sustainability report 2011 - 2012 - impounding pumping station · 2013. 4. 8. · we are the market...

SUSTAINABILITY REPORT 2011-12

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Sustainability Report2011 - 2012

KIRLOSKAR BROTHERS LIMITED

Meeting Technology with Green Energy

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Chairman’s Message 4

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10

19

27

29

47

Strategy and Analysis

Organisation Profile

Report Parameters

Governance: Commitments and Engagements

Stakeholder Engagement

Economic Performance

INDEX


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54

83

86

89

92

99

Environmental Performance

Human Rights

Society

Product Responsibility

Disclosure on Management Approach

GRI Index

71Social Performance

72Labour Practices and Decent Work

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Dear Stakeholders,

I am pleased to present our third Sustainability report, which demonstrates our efforts to promote sustainable development. While preparing the report, we are able to holistically look at the economic, environmental and social performance of our company. Like earlier reports, this report is based on the Global Reporting Initiatives (GRI) guidelines.

We are committed to deliver cost effective solutions in the area of hydraulic machines and systems and also contribute to nation building through our products and services. We are the market leader in India for providing total solutions in the area of fluid handling. We are recognised for our strength in ‘Concept to Commissioning’ and ‘Project Management’.

This year has been a difficult one for us in terms of achieving targeted sales and profitability. One of the reasons was recovering dues from our customers. Political instability and slow decision making in some states has affected the overall business environment and investments. Therefore, we decided that we would first focus on improving our financial position. This is being done by following a strategy to collect the dues from the customers and be selective in taking new projects which have a positive cash flow. We have also decided to shift towards products which have better profitability and faster cash generation.

We have taken many sustainability initiatives in our plants which follow principles of reuse, recycle and reduce. We are working to launch a programme ‘KBL Product Recycle’ which will give our customers an option to return the KBL product at the end of its life cycle. We will recycle the recyclable materials of these pumps. We consider this initiative as one more step towards recycling and our commitment towards product responsibility.

Chairman’s Message

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In keeping up with our group motto of “Enriching Lives”, we believe in partnership with our stakeholders to maintain the competitive edge. This partnership has helped in the development of energy efficient products, low cost products, lowest life cycle cost products and provide services for pumping energy audits. Implementation of dealer and supplier portals is an example of our efforts to use information and communication technology for the benefit of our stakeholders.

Safety of our workforce continues to be our top priority. Over the year we have further improved the compliance to safety norms through internal audits and increasing awareness of safety in workforce.

We are also closely associated with the communities as we believe in building the capacities of society around us. We contribute through initiatives in the area of health, environment, education and infrastructure.

We have more than 700 volunteers, which include our employees, who have worked for creating awareness related to health, environment and education in the society.

Tree plantation is one of the simple alternatives to offset the carbon footprint. We have consistently encouraged tree plantation programme in the vicinity of our plant locations. There have been more than 10000 plantation this year.

We comply with all the statutory requirements related to our business. We regularly review the status of compliance to the statutory requirements for manufacturing plants, project sites and offices.

As I look ahead, we will definitely improve on our economic, environmental and social performances. Since we believe in engagement with our stakeholders we would encourage mutual benefits and contributing positively to the world economy. I hope that we will be able to embed sustainable practices at all levels of our business and take up challenges of tomorrow.

Sanjay C. Kirloskar,Chairman and Managing Director


I am glad to say that more than 35% of the energy that we use in our manufacturing plants is renewable energy. We are fortunate to maintain the share of wind power at this level. This report gives the details of our sustainability initiatives for energy conservation, reduction in raw material usage through value engineering, reduction in wastage and recycling of materials. We have also included Green Procurement Policy, sustainable development awareness at vendors and SA 8000 in our annual operating plan.

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The Netherlands


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STRATEGY AND ANALYSIS


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1. STRATEGY AND ANALYSIS

1.1 Impact

In 2011-12 the slowdown in GDP growth rate affected our business. The adverse effect was more evident in the infrastructure projects. The thermal power projects witnessed a crisis owing to various policy issues. The ensuing liquidity crunch affected our receivables. We continued with our policy of focusing on our own manufactured products. We were selective in bidding for projects on account of payment terms and risks involved. The product business, industry and institutional business, in particular, were affected on account of negative business sentiment. In the current year, our sales turnover has decreased however we have achieved better productivity and improved cash flow.

1.2 Risks

The company has a risk management committee which undertakes evaluation of possible risks to the business and develops mitigation plans. The following major risks were identified and mitigation plans implemented to reduce the impact on the business:

a. Robust process control for product quality at plants: Company witnessed a high cost of quality at some of its plants. Steps were taken to reduce the cost of quality in a systematic manner. The quality controls have been organised to eliminate the failures on account of quality. The revamping of production system is in progress. The measure has yielded good results with significant productivity improvements.

b. Capacity utilisation at plants in view of the economic situation: The slow economic growth affected the capacity utilisation at our manufacturing plants. The reduction in sales order led to the lower plant capacity utilisation.

c. Inability to deliver products as per customer time schedule: The delay in delivery of products was a cause of concern owing to increase in liquidated damages. The company initiated the revamping of its plants which resulted in improved production and adherence to the agreed delivery schedules.

1.3 Opportunities

Growth Drivers: We have identified following growth drivers for our business which we expect will provide opportunities for economic sustainability:

• Focus on irrigation schemes in the12th Five Year Plan • WasteWater Management solutions owing to the legal norms and environmental concerns • Growth of manufacturing industries be cause of rising cost in Western countries

The company has identified following opportunities in the business;

• Promoting range of Lowest Life Cycle Cost Pumps (LLC) design features like high efficiency and less deterioration of efficiency over time, lesser vibrations and low downtime. This makes the payback in less than 3 years for 24 hour duty applications

• Promoting the space saving concept by offering innovative pump design, it saves space by 50% of traditional fire pump houses,equivalent to two car parks.For instance, the

replacement of standard Split case pumps by Multi Stage Multi Outlet pumps (for high rise buildings) for fire application

• Focus on providing pump automation solutions to the industrial as well as agricultural customers

• Sustainable Energy efficient solutions for HVAC (Heating Ventilating and Air Conditioning) application

• Focus on providing pumping solutions based on renewable energy such as Solar Energy. Country’s largest pumping system has been installed at Patna in the state of Bihar

• Complete fluid handling solutions catering to the different industrial segments

TM These pumps have special

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Portugal


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ORANI ATION PR

FILE

G

S

O


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2. ORGANISATION PROFILE

Business Areas and Operational Structure

Kirloskar Brothers Limited (KBL) is one of the world’s leading manufacturers of Pumps and Valves for water and other fluids, Hydraulic Turbines and Fire Fighting pumps. The company also undertakes turnkey projects.

We manufacture Centrifugal Pumps with flow rates ranging from 2 m3/hr to 120,000 m 3/hr and delivery head ranging from 24 m to 850 m. These pumps are single stage or multi stage and find applications in domestic, agriculture, industry, irrigation and utilities.

We also manufacture valves from size ranging from diameters of 100 mm to 4500 mm. We manufacture hydraulic turbines for the hydro electric power generation. Projects as an EPC contractor for various sectors like irrigation, water supply, power and oil and gas are also taken up.

A subsidiary of Kirloskar Brothers International BVin the UK, SPP Pumps Limited specialises inmanufacture of fire-fighting pumps and systems.

Kirloskar Corrocoat Private Limited is a joint venture between Kirloskar Brothers Limited and Corrocoat of UK. It manufactures corrosion resistant coatings for various mechanical componentsexposed to water and corrosive environments.

Kirloskar Construction and Engineers Limited is a subsidiary which specialises in various civil construction projects like roads, tunnels, oil and gas pipe lines.

The Kolhapur Steel Limited is a subsidiary which manufactures steel castings up to 14 tons.

We have 5 manufacturing plants in India which manufacture pumps, turbines and valves. These are located at Kirloskarvadi, Kondhapuri, Shirwal in Maharashtra and Dewas in Madhya Pradesh (Coimbatore plant is now operationalised with effect from June 17, 2011; however it is not in scope for this reporting year).

EPC capabilities

Over 75 types 3Flow up to 120,000 m /hr

Head up to 1200 m

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Joint Ventures

Nature of Ownership and Legal form

Markets Served

Significant Changes during the reporting period regarding size, structure or ownership

KBL has the following direct Subsidiaries and Joint Ventures which add value and facilitate diverse range of activities:

Owned Subsidiary Companies :

•Kirloskar Constructions & Engineers Limited •The Kolhapur Steel Limited •Kirloskar Systech Limited •Hematic Motors Private Limited •Kirloskar Corrocoat Pvt. Ltd. •Kirloskar Brothers International B. V. (KBLBV) Subsidiary companies of KBIBV

Kirloskar Brothers Europe B. V.SPP Pumps Ltd. Kirloskar Brothers (Thailand) LimitedSPP Pumps (MENA) L.L.C.

•Micawber 784 (Proprietary) Ltd. Subsidiary of Micawber 784(Proprietary)Ltd.

• Braybar Pumps (Proprietary)Ltd.

ndComplete list of subsidiaries is available in 92 Annual Report 2011-12 on page 55. This report is available on company website. http://www.kirloskarpumps.com/investors-financial-information-annual-reports.aspx/

It was on May 14, 2011 that the company disposed off its entire equity stake from Gondwana Engineers Limited. Gondwana Engineers Limited was a subsidiary which specialised in providing solutions for drinking water supply and waste water (domestic sewage) treatment on EPC basis to State and Central Government agencies.

In March 2011, entire motor manufacturing unit from Dewas is transferred to our subsidiary Hematic Motors Private Limited. Hence, now Dewas plant manufactures only pumps.

As mentioned earlier Coimbatore plant is operationalised since June 17, 2011 however it is not in scope for this reporting year.

Kirloskar Brothers Limited has the following Joint Ventures

• Kirloskar Ebara Pumps Limited • Kirloskar Corrocoat Private Limited

Kirloskar Brothers Limited is a public limited company listed on 2 stock exchanges; Bombay Stock Exchange and National Stock Exchange of India Limited.

Kirloskar Brothers Limited has major operations in India with export to more than 90 countries. This report gives details of the Indian operations.

