The Directors present the Company''s 65th Annual Report with the
 Audited Balance Sheet as at 31st March, 2012 and Profit and Loss
 Account for the year ended 31st March, 2012.
 
 Results of Operations                                    Rs in Million
 
                                                     2011-12    2010-11
 
 Income                                               8717.4     8238.7
 
 Expenditure                                          6558.6     6330.9
 
 Gross Profit                                         2158.8     1907.8
 
 Operating expenses                                   1548.6     1444.4
 
 Operating Profit before interest and depreciation     610.2      463.4
 
 Interest                                              383.0      317.1
 
 Depreciation, amortisation and provisions             183.9      161.9
 
 Operating profit before tax and extraordinary items    43.3      (15.6)
 
 Other income (net)                                     57.6       36.9
 
 Net profit before tax and extraordinary items         100.9       21.3 
 
 Extraordinary Income (Expenditure)
 
 Net profit before tax and after extraordinary items   100.9       21.3
 
 Provision for taxation                                  5.2        0.2
 
 Net profit after tax and after extraordinary items     95.7       21.1
 
 Company Performance
 
 During the year under report, your Company has achieved a turnover
 (Gross) of Rs. 8.72 billion (previous year Rs. 8.24 billion). The
 operations have resulted in a net profit of Rs.95.7 million (previous
 year Rs. 21.1 million).
 
 Industry Outlook
 
 Indian Economy performed relatively well against the backdrop of weak
 global atmosphere. Global economies appear to be going through a phase
 which is having greater share of volatility than that of stability.
 There are signs of inertia in Indian Economy as well. Your Company has
 taken several steps to mitigate the impact of this, rather to have
 better results by stress upon actions oriented towards goals and
 performance which should enable the Company to do well, barring
 unforeseen circumstances.
 
 Appropriations
 
 Dividend
 
 In order to conserve resources for Company''s growth, your Directors
 regret their inability to declare any dividend for the year under
 report.  The Company has not transferred any amount to its General
 Reserve.
 
 Subsidiary - Kirsons B.V.
 
 The operations of Kirsons B.V.,your subsidiary have resulted in net
 loss of Euro 0.071million.
 
 Subsidiary Companies
 
 The Company as of March 31, 2012 had one subsidiary, viz., Kirsons
 B.V., Netherlands (Kirsons). Kirsons is having two subsidiaries - Lloyd
 Dynamowerke GmbH & Co. KG, Germany and Lloyd Beteiligungs-GmbH,
 Germany. Pursuant to section 212 of the Companies Act, the annual
 accounts of subsidiary companies for the year ended 31st March, 2012
 along with the statements referred to in the said section, are attached
 with Consolidated Financial Statements as required. Further, pursuant
 to Accounting Standard - 21 (AS-21) prescribed under the Companies
 (Accounting Standard) Rules, 2006, Consolidated Financial Statement
 presented by the Company includes financial information about its
 subsidiaries.
 
 Environment, Safety and Energy Conservation
 
 As required by the Companies (Disclosure of particulars in the Report
 of Directors) Rules, 1988, the relevant data pertaining to conservation
 of energy, technology absorption and other details are given in the
 Annexure to this report.
 
 Particulars of Employees
 
 In terms of the provisions of Section 217 (2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 the names and other particulars of specified employees are set out in
 the Annexure to the Directors Report. However having regard to the
 provisions of section 219(1 )(b)(iv) of the Companies Act, 1956, the
 Annual Report is being sent to all members of the Company, excluding
 the aforesaid information. Any member interested in obtaining these
 particulars may write to the Company Secretary at the Registered Office
 of the Company.
 
 Corporate Governance
 
 Pursuant to the requirements of the Listing Agreements with Stock
 Exchanges, your Directors are pleased to annex the following :
 
 1.  Management Discussion and Analysis Report
 
 2.  Report on Corporate Governance
 
 3.  Auditors Certificate regarding compliance of conditions of
 Corporate Governance
 
 4.  CEO & CFO Certificate
 
 5.  CEO Certificate regarding compliance with the Code of Conduct.
 
 These annexures form part of this report.
 
 Directors
 
 Mr.Berthold Groeneveld, Mr. D.Devender Singh and Mrs.Meena Kirloskar
 retire by rotation and being eligible offer themselves for
 re-appointment.  Directors'' Responsibility Statement
 
 Pursuant to the Section 217 (2AA) of the Companies Act, 1956, the
 Directors confirm that :
 
 1.  In the preparation of the annual accounts, the applicable
 accounting standards have been generally followed.
 
 2.  Appropriate accounting policies have been selected and applied
 consistently and Directors have made judgements and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company as at 31st March, 2012 and of the Profit and
 Loss Account for the year ended 31st March, 2012.
 
 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 have been prepared on a going concern basis.
 
 Human Resources
 
 The Company considers its employees as its most valuable asset.
 Employees at all levels have put in their best to the services of the
 Company and the Board puts on record the sincere appreciation of their
 dedication and loyalty. The Company focuses on building an organization
 through induction and development of talent to meet current and future
 needs. Various HR initiatives have been taken to align the HR Policies
 of the Company with the growth projections of the Company.
 
 Segmentwise Operational Performance Rotating Machines Group
 
 During the year under review the sales under Rotating Machines Group
 amounted to Rs. 6356.60 million as against Rs. 6401.65 million in
 2010-11.
 
