Ladies and Gentlemen,
 
 I am pleased to present the 64th Annual report of your company.
 
 I wish to begin presenting this Annual Report by thanking Mr. RS Malik,
 former Joint Managing Director of your company who retired in October
 2010 after 13 years of service. Mr. Malik contributed significantly to
 turn the company around after we faced intense challenges due to
 adverse market conditions. His competence and commitment saw us through
 the existential crisis we faced.
 
 I would also like to take this opportunity to welcome Mr. Anuj
 Pattanaik, who has been appointed as the DMD of your company. He has a
 wealth of experience in marketing and manufacturing and I am sure with
 his experience and ability will see KEC take its rightful place in the
 industry landscape.
 
 Operating in an increasingly borderless marketplace and economy, the
 world''s economic health does impact us. The global economic output
 which had almost shrunk in 2009 registered a growth of 5% in 2010. IMF
 foresees a 4.5% growth in world economy in 2011 and 2012. The GDP of
 India which was 6.7% in 2008-09 and 8% in 2009-10 was around 8.6% in
 2010-11. The GDP growth rate is expected to be maintained in 2011 -12
 with a satisfactory monsoon predicted forthe year.
 
 As you will see from the Directors'' Report alongside, the turnover of
 the Company during the year 2010-11 amounted to Rs.823.87crores and net
 profit was Rs.2.11 crores. On a consolidated basis, the turnover was
 Rs.1087 crores with a net profit of Rs.6.91 crores.
 
 Higher raw material prices, increased interest costs and reduced
 margins have had an adverse impact on the profitability of the Company.
 Going forward, we are determined to boost our profitability as good
 turnover in itself does not imply greater shareholder value. Special
 attention is being paid towards that and we have initiated several
 measures across board - cutting costs, reducing overheads and taking an
 overall disciplined approach, rationalizing and streamlining operations
 to enhance efficiency.
 
 Coming to current issues, change is the mantra at KEC this year. As you
 are aware, change is the only constant in today''s marketplace and we
 need to adapt to this dynamic paradigm to sustain, grow and increase
 our market share. Reflecting this, we have initiated several systems
 and processes to ensure we are more assertive in the marketplace, more
 supportive to our partners, and more responsive to our customers.
 
 On the market side, we also have started the process of mapping key
 customers across segments, potential channel partners and products/
 solutions that bring in healthy margins. The sales organization is
 being recast to enhance the company''s reach and our product lines are
 being analysed for market demand and profitability.
 
 We are looking at increasing our presence in markets in Middle East. We
 have secured orders for INR 4 Crores based on our efforts in the
 previous year. We are also looking at the CIS countries and Europe for
 our next foray.
 
 Our indigenously developed Coolant Pump Motors for Nuclear Power
 Corporation of India are scheduled for delivery in 2012 and the project
 is on schedule.
 
 This year, we have officially entered the fast-growing Electric Vehicle
 segment, by launching a range of special Induction Motors used for the
 electric and hybrid motor vehicles both in the personal transportation
 and Commercial Vehicle segment. I am proud to say that your company is
 working with every leading car maker in India in this segment as an OEM
 and also in offering a retrofit option to customers.
 
 Considering the unprecedented increases in the prices of petroleum
 products in recent times and with more such moves anticipated, we
 expect huge demand for this range of products. We have supplied over
 2000 AC Motors to Reva Electric cars, functioning to complete customer
 satisfaction for over 5 years now. This gives us the motivation to
 enter the global market as a chosen supplier for leading brands in the
 nearfuture.
 
 As part of our modernization program, we have implemented SAP across
 all our manufacturing units and envisage benefiting from the synergies
 of a common platform for a smooth operation across the organization. We
 want to exploit these synergies for all functional areas.
 
 We have also acquired a state-of-the-art 3D modeling software for our
 Design and Engineering functions to enhance efficiency and reduce
 errors in the design/production of components.
 
 Our German company LDW has been performing as expected despite the
 German economy continuing to remain sluggish with no significant
 improvement since the previous year. LDW had a turnover of INR 263
 crores (€ 43.509 million) in 2010-11 with a net profit of INR 9.06
 crores (€1.270 million). We are confidentthatthis operation would
 contribute to our profitability in the coming years.
 
 As for the update on our activities in India, we have settled all
 pending labour issues with the unions and they proactively
 participating in our initiatives.
 
 Continuing on our last year''s plan of reactivating the training efforts
 for our employees, we have decided to make Hubli our center for this.
 We plan to conduct sessions imparting technical and managerial skills
 on various aspects enabling our employees to deliver effectively in a
 competitive business ecosystem. We plan to recruit a team of young
 professionals to effectively address emerging market requirements and
 take on competitors aggressively.
 
 Increasing investments in domains like Sugar, Steel, Cement and
 Fertilizers will see a rising demand for our products - from Motors,
 Transformers and switchgear, to Power Generation Equipment. We are
 foraying into newer markets like Infrastructure with our current
 products and also have several newer ones on the anvil, and plan to
 benefit from the massive growth being experienced by this sector.
 
 Considering our excellent track record and unique technical edge, we
 also envisage increasing our presence in the Defence sector by
 developing specialized products to address their unique needs.  We also
 expect to benefit from the investments in Power Sectorfrom the
 Government of India.
 
 Considering our own commitment to gender equality and women
 empowerment, we plan to offer more opportunities to women in our
 organization.
 
 I would like to sign off by stating that I have received unstinted
 support from all investors and would again like to take this
 opportunity to express my gratitude to the Board, Banks and Financial
 Institutions, Shareholders, and Customers for their continued
 confidence in Kirloskar Electric. I would also like to take this
 opportunity to thank all our employees for their commitment, dedication
 and support, to the management team in this hour of transition and
 change.
 
 On behalf of the management team, I wish to reiterate that we will do
 what it takes to ensure KEC retains its rightful place to soon become a
 brand cherished by all associated stakeholders and the community we
 live in.
 
 Vijay R Kirloskar
 
 Chairman and Managing Director