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Kirloskarvadi plant manufactures industrial pumps categorised as small, medium and large size pumps. It also manufactures pumps which are designed as per customer requirements. These find application in various projects related to Water, Irrigation, Power and Building and Construction sectors. This plant also manufactures hydraulic turbines used in hydroelectric power generating stations. The number of pumps and turbines sold from Kirloskarvadi plant by type are given below:

Note: The number of permanent employees are consistent with the reporting boundary, whereas therest of the numbers also take into account KBL’s subsidiaries and Jvs.

Kondhapuri plant manufactures valves which intend to meet increasing demands of various kinds of valves from Water Supply and Sewerage Boards of different states. The number of valves sold from Kondhapuri plant is provided below.

Scale of the Organisation

The following key elements provide the scale of the organisation:

Types and number of products sold during the reporting period

Kondhapuri

Kirloskarvadi

Valves (Numbers)

33311

33000

33500

32500

32000

31500

31000

31730

2010-11 2011-12

30500

Element Number/Value/Size

Permanent Employees 2072 (Staff + Workmen on Payroll )*

Revenue from operations FY 2011-12 Rs 17, 819 Million

Total Net Current Assets Rs 1490 Million

Gross debt Rs 3500 Million

Share Capital Rs 159 Million

Largest Shareholder Promoters

* as of 31st March 2012

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25

9

29

87

7

10

100

1000

10000

2010-11

(Nos.) Small and

Medium Pumps

(Nos.) Large Pumps

(Nos.) Turbines

2011-12

100000

47

6

54

7

5 8

1

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Following Business Related, Process Related and Individual awards have been received by Kirloskar Brothers Limited:

• SAPACE2011: Best Run Manufacturing Organisation

• Emerson Cup: India and south East Asia - Newbuildings for its Corporate Office – Yamuna

• CII National Energy Management Award

• In-house Communication Excellence (ICE) – BestIn-house Magazine Award

• Technology Excellence in HR Gold Award - GreenTech Foundation

• Golden Peacock Award for Corporate SocialResponsibility 2010 (received this year)

Awards received in the reporting period

Following Business Related, Process Related and Individual awards have been received by Kirloskar Brothers Limited:

Dewas plant manufactures pumps for agricultural and domestic segment. Shirwal plant manufactures submersible pumps for agricultural and domestic applications. The number of pumps sold during the reporting period from these 2 plants is given below:

Pu

mp

s (N

um

bers

)

Dewas

256772 247490

30418

300000

34243

Dewas

Shirwal

250000

200000

150000

100000

2010-11 2011-12

50000

0


Chairman &Managing Director

Director Director

Corporate Sectors Corporate Sectors Manufacturing

VP & Head

Corporate Research

& Engineering

Development

AVP &Head

Corporate Material

Management

AVP & Head

Corporate Quality

Assurance

AVP Distribution

VP and Business

Head Customer

Service & Spares

GM & Business

Sector Head

Industry

Div. Manager &

Business Sector

Head-Building &

Construction

Senior VP &

Head Corporate

Manufacturing

AVP & Head

Dewas & Shirwal

Operations

Manager Shirwal

Operations

AVP & Head

Kondhapuri

Operations

Steering

Committee

Kirloskarvadi

Operations

VP & Head

Corporate

Human Resource

Management &

Communications

VP & Head Legal &

Company Secretary

VP & Head

Corporate Finance

& Accounts

AVP & Head

Corporate Internal

Audit

VP & Head

Sector Head

Water Resources

Management

AVP & Head

Business Sector

Power

AVP & In-charge

Business Sector

Irrigation

AVP & BusinessSector Head Defence,Oil &Gas

VP & Head

Corporate

International

Institutational

Business

VP & Head

Corporate Global

Marketing &

Strategy

AVP & Head

Corporate

Information Centre

VP & Head

Corporate &

International

Business

AVP & Head

Corporate

International

Business Support•VP - Vice President

•AVP - Associate Vice President

•GM - General Manager

•DM - Divisional Manager

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OUR GLOBAL PRESENCE

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Location of Global Headquarters

KIRLOSKAR BROTHERS LIMITED

'Yamuna', S.No. 98 / 3 to 7, Baner, Pune, 411 045, Maharashtra, India

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Kirloskar Brothers Limited has signed following

• CII Code of Affirmative Action for the under privileged class.

• CII Code for Ecologically Sustainable Business Growth

Memberships in associations and/ or national/ international advocacy organizations;

• American Society of Mechanical Engineers

• CIO association

• Confederation of Indian Industry (CII) - western region

• Federation of Indian Chambers of Commerce and Industry (FICCI)

• Federation of Indian Export Organisation

• Indo American Chamber - Of Commerce

• Indo - Myanmar Chamber Of Commerce

• Mahratta Chambers of Commerce Industries and Agriculture (MCCIA)

• The British Business Group

• The India-CIS Chamber of Commerce and Industry

• The Indian Society of Advertisers


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REPORT PARAMETERS


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The information provided in this report is for the financial year 2011-12 (i.e. 1st April 2011 to 31st March 2012). The previous report was published in March 2012 for financial year April 2010 to March 2011. This report is released annually.

The report includes 49 core key performance indicators and 27 additional performance indicators of Global Reporting Initiative Generation 3 (GRI- G3) guidelines, as applicable to the Company with an application level of ‘A+’. The report has undergone external assurance by an independent assurer namely Ernst & Young Pvt. Ltd. They have provided the assurance statement which forms the partof this report and placed at the end of the report after GRI Index.

ASocial responsibility and mentions about the material issues. Materiality issues are identified and incorporated in the annual plan of all the departments. Based on these each department works for the entire year. The report is for all those stakeholders who may directly or indirectly get affected by our company’s products or services. This report is also for those who are interested in knowing about our sustainability initiatives, our engagement with our stakeholders, our environmental, social and economic performance and for those who are interested in associating with us.

3. REPORT PARAMETERS

Reporting details

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Global Headquarter, Yamuna, Pune

Dewas Shirwal

Kirloskarvadi

Kondhapuri

Mr. Pradip Khisti

Associate Vice President, Corporate Quality Assurance

E-mail: [email protected]

Ms. Sheetal Nagare

Assistant Manager, Business Excellence

E-mail: [email protected]

Contact points for questions regarding the report or its contents

Kirloskar Brothers Limited has 5 manufacturing plants in India. It has Global Headquarters in Pune. This report covers the operations and activities to 4 manufacturing plants and the global headquarters. Hence the scope and boundary of the report have remained same as for the previous year.

Boundary of the report


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We publish our Annual Report. Most of the information is sourced from the Annual Report 2011-12. Other data is based on regular tracking for the reviews by the management.

The manufacturing plant at Coimbatore is operational since June 2011 and performance indicators will be included in our next report while Ahmedabad plant has started its operations in current year in June 2012.

We have implemented SAP enterprise Resource Management System. Various modulesrelated to Finance, Production Planning, Materials Management, Sales and Distribution andQuality Management are implemented. Most of the data is retrieved from the SAP system. The financial data has been sourced from the Annual Report. The financial processes and management processes related Quality Management System (ISO9001), Environment Management System (ISO 14001) and Occupational Health and Safety Assessment Series (OHSAS 18001) are audited by the internal as well as external auditors. Wherever necessary, we have explained the assumptions and/or exceptions while reporting on the GRI key performance indicators.

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organisations

Specific limitations on the scope or boundary of the report

Data measurement techniques and the bases of calculations

ISO 14001:2004 Kirloskarvadi OHSAS 18001:2007 Dewas,

Shirwal & Coimbatore

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United States of America

GOVERNANCE: COMMITMENTS AND ENGAGEMENTS

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4. GOVERNANCE: COMMITMENTS AND ENGAGEMENTS

Governance Structure

The terms of reference of the audit and finance committee have been provided in the report on Corporate Governance Appearing in the Annual Report 2011-12.

The respective committee independently functions in the area assigned to them. Executive Committee (called Committee of Direction) consists of the Chairman & Managing Directorand the two Whole-Time Directors. We have developed cross functional teams at each plant location who are working towards sustainability and the activities are coordinated by sustainability team in corporate office ‘Yamuna’. We have monthly meetings which arereviewed by the CMD. The reviews are minuted for reference. Additionally monthly monitoring results are shared with the top management in monthly review meetings.

Committtees

RemunerationAudit/Finance

4 Independent Directors

1 non Executive Director





Shareholders’/Investors’ Grievance

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Highest Governance Body

Compensation for members of the highest governance body

The Board comprises an optimal complement of independent professionals as well as Company Executives with in-depth knowledge of business. As on the date of this report, there are thirteen Directors of whom one is Managing Director, two are Whole Time Directors and Ten (77%) are non Executive Directors of whom seven (54%) are independent directors. There are 7 independent and non-executive members on the Board of Directors of the company.

Details on the same are provide in 92nd Annual report 2011-12, page no. 27. http://www.kirloskarpumps.com/investors-financial-information-annual-reports.aspx

The performances of the Whole-Time Directors are evaluated / reviewed by the Remuneration Committee. The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and commission. The Report on Corporate Governance in the Annual Report contains details of the remuneration drawn by the Whole-Time Directors. The remuneration by way of commission paid to the Non Executive Directors is decided by the Board of Directors. Approval of the shareholders is taken for payment of commission to Non-Executive Directors which is within the limits prescribed under the Companies Act, 1956. Appropriate disclosures are made in the notice of the General Meetings. The Annual Report also contains details of the remuneration paid to both Executive and Non-Executive Directors. Currently the compensation of the Board members is not based on the environmental or social performance.

Name of the committee

Role Status on Independence

Audit Governance Structure Committee

The Committee has independence for functioning

Remuneration Committee

The Remuneration Committee of the Company is empowered to review and decide the remuneration of the Managing Director and the Executive Directors. Suggested disclosures as per clause 49 of the Listing agreement are made in the Annual Report


Shareholders’/ Investors’ Grievance Committee

The Investors’ Grievance Committee of the Board is empowered to oversee the redressal of investors’ complaints pertaining to share transfers, non receipt of annual reports, dividend payments, is sue of duplicate certificates , transmission (with and without legal representation) of shares and other miscellaneous complaints. The status of complaints and their redressal is disclosed in the Annual Report.


Executive Committee of the Board (Committee of Directors)

The Executive Committee of Board reviews major business transactions / strategies i.e. capital and revenue budgets, long-term business strategies and plans, the organisational structure of the Company, real estate and investment transactions, allotment of shares, borrowing and other routine matters.