 Power Generation and Distribution Group
 
 During the year under review the sales under Power Generation and
 Distribution Group amounted to Rs. 4636.97 million as against Rs.
 4646.76 million in 2010-11.
 
 Others
 
 During the year under review the sale of other Electrical Products
 amounted to Rs.691.67 million as against Rs. 535.90 million in 2010-11.
 Lloyd Dynamowerke GmbH & Co. KG, Germany (LDW)
 
 As you are aware the Company holds approximately 95% stake in Lloyd
 Dynamowerke GmbH & Co. KG, Germany and the entire shareholding in Lloyd
 Beteiligungs-GmbH, Germany through its subsidiary in The Netherlands -
 Kirsons B.V. Lloyd Dynamowerke GmbH & Co. KG, Germany is a limited
 partnership existing in accordance with the laws of Germany which owns
 an electrical machine manufacturing plant at Bremen, which is being
 operated by the said limited liability firm. During the year ended 31st
 March, 2012 Lloyd Dynamowerke GmbH & Co. KG, had turnover of Euros
 33.333 ( Rs.222 crores ){ Previous year -Euros 43.509 million (Rs.263
 crores)} with a net loss after tax of Euros 0.550 million ( Rs.3.10
 crores ) {Previous year net profit Euros 1.270 million (Rs.9.06
 crores)}.
 
 AUDITORS'' REPORT
 
 The comments/observations of the Auditors are self-explanatory and the
 Company''s explanations thereto have been given in relevant notes in the
 Notes to Accounts. Further explanations in regard to the
 reservations/qualifications in the Auditors Report are furnished below
 :-
 
 Para 10(i) of the Auditors'' Report
 
 The Company has sought written confirmation from all its vendors to let
 us know if they are either micro, small or medium enterprises. Once
 these details are updated, particulars of dues to micro, small and
 medium enterprises could be ascertained.
 
 Para 10 (ii) of the Auditors'' Report
 
 Confirmations have been received from some parties and from some they
 are expected. Confirmation is an ongoing process. However, this has no
 impact on financial results of the Company.
 
 Para 8 and Para 10 (iii) of the Auditors'' Report.
 
 This has no impact on the accounts. The Company has complied with
 Accounting Standard 2 in respect of valuation of raw materials, stores
 and components and in respect of work in progress and finished goods.
 The Company has from time to time initiated steps to bring the
 valuation of inventory at all units in line with Accounting Standard -2
 (Valuation of Inventory). The relevant details of inventory are
 available for verification.
 
 Para 10 (iv) of the Auditors'' Report.
 
 The Company has used and relied upon its market intelligence to judge
 the realizable value of assets held for sale. The estimated realizable
 value is judged to be in line with the market valuation.
 
 Para 10 (v) of the Auditors'' Report
 
 The Company is confident of realising the amounts due from certain
 companies referred to therein.
 
 Para 2 a of the Annexure to the Auditors'' Report
 
 Confirmations have been received from some parties and from some they
 are expected. Confirmation is an ongoing process.
 
 Para 2 b of the Annexure to the Auditors'' Report
 
 The Company has already identified the key focus areas and has started
 taking the necessary steps to make the inventory verification
 reasonable and adequate.
 
 Para 2 c and Para 8 of the Annexure to the Auditors'' Report
 
 During the year, the Company has completed implementation of SAP ECC 6
 System at certain units and it will implement it at the remaining units
 in phased manner in the current year. SAP is an integrated software
 where all the inventory records are maintained. The company has from
 time to time taken physical inventory at all locations. Since the
 valuation of inventory was done on the basis of physical inventory
 count performed as at 31st March 2012, the discrepancies, if any, have
 been properly dealt with in the books of accounts. The discrepancies
 were not material in nature.
 
 Para 5 a of the Annexure to the Auditors'' Report
 
 The Company is in the process of applying to the Central Government to
 seek its approval in respect of these contracts.
 
 Para 7 of the Annexure to the Auditors'' Report
 
 The Company appointed an independent reputed professional agency to
 perform internal audit of operations of the Company. The scope of the
 internal audit is decided considering the risk assessment carried out
 by the Company. The internal audit work at several of its plants,
 branches and offices are at advanced stage of completion and the final
 report is expected soon.
 
 Para 9 b of the Annexure to the Auditors'' Report
 
 The Company has made necessary arrangements to pay these dues.
 
 Auditors
 
 M/s. B. K. Ramadhyani & Co., Chartered Accountants and M/s. Sundar &
 Associates, Chartered Accountants, are the retiring Auditors in India
 and Malaysia respectively. They are eligible for re-appointment. The
 required certificates to the effect that the re-appointments, if made,
 will be within the limit specified in Section 224(1-B) of the Companies
 Act, have been received from M/s. B. K. Ramadhyani & Co., and M/s.
 Sundar & Associates.
 
 Fixed Deposits
 
 12 persons had not claimed repayment of their matured deposits
 amounting to Rs.5.94 lakhs as at 31st March, 2012.
 
 Acknowledgements
 
 The Directors takes this opportunity to express its sincere
 appreciation for the continued support and confidence received from the
 Company''s Bankers, Financial Institutions, Customers, Suppliers,
 Depositors and Shareholders. Your Directors place on record their
 appreciation of the efforts of employees at all levels and look forward
 to their continued support in the future as well.
 
                           For and on behalf of the Board of Directors,
 
 Bangalore                                  Vijay R Kirloskar
 
 Date : May 28, 2012                             Chairman