The Directors present the 91st Annual Report and the Audited Annual
 Accounts of the Company for the year ended March 31, 2011.
 
 FINANCIAL RESULTS
 
 The financial results of the Company for the year 2010-11 as compared
 with the previous year are as under: -
 
                                      Current               Previous
 
                                   Year ended             Year ended
 
                               March 31, 2011         March 31, 2010
 
                                         (Rs.)                  (Rs.)
 
 Sales                          19,417,972,360         20,178,370,074
 
 Other income                      131,485,675            479,471,733
 
 Total                          19,549,458,035         20,657,841,807
 
 Profit before tax               1,030,810,391          1,729,616,298
 
 Provision for tax                 417,210,649            554,438,774
 
 Profit after tax                  613,599,742          1,175,177,524
 
 Surplus in Profit & Loss Account
 
 brought forward from previous 
 year                              905,059,568            529,687,717
 
 Available surplus               1,518,659,310          1,704,865,241
 
 APPROPRIATIONS
 
 Your Directors propose to appropriate the available surplus as under :-
 
 Dividend @ 175% (275%)
 
 on 79,338,451 (79,330,766) equity
 
 shares of Rs. 2/- each            277,684,579            436,319,213
 
 Additional tax on Dividend         37,145,728             63,486,460
 
 Transferred to General Reserve     61,359,974            300,000,000
 
 Balance carried to Balance Sheet 1,142,469,029           905,059,568
 
 TOTAL                           1,518,659,310          1,704,865,241
 
 DIVIDEND
 
 Directors recommend a dividend of 175% (Rs. 3.50 per equity share) for
 the year.
 
 SCHEME OF ARRANGEMENT
 
 As you are aware, during the previous year the Scheme of Arrangement
 between Kirloskar Brothers Limited (KBL), Kirloskar Brothers Investment
 Limited (KBIL) and respective Shareholders was made effective and our
 companys shares were listed and traded on the stock exchanges. The
 company has remitted the amount towards the fractional entitlements to
 the concerned shareholders.
 
 During the current year, the necessary listing and trading permissions
 were received in respect of KBIL shares.
 
 STATUTORY DISCLOSURES
 
 1.  ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 
 Details of energy conservation, technology absorption, research and
 development and foreign exchange earnings as required under Section 217
 (1) (e) of the Companies Act, 1956, are given in the Annexure - I to
 this Report.
 
 2.  PARTICULARS OF EMPLOYEES
 
 Information regarding employees in accordance with Section 217 (2A) of
 the Companies Act, 1956 is given in the Annexure – II to this Report.
 
 3.  SUBSIDIARY COMPANIES
 
 The Company has incorporated a Wholly Owned Subsidiary - Kirloskar
 Systech Limited on August 9, 2010.  Kirloskar Systech Limited is
 primarily engaged in system engineering, designing and support
 services.
 
 During the year, the Company has transferred its 100% shares of two of
 the subsidiary companies viz.  Pressmatic Electro Stampings Private
 Limited (PESPL), Quadromatic Engineering Private Limited (QEPL) to its
 another wholly owned subsidiary Hematic Motors Private Limited (HMPL).
 Further, a Scheme of Amalgamation of Companys step down subsidiaries,
 PESPL and QEPL with Companys wholly owned subsidiary - HMPL was filed
 with the Honourable Bombay High Court by the said companies.
 
 The same has been approved by the Honourable Court vide its orders
 dated April 8, 2011 and the scheme has been made effective on April 25,
 2011. As a result, with effect from the appointed date i.e. January 1,
 2011 under the scheme, the PESPL and QEPL have been merged with HMPL on
 and from appointed date.
 
 On January 1, 2011, the company has transferred the shares held in its
 Wholly Owned Subsidiary Kirloskar Brothers (Thailand) Limited (KBTL) to
 its other Wholly Owned Subsidiary - Kirloskar Brothers International
 B.V (KBI) Netherlands. However, due to negative valuation of KBTL
 shares, KBL has transferred the shares at nil value and accounted for
 the loss on the transfer. Thus, KBTL ceased to be the direct subsidiary
 company of KBL.
 