The committee reports to the Board


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Selection of Directors

Conflicts of Interest

Mission Statement, Company Values and Code of Conduct

The Directors are selected based on the following criteria:

Risk Assessment

• Qualification and Expertise in the field

• Business experience and achievements

• Ability to bring in the external perspective

To ensure that no conflict of interests arise among the highest governing body, transparency in operations, is maintained with the help of various disclosures under governance. Proper and timely disclosures are made to public through stock exchanges and circulation in news papers, in respect of price sensitive information. Every year the Board members and senior management personnel provide declaration on their compliance with the Code of conduct.

Being a global player, We have our Vision and Mission statements and values in place. For corevalues, workshops at various levels to create awareness amongst the employees are being conducted. Further it has ensured that its corporate governance practices are compatible with thebest in the Country.

There is a structured process for risk assessment and risk mitigation. A committee consisting of senior leaders is constituted to identify the risks for the business. All officers from the General Manager and above managerial positions are involved in the assessment of risk and its likely impact on the business. This committee periodically reviews the risks and actions are planned and implemented to minimise them. The Audit Committee and the Board takes review of the total process of risk management in the organisation. The Audit Committee also reviews the adequacy of internal control systems with the management. Management then implements actions to mitigate residual risks. The Management is accountable for the integration of risk management practices into the day to day activities. The Risk management and internal controls framework adopted by the Company provides the Board reasonable assurance on the effectiveness and efficiency of the Company’s operations; the safeguarding of the Company’s assets and the Company’s compliance with laws and regulations. While developing the strategy or planning for the projects social and environment aspect are considered.

We have adopted the Code of Conduct developed for the Kirloskar Group of companies and also adopted Code of Ethics which is communicated to all staff employees. The company’s Whistle Blower Policy is available on company website in code of conduct section. http://www.kirloskarpumps.com/we-are-kbl-value-proposition-code-conduct.aspx

We have also adopted “The Ravi Kirloskar Quality Prize” on the basis of the CII-EXIM Bank award model for Business Excellence as a means for driving excellence.

Mission

We shall be known globally as a reliable, innovative and cost effective solution provider in Hydraulic Machines & Systems.

Vision

We shall be amongst the first five pump companies in the world by year 2015 and become the preferred choice of customers as well as employees.

Values

Developing and working with mutual trust

Building and nurturing team work

Fairness in dealing with stakeholders

Quality in everything

Commitment towards environment

The Mission, Vision and Values of review are given below:

http://www.kirloskarpumps.com/we-are-kbl-value-proposition-code-conduct.aspx

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Performance with respect to Economic, Environmental, and Social

Implementation of the Precautionary Principle

Externally developed Economic, Environmental, and Social Charters, Principles, or other initiatives to which the organisation subscribes or endorses

We have adopted balanced score card methodology which was developed with the help of an external consultant on strategy development for all the employees. It included the development of perspectives related to the Financial, Customer, Internal Process and Learning and CapabilityDevelopment. Based on this methodology the strategy map is prepared for the organisation to achieve its Vision.The company level objectives are taken to the employees of the company. Basedon this principle evaluation is done for department heads and their subordinates. The economic performance of the company is evaluated and audited by corporate financial accounts department. Related policy framework and strategy development is undertaken.

Corporate Human Resource and Communication (CHRM&C) department along with safety managerslays down the Environment, Health and Safety policy and required manuals. We conduct periodic audits of all our manufacturing units and all our project sites including the corporate office. The audit outcomes are converted into action plans, implemented and periodically reviewed. Corporate Safety Committee is formed to review implementation of the policy throughout the organisation.

CHRM & Ccoordinates company’s involvement with the society through its CSR activities. KirloskarFoundationand Vikas Charitable Trust are supporting us in these initiatives. Along with this, wealso conduct society perception surveys, results of which are presented to the top management and concern plant heads/project managers. While working with the NGO, employees voluntarily participate for yearlong activities. The department communicates with the respective heads of volunteers and makes them aware about these programmes, in terms of its methodology, time required and impact KBL would be assessing such programmes on the society.Updates of theactivities are shared with the management regularly.

The department head based on the findings and requirement communicates policies and strategies to the Executive Directors in monthly review meetings. This is followed by performance review on actions planned.

We have formed a Risk Management Committee to identify risks at the company level. The risks are prioritised and risk owners are assigned the actions to be taken to mitigate the risks and reduce the impact and likelihood of these risks.

We have implemented the review of projects for significant concerns related to cost, quality or time and these are addressed at the highest level of the management.

The Corporate Research and Development department along with product engineering develop new products based on customer expectations, performance of existing products and market analysis. Each business sector has developed the new product development plans and the contribution of new products as a % of sales.

We intend signing the United Nations Global Compact. Through this voluntary initiative, wecommit ourself to the ten principles that range from Human Rights Protection, Labour Standards, Environmental Protection and Anti-Corruption.

Kirloskar Brothers Limited is a member of leading industry associations like CII (Conference of Indian Industries) and ASSOCHAM (Association of Chambers of Commerce of India).


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STAKEHOLDER ENGAGEMENT

Major Stakeholder groups engaged by the organisation

We are constantly trying to embed the sustainability approach in all spheres of our businesses. This cannot be achieved if we work alone. We need pool of diverse perspectives, knowledge and resources. Individual or organisation cannot by themselves identify and implement the solutions to the bigger challenges. Therefore, to achieve long term growth there is a need to interact, engage with each other to solve these problems and make development plans. Hence, we believe that stakeholder engagement is important. We interact with our stakeholders in various ways through our house magazines, meetings, forums and conferences.

The stakeholders are identified internally based on whether they get affected and to what extent a specific group is or will get affected by our operations, products or services. The stakeholders were further selected based on the frequency of interaction, the level of responsibility, the level of influence they have on the company and kind of feedbacks received from all kinds of stakeholders on day to day interactions. The preparation of this report was undertaken internally within the organisation. The major stakeholders are highlighted below.

Stakeholders

Shareholders

Customers

Employees

Suppliers and

Vendors

Dealers & Distributors

Society

Our Stakeholders

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Customers:

We value our customers and strive to give them superior product that gives outstanding experience to them. Through our pioneering technologies, we are also trying to lead the development of environmentally friendly products.

Customer surveys were conducted separately for each business vertical for FY2011-12. Theresultswould be released in June 2012. Survey for customer service and spares was done separately and results available in reporting period, hence survey highlights and actions taken are provided below.

Stakeholder Category Customers

Purpose of Engagement Understand needs and expectations of customers

Mode of Engagement &Frequency

KBL top management interacts with the customers

Once a year

Sales and marketing teams interact with customers regularly

Regularly

Customer Perception Survey conduct

Once a year

Interaction points also include special events, seminars, exhibitions and meets.

Ongoing

Special Market research projects are conducted to understand the market and customers

As per requirement

Special surveys to understand the voice of customer

As per requirement

Visits of customers to ourpremises

Once a year

Toll Free Tatkal Seva Everyday

Survey Highlights Late delivery, slower response for queries, non availability of spares on time, receiving authentic spares, less visits by KBL representatives, weak coordination in project handling.

Action Taken Organisation of training, several measures to safeguard its spares from counter feit, Kirloskar Refurbishment Centre (KRC), Warehouse facility at Kirloskarvadi for small & medium rangepumps, Introduction of Customer Relationship Management (CRM) 7.1.

Solutions to problems faced by our customers we have planned to develop a warehouse, project Mithas for sugar industries, training for customers to make them aware about the product, its use and effective maintenance. These projects are in planning and execution stage whereas implemented of projects like Warehouse launching is done after the reporting period. Brief of this is provided below

Based on the survey highlights, customer service and spares have taken various initiatives. Customer satisfaction result is

Customer Satisfaction Survey

presented in left.

Happy Unhappy Others

9%

73%

18%


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When we analysed the feedback received from our customers we realised that over 90% Sugar Mills have KBL pumps and they had problems because a majority of the owners purchased non genuine Spares.

To develop trust and improve communication with the Mill owners, our CSS team introduced project Mithas - A customer intimacy programme for constant touch points with customers to show them that KBL really cares.

This project has following benefits:

• Making them aware that KBL will deliver all the spares with 100% Delivery Assurance and i nitiatives we have taken to do so.

• Spreading awareness about using original KBL spares increases the efficiency of the pump by 10% and if there is no increase in efficiency then there is a money back guarantee.

• To drive enquiries from the mill owners for KBL Genuine spare parts.

Project Mithas

As per requirements of our customers, key reasons to set up a warehouse:

• Quicker deliveries

• Improving response time

The warehouse facility at Kirloskarvadi for small &medium range pumps:

The warehouse has capacity of stocking more than 5,000 moving parts and delivery of parts is made within one week for breakdown orders.

A robust SAP inventory management system is in place to ensure timely stock replenishment.

State-of-the-art Warehouse

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Shareholders / Investors

A monthly report on shareholders complaints and responses thereon is prepared by the Secretarial Department and the same is placed before Investors’ Grievance Committee meeting.

Investors’ Grievance Committee reviews the investor grievance redress procedure and provides guidance on protection of the interests of the investors.

On recommendations of the Investors’ Grievance Committee, we have taken various initiatives like sending nomination forms and arranging factory visits. Critical feedback, complaints and suggestions received from investors are considered appropriately and addressed. A quarterly report on shareholders complaints is placed at the Board meeting.

We have appointed a professional agency to manage shareholder correspondence. We regularly monitor the performance of the said agency. We have provided draft formats of frequently used documents on website for shareholders. We also have one designated e-mail address for redressing of shareholder grievances. The number of grievances received and replied by us is published in the newspaper every quarter with our financial results.

We have whistleblower and prevention of sexual harassment at work policy for all the employees and stakeholders in place (e.g. vendors, customers, contractual service providers, contractors, agency staff or any other outside parties/non-employees dealing with the company, whether directly or indirectly). Awareness is being created amongst people by conducting workshops.

Information is available to the shareholders through Annual Reports and half-yearly communications, besides release of unaudited quarterly financial statements, under intimation to Stock Exchanges. An analyst meet is arranged every quarter to discuss quarterly financial results. This information is also available on the website.

