The Board of Directors have pleasure to submit the report and audited
 Balance Sheet and Profit and Loss Account of the Company for the year
 ended 31st December, 2011.
 
 FINANCIAL RESULTS AND DIVIDEND
 
 (i) Financial Results:
 
                                                         Rs. in Million
                                               Year ended    Year ended
                                               31.12.2011    31.12.2010
 
 Sales (net) & Other Income                        7641.3        6269.6
 
 Profit before taxation                             622.9         742.4 
 
 Less: Provision for taxation
 
 Current                                            207.0         254.0
 
 Deferred                                            (5.4)        (27.3)
 
                                                    201.6         226.7
 
 Profit after tax                                   421.3         515.7
 
 Adjustment of tax of
 earlier years                                        8.5          (0.1)
 
 Profit for appropriation                           429.8         515.6
 
 Appropriation:
 
 Dividend                                           139.2         174.0
 
 Tax on Dividend                                     22.6          28.2
 
 General Reserve                                     45.0          55.0
 
 Profit & Loss Account                              223.0         258.4
 
                                                    429.8         515.6
 
 
 (ii) Dividend:
 
 An interim dividend of Re 1 per share of Rs 10 each (10%) was paid
 during the year.  The Board of Directors propose a final dividend of Rs
 3 per share of Rs 10 each (30%) making a total of Rs 4 per share of Rs
 10 each (40%) for the year.
 
 GENERAL REVIEW
 
 (i) Working:
 
 During the year under review, the Company has earned lower profit
 before tax compared to the previous year even though there has been an
 increase in the sales.  Execution of the project orders which were
 obtained earlier with lower margin affected results considerably.
 Further costs push inflation increased the input costs significantly,
 mainly materials, which could not be passed on to the customers. Some
 of the large orders could not be executed as customers did not take
 delivery of pumps and valves on account of project delay at their end.
 Hence the situation of heavy pressures on margin continued in the year
 2011.
 
 Export increased by 68 mio. from 633 mio.  last year to 701 mio.
 
 The Company continues with its efforts to maintain the growth in this
 economic downturn and face new challenges.
 
 (ii) The Company has allotted 1,74,03,922 bonus shares on 20.04.2011 in
 the proportion of one new equity share for every one existing equity
 share.
 
 (iii) Unclaimed Bonus Shares:
 
 Total 25,390 bonus shares held by 158 shareholders were unclaimed in
 the year 2011, after allotment. Out of which 2,646 bonus shares were
 transferred to respective 7 shareholders who had approached for such
 shares. Now the total number of shares outstanding is 22,744 held by
 151 shareholders.
 
 (iv) Fixed Deposits:
 
 The Company has no unpaid deposits except those unclaimed after the
 period of maturity. As on 31st December, 2011, 2 depositors (Rs.25,000)
 had not claimed their deposits on the due dates.
 
 (v) Transfer to Investor Education & Protection Fund:
 
 During the year, in accordance with section 205C of the Companies Act,
 1956, an amount of Rs.56,480 being unclaimed fixed deposits and
 interest and an amount of Rs.260,529 being unclaimed dividends up to
 the year 31,12.2004, were transferred to the Investor Education &
 Protection Fund established by the Central Government.
 
 (vi) Subsidiary & Associate:
 
 Annual Accounts for the year ended 31st December, 2011 of Pofran Sales
 and Agency Limited (the Company''s wholly owned subsidiary) which show a
 profit before tax of Rs. 25.3 mio (previous year Rs. 16.4 mio.) for
 business upto the date, are attached.
 
 The Associate Company, MIL Controls Limited (MIL) has made a profit
 before tax of Rs 280.5 mio for the year ended 31st December, 2011
 (previous year Rs. 279.1 mio) .
 
 (vii) Management Discussion and Analysis Report:
 
 Annexed to this Report
 
 (viii) Corporate Governance:
 
 Annexed to this Report
 
 (ix) Consolidated Accounts:
 
 As per the requirement of SEB1, consolidated accounts in accordance
 with Accounting Standard AS 21 have been annexed to this Annual Report.
 
 DIRECTORS
 
 Mr. A. R. Broacha, Mr. G. Swarup and Dr. W. Schmitt retire by rotation
 and are eligible for re-appointment.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 The Board of Directors confirm that
 
 i.  in the preparation of annual accounts, the applicable accounting
 standards have been followed and there is no material departures;
 
 ii.  the Directors have selected such accounting policies and applied
 them consistently and 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 at the end of the financial year and of the profit or
 loss of the Company for the year under review:
 
 in. the Directors have taken proper and sufficient care 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.
 
 iv. the Directors have prepared the annual accounts on a going concern
 basis.
 
 ACKNOWLEDGEMENTS
 
 The Board of Directors are grateful to Canadian Kay Pump Ltd., the main
 shareholder, and to KSB AG, Germany, the Company''s collaborators, for
 their valuable assistance and support.  They wish to record their
 appreciation for the co-operation and support of the Company''s
 shareholders, bankers and other lending institutions, all employees
 including the workers, staff and middle management and all others
 concerned with the Company''s business.
 
 PARTICULARS OF EMPLOYEES
 
 The particulars prescribed under section 217(2A) of the Companies Act,
 1956 are furnished in the annexure to this report. ''
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 The particulars prescribed by the Companies (Disclosure of Particulars
 in the Report of Board of Directors) Rules, 1988 are furnished in the
 annexure to this report.
 
 SAFETY AND ENVIRONMENT
 
 The Company is committed for delivering quality product with minimum
 adverse impact on the environment. A well developed Environment
 Management System (EMS) is established in the Company. EMS is adherent
 to the highest possible standards of environmental management, health,
 safety and compliance with all relevant environmental legislations and
 regulations. The Company has been awarded Environmental Management and
 Quality management Certification according to the international
 standard ISO 14001: 2004 and ISO 9001:2008 respectively.
 
 KSB Group has become a member of United Nations Global Compact
 whereby it has committed to fundamental principles of the said
 organization.
 
 Reviews and audits of EMS are carried out on regular basis. Environment
 related initiatives are undertaken practically at all levels and in all
 functions of the organization. Environmental impacts are assessed and
 actions are taken in planned manner. Some of the environment related
 initiatives are installation of bio-gas plant, installation of fume
 extraction to mitigate air emission and rain water harvesting.
 
 Safety and health of the employees receives utmost importance at every
 workplace of the Company. Safe operating procedures, standards and
 systems have been laid down at all manufacturing locations. Regular
 training of employees regarding safe working guidelines, audit and
 review of every accident, mock drills on emergency are some of the
 steps that are followed to achieve higher safety standards.  Safety
 requirements are also extended to our subcontractors and visitors.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 KSB Care Charitable Trust has started a project of supporting a school
 near Company''s foundry at Vambori. The support is mainly directed
 towards providing infrastructure in the school.
 
 AUDITORS
 
 You are requested to appoint auditors for the current year and to fix
 their remuneration. The retiring auditors Messrs. Deloitte Haskins &
 Sells, Chartered Accountants, are eligible and offer themselves for
 re-appointment. The Company has received a certificate from Messrs.
 Deloitte Haskins & Sells to the effect that their re-appointment, if
 made, will be within the prescribed limits specified in section 224(1B)
 of the Companies Act, 1956.
 
                                   On behalf of the Board of Directors
 
                                                             G. SWARUP 
 
                                                              CHAIRMAN
 
 Mumbai, 22nd February, 2012