The Shareholders
 
 The Directors present the Company''s 64th Annual Report with the
 Audited Balance Sheet as at 31st March, 2011 and Profit and Loss
 Account for the year ended 31st March, 2011.
 
 Results of Operations                         Rs. in miliion
 
                                                 2010-11     2009-10
 
 Income                                           8238.7      8407.3
 
 Expenditure                                      6330.9      6151.3
 
 Gross Profit                                     1907.8      2256.0
 
 Operating expenses                               1482.3      1499.7
 
 Operating Profit before interest and 
 depreciation                                      425.5       756.3
 
 Interest                                          257.6       225.7
 
 Depreciation, amortisation and provisions         182.5       175.6
 
 Operating profit before tax and extraordinary 
 items                                             (14.6)      355.0
 
 Other income (net)                                 36.9       119.5
 
 Net profit before tax and extraordinary items      22.3       474.5
 
 Extraordinary Income (Expenditure)                   (1)        6.4
 
 Net profit before tax and after 
 extraordinary items                                21.3       480.9
 
 Provision for taxation                              0.2       105.0
 
 Net profit after tax and after 
 extraordinary items                                21.1       375.9
 
 Company Performance
 
 During the year under report, your Company has achieved a turnover
 (Gross) of Rs. 8.24 billion (previous year Rs. 8.41 billion).  The
 operations have resulted in a net profit of Rs. 21.1 million (previous
 year Rs. 375.9 million).
 
 Industry Outlook
 
 The Electrical Industry has been witnessing consistent growth during
 last few years but for a lull during 2008-09 on account of worldwide
 recession, which affected all industries. The performance of the
 industry is directly related to the country''s GDP growth. If the
 monsoon is good, forecast for which is normal, the Electrical
 Industry should perform well in 2011-12 also.
 
 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
 profit of Euro 3.947 million after accounting for profits of its
 subsidiaries.
 
 Subsidiary Companies
 
 The Company as of March 31, 2011 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, 2011
 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.A.S.Lakshmanan, Mr. S.N.Agarwal and Mr.Sarosh J Ghandy retire by
 rotation and being eligible offer themselves for re-appointment.
 
 The Board of Directors have at their meeting held on 23rd September,
 2010 appointed Mr.Anuj Pattanaik as additional director and have also
 appointed him as Deputy Managing Director for a period of five years
 from 23.9.2010, subject to approval of shareholders and such other
 approvals as may be required.
 
 Mr.Anuj Pattanik is a B.Tech in Mettalurgical Engineering from Indian
 Institute of Technology, Kanpur with rich experience of over three
 decades of working with well known national and international
 organizations.
 
 Mr.P.S.Malik, Joint Managing Director, retired from the services of the
 Company during the year under review, after over 13 years of service in
 the Company. Your Directors place on record their appreciation of the
 valuable services rendered by Mr.Malik during his tenure as a Director
 of the Company.
 
 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 they 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 31s'' March, 2011 and of the Profit and
 Loss Account for the year ended 31st March, 2011.
 
 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
 
 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 considers its employees as its most
 valuable asset. 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.
 
 Mr.R.K.Gupta, CFO, left the services of the Company during the year
 under review for personal reasons, after a long distinguished service.
 
 Segmentwise Operational Performance Rotating Machines Group
 
 During the year under review the sales under Rotating Machines Group
 amounted to Rs. 6401.65 million as against Rs. 7536.26 million in 2009-10.
 
 Power Generation and Distribution Group
 
 During the year under review the sales under Power Generation and
 Distribution Group amounted to Rs. 4646.76 million as against Rs. 4496.14
 million in 2009-10.
 
 Others
 
 During the year under review the sale of other Electrical Products
 amounted to Rs. 535.90 million as against Rs. 444.49 million in 2009-10.
 
 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 aKBremen, which is being
 operated by the said limited liability firm. During the year ended 31s''
 March, 2011 Lloyd Dynamowerke GmbH & Co. KG, had turnover of Euros
 43.509 million ( Rs. 263 crores ) with a net profit after tax of 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 and Para 4 of the Annexure to the
 Auditors Report
 
 Confirmations have been received from some parties and from some they
 are expected. Confirmation is ongoing process. However, this has no
 impact on financial results of the Company.
 
 Para 8 and Para 10 (ii) 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).
 
 Para 10 (iii) of the Auditors Report
 
 The Company has used and relied upon its internal market intelligence
 to estimate the realizable value of assets held for sale. The estimated
 realizable value is judged to be in line with the market valuation.
 
 Para 10 (iv) 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 2011, the discrepancies, if any, have
 been properly dealt with in the books of accounts. The discrepancies
 were not material in nature.
 
 Para 7 of the Annexure to the Auditors'' Report
 
 The Company has started the initiatives to strengthen the internal
 audit system to make it commensurate with the size and nature of its
 business.
 
 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
 
 7 persons had not claimed repayment of their matured deposits amounting
 to Rs.. 2.44 lakhs as at 31s'' March, 2011.
 
 Acknowledgements
 
 The Directors place on record their appreciation of efforts of
 employees at all levels. They would like to place on record their
 sincere appreciation for the continued co-operation and support
 provided by the Bankers, Financial Institutions, Customers, Suppliers,
 Depositors and Shareholders.
 
                         For and on behalf of the Board of Directors,
 
 Bangalore                              Vijay R Kirloskar
 
 Date : May 28, 2011                        Chairman