A business overview– which is apart of the Director’s Report under Management Discussions andAnalysis (MDA), reviews Indian and Global markets with its impact on the company business. MDA inter-alia includes sections on the World Economy, Indian Economy, Global Pump Market- Outlook, Indian Pump Industry, Strategy and Policy, International Business Strategy, Sustainability and Growth Initiative, Risks and Concerns, Marketing Sectors (Water Resources Management, Irrigation, Power, Industry, Gas, Oil and Defence, Building and Construction, Domestic and Agriculture, Customer Service and Spares), Plant Operating performance, Research and Development activities, Global Marketing,Financialperformance,HumanResourceManagementandInternalControlSystems.

In addition to this, to achieve excellence in Corporate Governance, certain additional disclosures have been given in the Annual Report viz. Top ten shareholders, Change in Equity Capital during the financial year, Vision Mission statements. Further, during the year, the Board has adopted certainpolicies viz. Code of Corporate Governance, Corporate Disclosure Policy, Dividend Policy and Policy for placing Action Taken Report / Implementation Report at the Board Meeting.

Stakeholder Category Shareholder / Investors

Purpose of Engagement To communicate company’s financial status, future plans and strategies to build trust of investors.


Annual General Body Meeting Once a year

Company website Regularly

Quarterly financial reports publication in newspapers and websites

Ongoing

Survey highlights Engagement regularly conducted as per plan

Action taken Continue to have engagement for building trust


33

Vendors and Suppliers:

We have a Vendor Management Cell which looks at following issues

• To identify parameters that form the elements of satisfaction in vendors

• To evaluate the Vendor Satisfaction Level (VSL)

• To benchmark our performance with industry competitors

• To analyse the qualitative response obtained from vendors/ suppliers and present them in a structured format.

• To develop strategies to plan further improvement

• To review supplier coverage and the efficiency of transactions with the Company.

We organise surveys and vendors’ meets to communicate with senior management and share their thoughts and inputs.

As summarised in the above table, the key aspects identified are that vendors satisfaction depend on rewards and recognition which can be achieved by addressing finance related issues and organising vendors’ meets and vendor evaluation programmes. They also wanted us to create a platform for vendor interaction and a single window of contact which will help to increase vendor satisfaction and smoothen the progress of vendor relationship. This was also supported by having centralised evaluation for vendors/ suppliers which would result in fair ranking and rewarding.Vendor satisfaction index (VSI) is presented below. Highest VSI was achieved for Dewas plant.

Stakeholder Category

Suppliers and Vendors

Purpose of Engagement

Understand needs and expectations of suppliers and vendors

Mode of Engagement

VendorSatisfaction Surveys

Workplace Assessments

One-to-one Meetings

Vendor Meet

Frequency Once in 2 years

6 months Ongoing process Once a year

Survey Highlights

Payment as per agreed norms. Vendor Meets - Rewards / Reorganisation,Evaluation of Performances. Periodic Performance Feedback to vendors. Timelyresponse to the queries and suggestions by vendor. Timely Receipt of Purchase Orders or schedules to vendors. Centralised contact for vendor interaction in execution.

Action Planned

E- Portal where payment status is available to suppliers. Web Portal based on share point for monitoring of entire procurement activities. RTGS transfers system to be used for payments in suppliers. Centralised Performance Evaluation system for suppliers. Create preferred vendor list based on performance and increase business share with these vendors.

Vendor Satisfaction Index

Kirloskarvadi Dewas Kondhapuri

2

3

4

5

6

76.64 7.41 6.9

8

Industry Avg

34

Vendors Meet 2011

Vendors Meet 2011

(Kirloskarvadi)

As mentioned above based on the detailed expectations of the vendors, action were planned. Below are selected activities and initiatives taken.

About 200 enthusiastic vendors from Palus, Sangli, Kolhapur, Belgaum, Bengaluru and Ahmednagar attended. About 20 vendors were felicitated in the programmes.

Based on these recommendations an action plan was prepared, targets were set and responsibilities were given. One of the major action taken is development of vendor portal.

Vendor Meets (Kondhapuri)

Vendor being awarded


35

As mentioned above based on the detailed expectations of the vendors, action were planned. Below are selected activities and initiatives taken.

We have established a vendor portal based on feedback received from our vendors. This portal has simplified and improved processes related to purchasing activity which includes, request for quotation, submitting quotation, receiving quotation and uploading purchase orders. The portal enables us to give relevant information to vendors – for example, pending purchase orders,inspection details,pending payment report and cleared payment report. Portal also helps improve our communication with vendors for inspection calls, dispatch details etc. We also encourage our vendors and suppliers to provide us innovative ideas and work as partners with KBL for implementation of improvements. Due to this portal it is very easy for vendors to update their profile and make them competitive.

Hence it will reduce non–value adding activities for both vendors and KBL, reduce supplier’sdependency on KBL buyers for day to day activities. There will be improvement in accuracy of Documentation, increase in transparency and improvement in internal efficiency.

We also are planning to conduct training programme for vendors on energy conservation. This is a new initiative for developing a green supply chain. Dewas plant has targeted to initiate ENCON/resources conservation initiatives at vendor end. They are targeting at 10 vendors of this year.

Case Study: Vendor Portal

Energy Conservation awareness to suppliers at Kirloskarvadi

36

Dealers and Distributors

It has been observed that the end-user satisfaction is guided by the performance of all the stakeholders in the entire chain; dealer and distributors is one of the important components. Rather than spending time trying to constantly stay in touch with each customer we can stay in touch with them through our dealers and service providers locally and be adequately informed about them.

Apex Dealers Conference

Stakeholder Category Dealers and Distributors

Purpose of Engagement To develop understanding about business operations and implement business plans into action.


Apex dealers meet Once a year

One to one meet Ongoing

Dealer portal Everyday

Surveys Bi-annual

Survey Highlights Survey conducted in FY2011-12 and results will be out in June.

Action Taken Will be planned in financial year 2012-13

We at KIRLOSKAR BROTHERS LIMITED

take pleasure in inviting you for the

February 10,2012

Apex Dealers ConferenceApex Dealers Conference


37

Dealer Training Workshops

KBL organises dealer training workshops for imparting knowledge and knowhow to ensure that the dealers derive maximum benefits out of its world class products.

The training workshops focus on:

• Knowledge about the design, concept and constructional features of centrifugal pumps

• Applications and selection of the right pump for specific purposes

• KBL range of products and their applications

• Assembly and dismantling of pumps

• Quality aspects and requirements

• Preventive maintenance and trouble-shooting

• Benefits derived by using genuine spares and their positive impact on pump performance

• Special emphasis on Energy Audits and conservation of energy in pumping systems.

38

Employees

The Management Committee reviews the employees’ issues on a regular basis. One to one feedback, employee satisfaction, employee growth plan and organisation culture are discussed in these meetings.

The Board is also kept informed of senior level changes in management, status on signing of UnionWage Agreements and Remuneration of Senior Executives.

Stakeholder Category Employees

Purpose of Engagement To know employee satisfaction level and their requirement


Employee Engagement Survey

Annual for Staff, once in 2 years for workmen.

GT / PGT feedback session/ Quarterly

One to one Probationers feedback session

Quarterly

Exit interviews feedback and analysis

Monthly

Mahasabha Bi-annually

Sharing of Employee Engagement Survey results

With each department after the survey results are out

Speak Out session feedback Quarterly

Survey Highlights Survey was conducted in the reporting year but results will be outinFY12-13

Action Taken Will be planned in current financial year


39

Actions Implemented

•Review of Q12 (12 questions which are considered in the survey) actions by Directors, Job Description is given at the time of joining, Laptops are provided to sales personnel

• Sharing of companies quarterly performance, organising of Mahasabha for interaction between employees and directors, speak-out sessions, coffee with directors for individual employees

•Results communicated to all staff employees

Based on the previous year’s survey feedback following actions were implemented.

The organisation provides multiple platforms to all employees for generating their ideas and thoughts. The participation, involvement and representation of different levels of employees in different CFTsand other improvement project teams is ensured. This enables the organisation to develop the people strategies in an innovative manner.

A knowledge sharing platform “Sharekha+n” has been introduced for Gen Y employees whichis official, but informal. “Sharekha+n” is a rotating title and mascot. Attitude matters as much as knowledge. This platform gives the opportunity for Gen Y employees to present on any topic oftheir interest relating to academics or job function. This platform enables intra – departmentcommunication and connects. Language is no barrier as long as people can receive theinformation and message being delivered. Every 3 months, the most effective Sharekha+n is given a certificate “Sharekha+n of the Quarter”.

SHAREKHa+N: Handing over the mascot

Maha-sabha: A place where every employee gets chance to question the directors and communicate with them on any possible issues.

44

Society

We believe that a good company delivers excellent products and services; while a great company does all that and strives to make the world a better place! In order to promote economical, education, environmental growth we are constantly interacting with the society. We also work in field of health and sanitation.

Stakeholder Category Society

Purpose of Engagement To know the concerns of the society


One to one interactions Regularly

Awareness Programmes Regular

Celebrating Festivals Annually

Society Perception Survey Annually

Kirloskar Foundation and VikasCharitable trust activities

Ongoing

Vasundhara Festival Annually

Survey Highlights Survey was conducted in the reporting year but results will be outinFY12-13

Action Taken NA


41

Corporate Social Responsibilty (CSR)

Society perception survey is conducted by the Karve Institute for all our plants locations. In addition; our Dewas plant conducted society perception survey with an objective to understand the perception of the society in which the plant operates. We also wanted to know about our role as a corporate and also to capture the expectation of society as a whole from KBL. We received expectations of the people from KBL for its contribution in the sectors for the development of the society. It highlighted that 34% of people wanted us to contribute for environment, whereas 32% were for health and remaining wanted us to work in the field of education, sports and cultural activities. Employees have also contributed to the social cause on large scale. Glimpses are presented below.

Tree plantation done by employees in the

company premises (Dewas)

Employees demonstrating hand wash

technique in school (Kirloskarvadi)

Blood Donation by employees (Yamuna)

WASH volunteers (Yamuna)

Awareness programme by Kondhapuri

volunteers

Training given to the volunteers

46

Care for mother & child health

CSR Activities Conducted

Care for mother and child health is fundamental to creating a healthy society. Poor education level & inadequate social infrastructure leaves a huge gap in the desired level of health care facility.Thereare several activities under company’s social initiatives which provide opportunities for basic health care facilities. Few of the programme conducted in this area are

• Health education,

• Women checked for antenatal care,

• Blood pressure check up,

• Physical check up,

• Screening for obstetric complaints,

• Hemoglobin check up,

• HIV check up,

• Guidance about diet,

• Tetanus toxoid vaccination,

• Guidance about exercises

Antenatal Awareness Workshop, Antenatal checkups, Medical Checkup for villagers, AID’s Awareness Programme, Career Development Programme, Visit to Ideal school by Teachers forInnovative Ideas, Participation of school students in Competitive exams, Blood Donation Camp, Tree Plantation Activities, Plant Nursery Development are some of them.