 The performance of the domestic and overseas subsidiary companies has
 been good, except in respect of a few subsidiary companies. The company
 is in the process of aligning the operations of its subsidiary
 companies.
 
 As a way forward, the company would concentrate on streamlining the
 operations of companies involved in manufacturing and take strategic
 decisions in respect of companies which are in the project / EPC
 business.
 
 The Financials of subsidiaries are appearing elsewhere in this annual
 report.
 
 On November 22, 2010, the Company made an application to the Central
 Government under section 212(8) of the Companies Act, 1956 for
 exemption from attaching the annual accounts of the subsidiary
 companies.  On February 8, 2011 the Government of India, Ministry of
 Corporate Affairs vide General Circular No.  2/2011, granted general
 exemption under section 212(8) of the Companies Act, 1956.
 Consequently, Company has also received a letter No. 47/29/2011-CL-III
 dt. February 14, 2011, from the Ministry of Corporate Affairs, to that
 effect.
 
 The consolidated financial statement of subsidiaries prepared as per
 applicable provisions and duly audited by the statutory auditors, is
 presented elsewhere in this annual report. As per the said general
 exemption, instead of the annual accounts of the subsidiary companies,
 we have attached certain information in respect of Companys
 subsidiaries for the respective financial years.
 
 Further, we hereby undertake that annual accounts for the subsidiary
 companies and the related detailed information will be made available
 to the Shareholders, seeking such information. The annual accounts of
 the subsidiary companies will also be kept open for inspection for
 Shareholders.
 
 4.  DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Board of
 Directors report that
 
 - In the preparation of the annual accounts, the applicable accounting
 standards have been followed and there was no material departure from
 the accounting standards.
 
 - Accounting policies have been selected and applied consistently and
 that the judgements 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 at March 31, 2011 and of the profit of the Company for the period
 April 1, 2010 to March 31, 2011.
 
 - 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, and
 
 - The annual accounts have been prepared on a going concern basis.
 
 5.  CASH FLOW
 
 A cash flow statement for the year ended March 31, 2011 is attached to
 the Balance Sheet.
 
 SAFETY, HEALTH AND ENVIRONMENT
 
 All our manufacturing plants have been awarded with the prestigious
 international certificate OSHAS 18001.  This is very important step
 towards ensuring and achieving occupational Health and Safety standards
 for persons connected with these plants.
 
 The Company continues its thrust on safety measures for employees with
 regular safety training. Safety audits are also conducted regularly. As
 a commitment to environment, the Company has selected the
 sustainability model and formed a core group to address the relevant
 issues. The first sustainability report was prepared during the year
 and company would measure performance for sustainability based on the
 globally accepted standards and continuously find ways to reduce the
 adverse impact on the environment. The said report is available on
 companys website.
 
 CORPORATE GOVERNANCE
 
 Pursuant to Clause 49 of the Listing Agreements with the Stock
 Exchanges, Management Discussion and Analysis Report, Report on
 Corporate Governance, Auditors Certificate on Corporate Governance and
 the declaration by the Chairman and Managing Director regarding
 affirmations for compliance with the Companys Code of Conduct are
 annexed to this report.
 
 EMPLOYEE STOCK OPTION SCHEME (ESOS)
 
 As you are aware, during the year 2007-08, Company launched the
 Employees Share a Vision Stock Option Scheme, 2007 (ESOS-2007).
 During the year, 3rd tranche of options i.e. 40% of the total options
 have been vested on August 31, 2010. The exercise price offered is at
 Rs. 200/- per option to be converted into an equity share on exercise.
 During the year, 6,185 equity shares of Rs. 2/- each have been allotted
 at an exercise price of Rs. 200/- each.
 
 The Management has formulated under ESOS - 2007, a proposal of
 providing stock options at Rs. 2/- per option to award employee for
 their outstanding, exemplary performance in getting sustainable
 results. During the year, 1250 options have been granted to two
 employees and 1,500 equity shares of Rs. 2/- each have been allotted at
 an exercise price of Rs. 2/- each.
 
