring, Unity Power factor is maintained through
 out year, saving Rs.42 lacks as an Incentive in electricity bills.
 
 2.  Studied the peak and lowest demand of compressed air for different
 shops and accordingly compressor run pattern decided and implemented
 results in saving of electrical power of Rs.3.5 lacks per year.
 
 3.  Mercury and sodium street lights replaced by modern CFL of low
 wattage installed.
 
 4.  Thyrister control AC drive for heaters installed for sursulf salt
 bath furnace maintaining temperature at 565 degree Celsius constantly
 results in saving of Rs.63000/- per year.
 
 5.  Compressed air pipe of nylon braded is replaced with PU tube
 fittings in Gear box assembly line and Aluminum machine shop.
 
 6.  CFL spiral lamps fitted in office area replacing 40 watt tube
 fittings.
 
 7.  In Aluminum line energy efficient tube fittings installed,
 replacing 250 watt mercury lamps. Saving Rs. 2 Lacks per year.
 
 8.  For paint baking and bond rising tank water heating thermopac
 operates during load period instead of continuous.  Savings Rs.1.5
 lacks per year.
 
 9.  Compressed air measurement carried out for all machines in
 different shops.
 
 10.  About 3500 liters of oil is extracted from drained coolant per
 year.
 
 11.  Compressed air leakages from the welded joints in pipe line
 arrested.
 
 12.  Fire hydrant line 3 inches under ground water leakage arrested by
 replacing with new line, save about 5 lacks liters of water per year.
 
 The above measures have resulted in significant saving in energy cost.
 
 Foreign exchange earnings and outgo
 
 The information on foreign exchange earnings and outgo is contained in
 Point No. 10 & 11 in Notes to the Accounts.  Directors responsibility
 statement
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
 confirm that:
 
 1.  In preparation of the accounts for the period under review, the
 Company has followed the applicable accounting standards
 
 2.  Appropriate accounting policies have been selected and applied
 consistently and the judgments and estimates made are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the company as on 31st March, 2012.and of the profit of the company for
 the year ended on that date.
 
 3.  Proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the company and for
 preventing and detecting fraud and other irregularities
 
 4.  The annual accounts for the period under review have been prepared
 on a ''going concern'' basis Corporate governance
 
 Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a
 report on Corporate Governance with certificate of the Auditors of your
 company on Compliance with the conditions of Corporate Governance is
 given as annexure to the Directors'' report.
 
 Fixed deposits
 
 During the period under review fixed deposits amounting to Rs.0.10 lac
 were repaid on maturity. The balance as on 31.3.2012 standing in the
 fixed deposit account was Rs.0.75 lac.
 
 Directors
 
 In accordance with the provisions of the Companies Act, 1956 as well as
 the Articles of Association of the Company, Dr. N. A.  Kalyani, Mr. S.
 R. Kotecha & Mrs. Sulajja Firodia Motwani, directors, retire at the
 ensuing Annual General Meeting, and are eligible for re-appointment.
 
 The directors Mr. Arun H. Firodia, Mr. Ajinkya A. Firodia & Mrs.
 Sulajja Firodia Motwani are related to each other.
 
 Mr. Jinendra H. Munot was appointed as an Additional Director by the
 Board, and holds office as such director until the ensuing Annual
 General Meeting. The Company has received a notice u/s 257 of the
 Companies Act, 1956, proposing the candidature of Mr. Jinendra H. Munot
 as a director of the Company.
 
 Mrs. Sulajja Firodia Motwani and Mr. Arun H. Firodia were appointed as
 Vice - Chairperson and Chairman by the Board of Directors in their
 meetings respectively held on 9th December 2011 and 30th May 2012.
 Members are requested to approve their appointment.
 
 Auditors
 
 The auditors M/s P. G. Bhagwat, Chartered Accountants, hold office
 until the ensuing Annual General Meeting, and have furnished a
 certificate in terms of Sec. 224(1) of the Companies Act, 1956, about
 their eligibility.
 
 Employees
 
 Particulars of Employees as required under Section 217 (2A) of the
 Companies Act, 1956 read with Companies (Particulars of Employees)
 Rules, 1975 form part of this report. However, as per the provisions of
 Section 219(1)(b)(IV) of the Companies Act, 1956, the report and the
 accounts are being sent to the shareholders of the company, excluding
 the statement of particulars of employees under Section 217(2A) of the
 Companies Act. Any shareholder interested in obtaining a copy of the
 said statement may write to the Company at the Registered Office of the
 Company.
 
 Acknowledgement
 
 The directors express their sincere thanks to Reliance Capital Limited,
 Clearwater Capital Partners India Limited, banks, suppliers and
 stakeholders for the support extended to the Company and also wish to
 place on record their appreciation of the dedicated services rendered
 by the employees of the Company.
 
                             For and on behalf of the Board of Directors
 
                                                           A. H. Firodia
 
                                                                Chairman 
 
 Pune : 30th May, 2012
 Regd. Off. :
 
 D1Block, Plot No.18/2, MIDC, Chinchwad, Pune - 411019.