43

Health Check Up (Senior Citizens)

Health Awareness Camp (Tandalgaon)

Health Check Up (School Children)

Aids Awareness Programme

Career Guidance to Students

Kirloskar Vasundhara Festival

Vision :

1 To make sustainable improvement in school environment with respect to water and sanitation facilities and hygiene practices.

2 To inculcate habit and good practices in students on use of WATSAN facilities and for following hygiene practices.

Mission :

To run annual clean and Beautiful School (CBS) Competition Project to inculcate habits 1and discipline of cleanliness among school children.

2 To run WASH Initiative(a)to create awareness about WATER, SANITATION and HYGIENE in students.(b) to develop soft skills in these students on use of acilities WATER, SANITATION fand hygiene practices.

3 School Sanitation Infrastructure Project (SSIP) :To improve WATSAN Infrastructute CBS School, by (a) Studying their need, preparing proposals and appeal for resources. (b) Depending on fuding-resource, facilitate/ participate in implementation of SSIP proposals.

Water Sanitation & Hygiene (WASH) Programme

There are various activities conducted by Vikas Charitable Trust. It includes activities like celebration

of New Year with visits to school, Mi Va Maze Bhavitavya (Me and My future), Thet Bhet (Interviews of

prominent personalities), Pradnya Shodh Programme (Knowledge–Wisdom search programme), rain

water harvesting in schools, cycle rally during Vasundhara festival, Dhyas adarshacha bulletin. For

each month the programme is planned and year long activities are conducted.

With thesupportofKirloskarFoundation,KBLemployees/volunteersconductsWaterSanitationand Hygiene (WASH) awareness programme in the schools allotted to them. A detailed monthly plan is prepared wherein each volunteer is given the training, before he/she interact with the school. The activities involve mapping the sanitation awareness status of the schools, giving them simple tips for improving their sanitation awareness. This was also supported by exhibitions, hand wash demo–useofUVlightandparentsmeeting.

Vikas Charitable Trust

44


45

Materiality

The success of a business depends on understanding the competitive environment and on actions taken for achieving the goals. Thus in a rapidly changing environment business which may be because of customer demand, societal change, political change, climate change, governmental regulations etc we need to understand what makes the major difference to the organisation and our stakeholders. We understand that each of the aspect mentioned above are important, so going further ahead we need to understand to what extent they are impacting. Hence to know the materiality aspect we have built up a matrix, which is based on feedback received from our stakeholders through various interactions.

The Y axis shows the concerns of our stakeholders and X axis shows the concern of organisation.

In defining our material topics, we have taken into account reasonably estimable sustainability impacts, risks, opportunities, existing regulation and voluntary initiatives. Our materiality assessment also includes interest and topics important to our stakeholders (like centralised performance evaluation for vendors and suppliers, innovative solution for energy saving, space saving and ease in maintenance) as well as the organisations own values (KBL’s values like Fairness in dealing withstakeholders, Commitment towards environment) and goals. A content of this report is guided by these prioritised topics and issues as stated in the picture above.

Vendor/ supplier - Motivation,

Evaluation of Performances

Upgradation and development

of Vendor/ supplier

Providing training/installation material

Reduce response time

Effective communication of stakeholders

Offer value added solution

Product Quality

Environment protection

Develop dealer competency

Health and Sanitation

Carbon footprint

Training and Development

Connecting dealers with customers

Increase technical experties with respect to different sectors

Attrition

Work-life Balance

Anti-corruption

Human Rights

Cultural and Sport Activities

Biodiversity

Supply Chain

GHG emissions

Centralisation Performance Evaluation for vendors/suppliers

Solutions providing energy saving, space saving, ease of maintenance

Sta

ke

ho

lde

r

Organisation

50

Oman


51

ECONOMIC PERFORMANCE


48

50

0

26

5

30

0 89

5 24

48

55

4

15

,03

4

33

03

59

31

5

30

0

61

13

51

31

57

41

5

13

,43

1

37

7

Inte

rest

ve

Di idnd

Dp

e

ion

er

ciat

Reser

ve

mpl

e

xpns

s

E

oye

Ee

e

rio

nsa

Ope

at

nd

othe

r Exp

ense

s

Taxe

s an

d Dut

ies

Mat

erials

18

2 30

3

31

1,4

90

3,1

12

28

12

,66

1

10,000

1,000

100

10

1

Direct Economic Value Generated for the year FY 2011-12

Scale: Amount in Rs

Materials 31

28

301 182377

Operation and other expenses

Employee Expenses

Interest

Depreciation

Dividend

Reserve

Taxes & Duties

. (million)

3,112

1,490

12,661

Economic Performance Amount Rs. (million)

2009-10 2010-11 2011-12

28

5. ECONOMIC PERFORMANCE

Like the previous year, this year also was not easy in terms of achieving the targeted sales and profitability. The cash flow position has not been encouraging and we have decided that we will first focus on improving our financial position. Graph below gives the economic performance since 2009-10 to 2011-12.

100,000

49

Summarised Balance Sheet

In the last year, we concentrated on improving the balance sheet and positive cash generation was taken as the most critical parameter to achieve. Therefore, there was a control on the revenues as products were dispatched only to customers who had capacity to pay. Bids for new project orders were made selectively and only for projects which were profitable and cash positive throughout the execution period. This has resulted in decreasing order board. On the other hand the percentage of number of project orders with negative cash flows has decreased from 47% to 43%.

Product sales (even for projects) have been encouraged and hence gone up to 58% of turnover last year with positive cash generation. Steps have been taken at all our plants to increase capacity with minimal investment.

10

,92

1

11

,03

611,200

11,000

10,800

10,600

2010-11 2011-12

Net

Fix

ed

Ass

en

t2

,95

7

2,1

49

3,1

58

16

73

6,2

51

5,7

97

40

32

Inve

stm

en

ts

Net

Cu

rren

t A

ssen

tsBalance Sheet details (Amount Rs. (million)

Balance Sheet details (Amount Rs. (million))

Inta

ng

ible

Ass

en

ts

7,000

4,000

6,000

3,000

5,000

2,000

1,000

0

2010-11 2011-12

7,4

34

3,4

87

15

9

7,2

76

7,5

36

3,5

00

15

9

7,3

78

2010-11

2011-12

7,000

8,000

4,000

6,000

3,000

5,000

2,000

1,000

Net Worth Share Capital ReservesLoans

Total Assets (Net) Rs. Million


50

Summarised Profit and Loss Account:

Our company is now focusing on profit driven sales with good cash flow. This focus will continue to be on manufactured products rather than traded items. The action has comparatively reduced the top line, but has improved the cash flow.

Sales Other Income

1 1

200

400

600

800

1000

1200

10

100

1,000

10,000

100,000

19,4

69

129

278

1,14

2

1,24

1

37 61

159

23 31

2010

-201

1

2011-2012

17,8

19

463

Pro

po

sed

Div

iden

t

Ad

ditio

nal T

ax

on

Div

iden

t

Gen

era

l R

ese

rve

Su

rplu

s C

arr

ied

to B

ala

nce S

heet

2010-11 2011-12

13

,43

1

18

,56

9

12

,66

1

17

,94

2

1,3

51

1,0

28

3,1

57

30

0

33

01,4

90

34

0

41

5

31

2 1,1

42

61

4

90

5

28

3,1

12

30

3

37

7

Mat

eriasl

Emplo

yee

Cos

t

*O&O

E

ee

io

Dpr

cati

n

Inte

rest

Pfi B

ee

T

rot

for

ax

rofit

After T

P

ax

There are no payments made to the government except applicable payments of duties and taxes.

* alan

c-P

rv o

e

*B

e

ei

usy

ar

Io

ncm

e Ta

x

Tota

l Exp

nditu

re

e

10,000

1,000

100

10

1

2010-2011 2011-2012

Appropriations (Amount Rs. million)Sales (Amount Rs. million)

Expenditure (Amount Rs. million)

*Operating & Other Expenses,**Balance brought forward from previous year

100,000

2010-2011

56

Risks and opportunities for the organisation’s activities due to climate change

There are lots of uncertainties due to climate change and few things can be predicted.

• Availability of power is limited which will impact the use of pumps.

• Scarcity of water and increasing requirement of drinking water will provide opportunities for water treatment plants.

• India is one of the largest consumers of ground water. In the drop of water table, requirement of pump would increase.

• There will be increased in water transfer projects i.e. transfer ring water from water abundant region to water scarce region.

• Demand for energy efficient products like 5 star rated pumps will increase.

• Migrations cause due to climate change that can be because of land degradation, water scarcity or insufficient energy. This increases the interstate pressures and conflicts. As a result there may be delays in projects.

• The most immediate effects of climate change would be on health as a result of extreme weather conditions. This may have large impact on our business, as our stakeholders in large would be affected.

• With all such changes in natural resources, political will is required more than just an expression of best intentions.

• Availability of Coalfor Thermal Power Plants: The power sector customers will face stringent regulations for mining of coal and this will impact the setting up of new power plants using coal as the source of energy. This may have adverse impact on the power sector growth.

• Land Acquisition: There is pressure from NGOs in land acquisition and this process is likely to become a major issue. Under these circumstances the projects are likely to have adverse

impact resulting in delay in orders for Irrigation sector and Nuclear power sector.

•Nuclear Plants safety issues due to Tsunami in Japan and opposition in European countries:

The nuclear projects are likely to be impacted due to public concern on nuclear power plant safety. Additional safety requirements may delay the project execution and fresh orders.


52

Company has own following institutions

• Kirloskar High School,

• Kirloskar Junior College

• Kirloskar Bal Vikas Mandir

• Kirloskar Vidayalaya School Library

• Kirloskar Play Group

Development of infrastructure investments and services for public benefit

Kirloskar High School, Kirloskarvadi

These are highlights of some of our CSR initiatives done in the reporting period.Team was invested.