 Consequent to allotment of above shares under ESOS, the issued and
 paid-up share capital of the Company, at
 
 the end of the year 2010-11, stands at Rs.158,676,902/- i.e. 79,338,451
 equity shares of Rs. 2/- each.
 
 The disclosures required to be made under the Securities and Exchange
 Board of India (Employee Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999 and a certificate from the Statutory
 Auditors with regards to compliance of the guidelines, is provided as
 Annexure - III to this report.
 
 FIXED DEPOSITS
 
 The Company is neither accepting nor renewing the matured deposits
 since January, 2003. As on March 31, 2011, deposits from public and
 shareholders aggregating to Rs.390,000/- have matured but have not been
 claimed.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 The company undertakes its social responsibility directly and also
 through trust – Vikas Charitable Trust. The main thrust of this
 Corporate Social Responsibility (CSR) initiative is on education and
 social health defined in a policy of CSR.
 
 During the year, as a part of CSR and our obligation towards society at
 large, your Company continued its efforts in implementing Community
 Programs in line with the Society Perception Survey with a thrust on
 health and education. The prime initiative undertaken by the company
 was participation in WASH (Water, Sanitation and Hygiene) program with
 the help of our employees who volunteered for the program.
 
 CENTENARY CELEBRATIONS
 
 We celebrated a centenary year of our Kirloskarvadi plant on March 10,
 2010. The Centenary Celebrations continued during the year 2010-11, as
 we conducted functions at Kolkata, Chennai, Delhi and Mumbai. More than
 2000 customers, dealers and well-wishers attended these functions.
 During these functions, company felicitated the customers, dealers and
 a few employees, who have been with the company for fairly a long time.
 
 The Celebration concluded on March 10, 2011 at Pune. We are very proud
 for this achievement and re-confirm our commitments to follow the value
 systems framed by our founders.
 
 NEW MANFACTURING UNITS
 
 The Company has initiated the process of setting up new manufacturing
 units at Kaniyur Village, Coimbatore and Charodi Village, Sanand,
 Ahmedabad for the production of Mini & DCM Pumps and Submersible Pumps,
 respectively.
 
 The new plants are equipped with modern plant & machinery. These units
 have some additional features such as formation of suppliers cluster,
 lean manufacturing process and so on. With this, the products would be
 competitive in cost and quality.
 
 The production at the respective units is expected to commence during
 current year. This will help the Company to cater to the increasing
 market demand for these products.
 
 DIRECTORS
 
 With deep regret, we report the sad demise of Mr. Madhav G. Padhye,
 Ex-Director of the Company. Mr. Padhye was associated with the Company
 since 1990 till he resigned in December, 2008. He had wide experience
 in the Civil Engineering, Government Service and Water Resource
 Development Projects. His expertise and guidance to the Board and the
 Company has been noteworthy. The Board wishes to place on record its
 gratitude for the guidance received from Mr. Padhye.
 
 Mrs. Lalita D. Gupte, Mr. P.S. Jawadekar and Mr. Rahul Kirloskar,
 retire by rotation at the ensuing Annual General Meeting and being
 eligible offer themselves for re-appointment.
 
 Subject to members approval, the Board has re-appointed Mr. R. K.
 Srivastava, Whole Time Director and Mr.  Sanjay C. Kirloskar, Managing
 Director with effect from September 19, 2010 and November 19, 2010,
 respectively.
 
 AUDITORS
 
 M/s. P. G. Bhagwat, the Auditors retire at the ensuing Annual General
 Meeting and are eligible for re- appointment. The requisite certificate
 pursuant to section 224 of the Companies Act, 1956 has been received.
 The Audit and Finance Committee has recommended their re-appointment
 and the annual audit fees.
 
 ACKNOWLEDGEMENTS
 
 Your Directors wish to place on record their appreciation of the
 unstinted support and co-operation given by banks and financial
 institutions. Your Directors would further like to record their
 appreciation of the efforts of every employee for the results achieved
 during this year.
 
                            For and on behalf of the Board of Directors,
 
                                                       SANJAY KIRLOSKAR
 
                                                               CHAIRMAN
 Pune : April 26, 2011