As amount of Rs. 20,25,000/- was invested for public benefit in Dewas. Similarly, at Kirloskarvadian 13,24,890/- by Vikas Charitable Trust and Rs.13,68,000/- by our company CSR amount of Rs.


59

ENVIRONMENTAL PERFORMANCE


55

MATERIALS

The reduction of material consumption is directly linked to the cost reduction initiatives for improving competitiveness of the company products. We had targeted material cost reduction to 69.1% of sales and could achieve 71.1% material cost to sales. Previous year the material cost as % to sales was 69.1%. We have set target for material cost at 68.7% to sales for financial year 2012-13.

MT: Metric Ton, kL: kiloliters, kg: kilogram, CFT: cubicfeet, NA: Not Applicable for these locations

*Thinner=1096.58 Kg.; Paints and Primers = 56.73 kL. Paper consumption at Yamuna 7790.0.4 kg

6. ENVIRONMENTAL PERFORMANCE

Location wise procurement in 2011 -12

Total Material Used by Type Unit Kirloskarvadi Dewas Shirwal Kondhapuri

Steel

Pig Iron MT 5170.68 1836.43 NA NA

Cast Iron MT 1241.89 1094.39 76.25 645

Silicon Steel MT 1336.79 0 NA NA

Mild Steel MT 1504.49 454.61 NA NA

Cast Steel MT NA NA NA 357

Stainless Steel MT NA NA NA 6.5

SG Steel MT NA NA NA 208.7

Other Steel MT NA NA 425.63 15.7

Cement MT 50 36.75 NA 74

Copper MT 4539.46 78.12 28.07 NA

Lime Stone MT 541.37 0 NA NA

Oil kL 76.30 5.13 0.028 1.79

Paint, Primer, Thinner kL 268.44 *1153.31 10.9

Rubber kg 7344 35.95 3119.49 799

Plastic kg 86.74 18782 36290.07 MT

Wood CFT 880374 NA NA 39567.5

Plywood Sq.ft. 303937.28 NA NA NA

Paper kg 10250 3000 NT 2007.5

56

In addition to above material 880374 cft of wood and 303937.28 Sq.ft of plywood is also used. Petroleum coke is also used but not reported as the value is negligible.

Kirloskarvadi:

Dewas :

100000

10000

1000

15

96

.77

18

36

.43

23

44

.16

22

19

9

38

8.3

6

2.2

5

70

7.1

5

86

.68

37

.9

5.9

6

10

94

.39

18

78

2

45

4.6

1

36

.75 78

.12

11

53

.31

36

.95

5.1

3

66

.32

10

1

Pion (

g Ir MT)

Cs

Ir

)

at

on (MT

Si icon S

t el (MT)

l

el

Seel

Mi d

t (M

T)

ent MT)

Cem

(e

T

Coppr (M

)

Oil ()kl

Rub

(kg

ber

)

Pl stic (k

g)

a

k

Paint, Prim

er, Thinner (

l)

100000

10000

1000

43

53

.19

51

70

.69

77

8.5

80

05

.75

12

54

4

18

56

.36

80

4.7

7

76

.91 15

6.5

5

44

9.1

6

54

1.3

7

12

41

.89

73

44

86

.74

15

04

.89

50

45

39

.46

76

.3

26

8.4

4

53

7.8

4

13

36

.89

10

1

Pig Iron (M

T)

Cas I MT)

t ron (

Silicon S

teel (MT)

Mil S

teel MT)

d

(

Cemen (

T)

tM

oppe (

)

C

rMT

Oil (kl)

L mst

e (T)

ie

onM

Rubber kg)(

Plastic (k

g)

Pain, P

rimer, T

h nner (kl)

t

i

Dewas 2011-12

Kirloskarvadi 2010-11 Kirloskarvadi 2011-12

Presented below is material procurement in each plant for FY2010-11 to FY2011-12. On X-axis are the materials procured specifically by that plant. Along with the material, ‘unit’ is mentioned under each bar of the graphs.

Dewas 2010-11

100

100

57

Shirwal

Kondhapuri

We are looking for options which would make recycling more economically attractive thus reducing our material used.

100000

10000

1000 11

5

76

.25 66

0

60

.75

74

28 28

.07

30

33

00

0.0

28

31

19

.49

0.0

32

28

00

0.8

2

36

29

0.0

7

10

1

01

0.01

Cast Iron(MT)

Silicon Steel (MT)

Cement(MT)

Copper (MT)

PaintPrimer

Thinner (kl)

Oil (kl) Rubber (kg) Plastic (kg)

100000

10000

1000

58

4

64

5

35

7

6.5

15

.7

20

8.7

20

.3

1.7

9

32

4.3

7

10

.9

14

40

79

9

67.5

10

1

Cast Iron

(MT)

Cast Steel

(MT)

Stainless

Steel (MT)

Other

Steel (MT)

SG

Steel (MT)

Paint

Primer

Thinner (kl)

Oil (kl) Rubber (kg)Wood

(CFT)

Kondhapuri 2010-11 Kondhapuri 2011-12

Shirwal 2010-11 Shirwal 2011-12

100

100


58

Recycle and Re-Use

Case Study: Trolley Washing Station (Dewas)

With our conventional ways of recycling we are also planning to categorise the materials as

• Productre-used (KBL product recycle)

• Material re-used for new products (packaging)

• Material re-used for less demanding purpose

Based on above understanding and plant requirement our Dewas Plant has taken up the target for recycling and reuse of cast iron to 1500 MT from 1819.71 MT.

Problem Identified: Due to dirty trolleys components gets rusted and damaged.

Challenges 1. Cost effective solution

2. Ample space required for trolley movement and washing.

3. Use of water and its recycling

Actions Taken 1. We had to construct a new underground tank for washing and a shed was required. Instead we used our old unused ETP collection tank.

2. Space was sufficient enough for the washing and movement of trolleys.

3. Spray nozzles along with pipe lines were installed.

4. Since the washing area constructed is near to the ETP collection tank, water transferring to ETP has become easy. No extra pipe lines laid for transferring the effluent.

Benefits: Saved Cost Of New Tank Construction - Rs. 1.5 Lac.

Saved Cost Of Pipe line - Rs. 15 Thousand

This approach of reusing has saved our cost and along with this it has overall reduced our carbon footprint which otherwise would have been higher.

100000

Cast Iron (MT) Mild Steel (MT)

Cast Steel (MT)

Reuse Material

Plastic (MT)

Steel (Nail&Sheets)

(MT)

Wood (MT)

10000 37

47

.6

18

19

.71

46

5

13

.18

34

.8

1.8 3

29

34

.0

100

10

1

Kirloskarvadi Dewas Kondhapuri

1000


59

Case Study: Fabrication of MS Structure for Hoist (Dewas)

Problem Identified: In the new DB setup hoists are required, for this structure is to be fabricated.

Challenges: 1. Cost effective solution.

Actions Taken: 1. We have constructed a new pump testing setup and old setup removed.

2. We used old rail tracks (kept idle for last many years) for fabrication of structure.

Benefits : CostofOldMaterialFromScrap(MSStructure)-Rs.3.6Lac.

This approach of reusing has reduced cost and our carbon footprint

60

14

.7

ENERGY

Direct Energy Consumption

The source of direct energy in KBL is coke, high speed diesel, petrol and biodiesel. Details are given below.

For Yamuna, corporate office the fuel consumption is 17.9kL which includes both diesel as well asbiodiesel. A small quantity of LPG is used in plants as fuel and biogas is used in canteens.

Our Kondhapuri plant has targeted to reduce its fuel consumption by 10% as compared to previous year.

65

6.1

26

63

0.0

42

0.9

15

4.6

53

4.9

31

75

.8

14

.7

10000

1000

100

10

1KirloskarvadiYamuna Dewas ShirwalKondhapuri

Coke Diesel HSD Petrol (NDT Use)

65

6.8

10

59

.1

49

6.4

20

0.6

1200.0

800.0

600.0

400.0

200.0

0.0KirloskarvadiYamuna Dewas ShirwalKondhapuri

Total Direct Energy use (GJ)

Energy for DG Set (GJ)

*GJ:

Gig

a J

ou

les

*GJ:

Gig

a J

ou

les

1000.0

100000


61

We are trying to increase the use of renewable energy wherever it is possible. We use 37% of renewable energy out of which 99% is wind energy.

Kondhapuri plant has targeted to reduce electricity consumption by 2% as compared to previous year.

Our Dewas plant has taken up the target of increasing its use of renewable energy by procuring 2820000 kWh wind power by year 2012-13.

Indirect Energy Consumption

The indirect energy consumption is from grid of respective state electricity board. Along with this we also use renewable energy like wind and solar.

Electricity (State Electricity Board) - GJ

Kirloskarvadi

Yamuna

Dewas

Shirwal

Kondhapuri

38935.7

13045.4

1195.3

212.3 420.5

Renewable Energy (GJ)

25743.1

20.2

8071.2

11.4

0.4

100000

10000

1000

100

10

1

0.1

Yamuna Kirloskarvadi Kondhapuri Dewas Shirwal

15.0

Wind power Solar power

62

Energy saved due to conservation and efficiency improvements.

Initiatives to reduce indirect energy consumption and reductions achieved.

Energy saved by each of the plant is graphically represented below. Based on this savings done in terms on money is Rs. 73.2 million in case of Kirloskarvadi, Rs. 4.67 million by Dewas, Rs. 0.27 million by Kondhapuri and Rs. 4147.2 by Shirwal plant.

In Kirloskarvadi 149.9 GJ is the energy saved due to ENCON project and remaining due to efficient product, process and pattern manufacturing.

We are well aware and we ensure precautionary approach to environmental concerns and hence undertakes many initiatives to promote greater environmental responsibility. We have our ENCON policy and well established energy conservation teams in each of our units. They set their targets and responsibilities for energy and water conservation. These targets are based on the previous year performance. Based on these targets, various initiatives are planned to achieve targets.

Kondhapuri plant

• Reduce Electricity consumption by 2% as compared to previous year

• Actual Electricity Saving (Units in kWh) – 4.38%

• Energy cost saving with respect to Sales Value 6.89%

• Reduce Fuel Consumption by 10% as compared to previous year

• Actual Fuel Saving in kL – 36.13%

• Reduce leakages of compressed air below 10%

• Actual leakages – 7%

Dewas

Reducing specific electricity consumption of manufacturing shop to 3.19 kWh/Eq. Pump in the year 2012-13 from 3.36 kWh/Eq. Pump achieved in 2011-12.

For foundry the target set for reduction in specific electricity consumption is 1165 kWh/Eq. Pumpfor the year 2012-13.

Energy Saved (GJ)

343.5

39.2

1.4

10000

1000

100

10

1

Kirloskarvadi Kondhapuri Dewas Shirwal

8978.4.0


63

Kondhapuri

Over the years we have increased our production; however we have succeeded in getting a decrease trend in specific energy consumption.

Light Pipe System

ADOPTIONOFNEWENERGYEFFICIENTTECHNOLOGY(PROCESSIMPROVEMENT)

90 Degree Milling Cutter

45 Degree Milling Cutter

Energy Efficient Lighting for Shop and Stores

0

100

200

300

400

500

600

2009-10 2010-11

kwh/Rs. Mn

2011-12

Specific Energy Consumption (Kondhapuri)5

40

.86

44

1.9

9

33

6.1

8

64

Initiatives to provide energy-efficient or renewable energy-based products and

services, and reductions in energy requirements as a result of these initiatives.

Mobile Pump Controller: This innovative product was launched on December 19, 2011. It is designed to assist a pump user to monitor and operate the pump by remote with the help of a mobile. Available through the vast distribution network of KBL channel partners across the country, it can be installed on different types of new and existing pumps. After the installation, the user can operate the pump from any mobile irrespective of the mobile service. The product is a blessing–it conserves and deals with erraticpower supply and tough terrains to access the pump location.

We have also received one more feather in our cap and that is trademark registration for ‘Jalverter’ a unique, patented, multipurpose off-grid solar inverter. This off-grid solar inverter is used for the innovative solar power conditioning unit which is the heart of Kirloskar solar pumping system / power pack. It can solve the power shortage problem of not only about 5,00,000 villages in India but also has the potential to save approximately 10000 MW of power, if we just solarise all the agriculture and domestic pump load.”

Our Dewas and Shirwal plants manufacture pumps for agriculture and domestic applications. During the reporting period Dewas has developed 14 pump models which have received “5 Star” label from Bureau of Energy Efficiency (BEE) with “5 Star” rating.

This year our Dewas plant has targeted development of 50, 5 star rated models.


65

WATER

Total water withdrawal by source

3Total Water Consumption (m )

Source of Water :

3Drinking water bottle consumption of Yamuna is 292.5m and for Kirloskarvadi it is 4.0 m3 . We have 3started tracking tanker water consumption for Yamuna,corporate office which is 1330m for this

year. In case of Shirwal and Dewas, drinking water is used after the RO treatment and the values are included in the above graph. Kondhapuri plant has targeted to reduce its water consumption by 2% as compared to the previous year.

3Borewell (11197 m )

3Borewell (21786.18 m )

Dew

as

Sh

irw

al

3Bottle (292.5 m )

Open well (235499 m3)

3River (4578.3 m )

3River (18960 m ) 3Tanker (1330 m )

Ko

nd

hap

uri

200000

150000

250000

100000

50000

19

17

91

20

27

2

12

62

9

53

45

13

70

9.1

5

21

78

6.1

8

11

19

7

45

78

.3

20

58

2.5

23

55

03

.1

Kirloskarvadi

(Factory)

YamunaDewas Kondhapuri Shirwal

2011-122010-11

0

Kir

losk

arv

ad

i

Yam

un

a

3Bottle (4.062 m )

66

Specific Water Consumption with respect to production values for each of the plant is presented below. Kondhapuri, Dewas and Shirwal plants results are encouraging and shows decreasing trend.

All these locations are zero discharge as all the water treated is used for gardening. Only storm water during excess rain goes out of the premises.

Some of the major water conservation activities implemented are listed below:

• Metering of end users for water consumption

• Control of water supply through restricted supply hours

• Control of leakages through repair and replacement of GI pipes with HDPE pipes

• Replacement of old water taps by water saving taps

• Use of ETP water for gardening and toilet flushing

Dewas plant has targeted for reduction in specific water consumption of plant to 0.078m3/Eq. Pump in the year 2012-13 from the 0.082 m3/Eq. Pump achieved in 2011-12. Kondhapuri plant has considered reduction in water consumption by 2% as compared to previous year.

The total water consumption of Kirloskarvadi is increased however they have succeeded in increasing the recycling of water.

Dewas plant has taken up the target for recycling and reusing of process water from 0.059 m3/Eq. 3pump to 0.055 m /Eq. pump of the year 2012-13.

Total volume of water recycled and reused.

80.0

60.0

40.0

20.0

51.3

21.7

8.1

19.5

58.8

16.7

7.411.2

0.0

Kirloskarvadi DewasKondhapuri

Specific Water Consumption (kL/Mn)

Shirwal

2010-2011 2011-2012

120000

80000

160000

40000

11

99

78

18

88

1.0

4

11

4

68

75

73

6.7

5

42

42

.21

14

82

20

14

05

3.8

6

0 0

Kirloskarvadi YamunaDewas Kondhapuri

3Total Recycled Water (m )

Shirwal

2010-2011 2011-2012

0


67

The highest values obtained in the entire year are presented below. Some of the values have gone beyond the permissible limit which was seen only once in entire year.

mg

/L

TOG (Total Oil and Grease) for Kirloskarvadi is below detectable level for the entire year and hence is not reflected in the graph where TDS (Total Dissolved Solid) is applicable only for Kirloskarvadi plant and hence are not reflected in the graph for other plants.

As mentioned earlier, all our plants are zero discharge and treated water is used for gardening or is reused for flashing. We have ground structures in such a way that we reduce the runoff and maintain good percolation. Thus we maximise the groundwater recharge.

Targets set: Dewas plant has targeted for reduction in specific water consumption of plant to 0.078 3m /Eq. Pump in the year 2012-13 from the 0.082 m3/Eq. pump achieved in 2011-12. Kondhapuri

plant has considered reduction in water consumption by 2% as compared to previous year.

TSS :Total Suspended Solids | TOG : Total Oil and Grease | BOD: Bio chemical Oxygen Demand

COD : Chemical Oxygen demand | TDS : Total Dissolved Solid

Effluent Water Quality

11

.0

Yam

una

Kirlos

kava

i

rd

Kondha

puri

wDe

as

Shirw

al

TOG BOD COD TDS

0.1

1.0

10.0

100.0

1000.0

10000.01

4.0

54

.0

19

0

40

13

64

11

5.0

32

15

01

4

56

58

08

66

.0

20

.4 64

.0 17

24

89

23

6

0.1

TSS

68

EMISSIONS EMISSIONS

Total direct and indirect greenhouse gas (GHG) emissions

Total CO2 emissions (Tons)

Initiatives to reduce greenhouse gas emissions and reductions achieved.

Note: For calculation of tons of CO2 1 kWh of electricity=0.0008 tons CO2, 1 Kilolitre of Diesel =2.828 tons CO , 1 ton of Coke= 2.998 tons CO are taken.2 2

As reflected from the graph there is no major increase in the CO2 emissions except in Kirloskarvadi plant. Where as Dewas, Shirwal and Yamuna (corporate office) have shown a decreasing trend.

Globally, CO2 concentrations have risen from 25% to possibly over 39% over the last century. Till May 2011 the concentration of atmospheric CO globally was at around 394.16 ppm. 2

Followingare few of the initiatives taken by us for reducing our GHG emissions throughout ourplants

• Reduce, reuse and recycle of resources to the possible extent

• Adoption of energy efficient equipments

• Adoption of energy efficient processes for manufacturing

• Adoption of latest technologies

• Maximise use of renewable energy

• Maximise conversion efficiency

• Adherence to green purchase policy

• Awareness, training, information sharing

• Energy efficient product manufacturing

• Initiatives for environment protection

In addition to this we have also given importance to tree plantation.

100000

11

93

3.5

12

09

6

31

64

.8

31

35

31

9.2

30

7

52

.2

48

10

17

.6

99

1

1000

100

10

1

Kirloskarvadi

2010-2011

Dewas

2011-2012

Kondhapuri Shirwal Yamuna

10000


69

NOx, SOx, and other significant air emissions

Emissions to Air (ug/m3)

Environmental Impacts of transporting products and other goods and materials used for the organisation’s operations and transporting members of workforce

KBL follows all the environment norms of Central Pollution Control Board. Given below is the table which highlights the highest reading obtained in entire year. It can be seen that all our highest reading are also within the permissible limit.

As trees remain one of the most effective means of drawing excess CO2 from the atmosphere and we keep making provision for the same. It is estimated that roughly around 225.4 tons in FY 2011-12where as 200.7 tons in FY2010-11of CO2 will be sequestered. We consider this as the start and hope that year on year we are able to reduce our CO2 footprint either by offsetting it or by our sustainability initiatives. Our Dewas plant has targeted plantation of 10000 new trees.

Limit: Permissible Limit, SPM: Suspended Particulate Matter, SO2: Sulphur Dioxide, NO2: Nitrogen Dioxide, CO: Carbon Monoxide and RPM: Respirable Particulate Matter.

There is strict adherence to the norms applied to transport products, materials and employees. Vehicle Condition Check, Pollution Under Control (PUC) checks are in place to avoid any significantenvironmental impacts during transportation. Further we have plans to conduct a survey internally toknow our carbon foot-printing through local commuting. Details will be provided in the next report.

12000

10000

8000

2010-11

No. of trees planted

9220

2011-12

10352

SPM

0.1

1

10

100

1000

10000

10

08

08

02

00

0

55

14

.51

8.3

23

.7

0.1

7

0.1

4.7

41

21

.51

7.4

69

.4

78

34

.84

3.5

NO2 CO RPM

Lmit

i

Kirlos

karv

adi

ewa

D

s

hw

Sir

al

Knd

hapur

i

o

SO2

70

WASTE

Type of waste and disposal method

Weight of transported, imported, exported or treated waste deemed hazardous under the terms of Basel Convention

Percentage of products sold and their packaging materials that are reclaimed by category.

Parameter Unit Yamuna Kirloskarvadi Kondhapuri Dewas Shirwal

Food Kg NT 4463.41 294 4034 NA

Paint Sludge

MT NA 38.94 0.505 11.68 NA

Oil soaked cotton waste

MT NA 25.145 525 NA NA

UsedOil Lit NA 13.125 160 100 NA

Empty used containers of Resin/Hardner

Nos NA 138 NA NA NA

Plastic KG 30 NA 404 6090 NA

UsedBatteries

Nos. 100 19 6 NA

*E - Waste kg 645 0 200 950 NA

Burnt Sand MT NA 19036.73 NA 1342.41 NA

MS Materials

MT NA NA NA 185.795 2.335

All the waste mentioned above are either given to authorised agency declared by MPCB or the authorised recycler. In our Dewas plant, specific generation of paint sludge is 0.076 kg/Eq. Pump; now they have targeted to reduce it to 0.072 kg/Eq. Pump. They have also targeted to reduce their specific generation of plastic waste to 0.02 kg/Eq. Pump from 0.021 kg/Eq. Pump achieved this year.

NT: not tracked

No hazardous wastes were imported or exported. However, hazardous wastes generated in various production processes like waste or used oil, non- ferrous metal, hazardous waste as defined in Schedule - 4 of Hazardous waste (management & handling) Amendment Rules 2003 are sold to theMinistry of Environment and Forests (MoEF)/ Central Pollution Control Board (CPCB) registeredcyclers/ re-refiners/re-processors only.

The company manufactures large variety of pumps from very small pumps for domestic applications to custom designed pumps for large projects. It is therefore not possible to ensure reclaiming of the product or the packaging material. We are making efforts to increase the use of packaging material which are recyclable. We have started using such recyclable products for packaging in our plants. Our products are serviceable and in case of operational problems either these are repaired at site or are repaired at our authorised service centre. Such repairs result in most of the pump components reused and only the defective parts are replaced. We have not reclaimed packaging material of our product. However, we plan to establish a product recycle programme in the next 2 years which will be extended to reclaiming of packaging material as well.

SOCIAL PERFORMANCE


77

LABOUR PRACTICES

AND DECENT WORK


73

7. LABOUR PRACTICES AND DECENT WORK

We appreciate the contribution of our people in the performance of the company and also their support towards contributing to the environment and society. The workforce in various business sectors, corporate functions and manufacturing plants of the company are given in table below. It

1can be seen that number of staff and temporary workforce has increased over the last year .

*** This value shows only the temporary workforce. ** Gives workforce details for all the locations which is beyond project boundary.* Others gives function specific workforce distribution which is beyond report boundary. However distribution of workforce as per the report boundary is provided in the graph below.

As per the report boundary total employees are 3577 and below is the distribution of workforce. Around 29.9% of the employees are workmen, 28% staff, and 27% floating. However, remaining percentage is contributed by workforce from trainees, temporary, operator trainee, earn and learn and trainee sales officer category.

1Manpower details are inclusive of locations considered for Sustainability Report boundary.

WORKFORCE

Personnel Area Staff Workmen Others*

Building & Constructions 17 0 0

Corporate Functions 174 15 76

Customer Service & Spares 60 3 15

Distribution 89 1 93

Gas, Oil & Defence 27 0 2

Industry 49 1 5

Irrigation 86 1 3

Power 106 0 14

Sector Shared Services 70 18 1

Water Resource Management 76 3 5

Dewas Operations 148 468 240

Kirloskarvadi Operations 346 524 1085

Kondhapuri Operations 45 29 64

Shirwal Operations 9 25 29

Grand Total 2011-12 as on 31st March 2012**

1302 1088 1632

Previous year total As on 31st March 2011

1286 1089 51***

74

1002

1070

8930

126

6

265

11

978

Breakdown of workforce with respect to the location is given below. It can be seen that maximum floating population is present in Kirloskarvadi whereas maximum staff population is in Pune corporate office. Number of workmen are highest in Kirloskarvadi because of the size of the foundry which is followed by Dewas plant.

We constantly venture to incorporate and implement our organisational values and vision in our people thus trying to achieve our mission which says that “we want to be the preferred choice of

Staff

employees”.

Workmen

Trainees

Fixed Term/ Temporary

Apprentice

Operator Trainees

Earn & Learn

Trainee Sales Officer

Contract Manpower

Distribution of workforce

Location and category wise distribution of workforce

Dewas

1

10

100

1000

14

0

46

95

24

29 2

32

5

15

15

17

5

89

26

5

8 6 6 6 7

16

96

95

26

65

23

4

1

44

30

34

6 46

24

5

9 9

Kondhapuri Pune Shirwal

af

Stf a

Wor

kmn

Traine

es t

Appren

ice

Fixed Te

am

mp

rr

/ Te

oa

y

Oper

ator

Traine

es

Earn

& Lea

rn

at

Con

trc

Man

power

Traine

es S

ales

Office

r

Kirloskarvadi


75

The total number of employees leaving the organisation are 200. Overall attrition rate for the FY2010-11 was 16.21% whereas for 2011-12 it is 15.35%. We are constantly striving to make our company a better place to work. We are working to further reduce the attrition rate by next year.

It can be seen from the graph that Shirwal plant has no attrition and this trend is same as previous year. While this sustainability report is for the 4 plant locations and corporate office at Pune, the location–wise attrition data presented below covers all regional offices.

Graphs below details the attrition of employees with respect to the employment category.

ATTRITION VALUE

24.319.30

15.70

16.10

11.1

16.1

Senior Management

Junior Management

Middle Management

Percentage Attrition (2010-11)

Region-wise attrition

Percentage Attrition (2011-12)

Attrition rate (%)16.21

2010-11 2011-12

15.35

14.8

0

100

200

300

400

500

16

140

Dewas

Attrition (No. of staff employee) No. of staff as of 31st March 2012

Kirloskarvadi Kondhapuri Shirwal Pune

40

346

7

450 9

462

90

15

15.2

15.4

15.6

15.8

16

16.2

16.4

76

Kirloskarvadi

26 to 30

Shirwal

51

Kondhapuri

31 to 40

Regional Offices No.s of employees Regional Offices No.s of employees

Ahmedabad 8 Kondhapuri 7

Bangalore 6 Lucknow 2

Bhopal 2 Mumbai 7

Bhubaneshwar 1 Nagpur 1

Chennai 4 New Delhi 4

Dewas 16 Pune 90

Kirloskarvadi 40 Secunderabad 6

Kochi 1 Shirwal 0

Kolkata 5

Attrition data for regional offices

Gender-wise Attrition (No. of males)

Age wise attribution

In last year’s report Shirwal plant and Nagpur regional office were not reported as they had zero attrition. This year we have displayed all the locations giving their current status.

Guided by KBL values, fairness is ensured while dealing with employee’s right from the recruitment to separation without any bias of gender, caste and religion. Increase in number of female employees over last few years and lesser attrition rate reflects fairness and equal opportunity. From the total of 200 employeeswho left the organisation, 153 employees are from report boundary. Only 5 of them are females, working in Pune office and others are male employees. As per the report boundary distribution of male employees is provided in graph to the left.

From the graph, it can be seen that maximum numberof employees (i.e. 60) who left the organisation are from the age group of 26 to 30 whereas second highest group which show attrition is 31 - 40 with 53 employees leaving the organisation.

16

40

7

85

0

Dewas

<25

Pune

41 to 50

42

6053

36

9


77

BENEFITS TO EMPLOYEES

(I) GRATUITY

We have an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service.Vesting occurs upon completion of five years of service.

We make annual contributions to gratuity fund established as trust. Company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation.

(II) SUPERANNUATION FUND

The objective of the scheme is to provide every member of the superannuation fund on his retirement or his becoming incapacitated prior to such retirement or to the widow, children or dependents of the member on his death, with an amount in the form of an appropriate monthly pension.

(III) PROVIDENT FUND

Eligible employees of the company are entitled to receive benefits under the Provident Fund,adefined contribution plan, in which both employees and the company make monthly contributions at a specified percentage of the covered employees’/workmen’s salary. The contributions as specified under the law are paid to the Provident Fund and Pension Fund set up as irrevocable trust by thecompany or to the respective Regional Provident Fund Commissioner and the Central ProvidentFund under the State Pension scheme. We are generally liable for annual contributions and anyshortfall in the fund assets based on the government specified minimum rates of return or pension and recognizes such contributions and shortfall, if any, as an expense in the year incurred.

(IV) LEAVE ENCASHMENT

We provide for the encashment of leave(s) subject to certain rules. Employees are entitled to accumulate leave, subject to certain limits, for future encashment. This accumulated leave can be encashed at the time of superannuation.

(V) MEDICLAIM HOSPITALISATION POLICY

This policy provides employees and family members the medical assistance as and when required. The mode of this policy comes in two options:

a. Cashless treatment in listed hospital

b. Reimbursement option for non listed hospitals

We have also extended the MEDICLAIM hospitalisation benefits to the employees superannuated from the services of KBL. This will take care of the employees and the health of their spouse when they require it the most.

(VI) PARIVAR SURAKSHA YOJANA

This scheme is to provide financial relief in the form of a monthly payment to the spouse of an employee, who dies while in the services of the company. These are given as per the nominations given by the employee for his provident fund or to the spouse in absence of any such nominations.

Some other benefits advanced to the permanent employees are: 20% discount on pathological tests in selected pathology laboratory, Annual Medical check for staff employees and their spouse. Allowances like Conveyance Allowance, Education Allowance and Leave Travel Assistance.

78

HEALTH AND SAFETY

Collective Bargaining Agreement

Safety statistics includes contract labours.

Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements

We have internal unions at manufacturing units at Kirloskarvadi, Dewas, Kondhapuri and Shirwal. These unions form representative bodies of the workmen. They negotiate with the management and settlements are signed with these unions. Currently it covers all permanent workmen present. 27% of the employees i.e. 1088 out of total 4024 workforce are covered by Collective Bargaining Agreement. This figure is for all the location which is beyond project boundary. However, within the project boundary 29.91% i.e. 1070 employees out of 3577 are covered by the Collective Bargaining Agreement.

We have a Safety, Health and Environment (SHE) policy, which encompasses all regulatory norms along with International Labour Organisation recommendations. A process is established for recording, reporting, analysing and taking action on accidents and unsafe conditions.

There bipartite committees include Safety Committee, Works Committee, Canteen Committee and Joint Development Councils. These committees thus cover 100% of the workforce.

We monitor on regular basis the safety statistics through monthly review sessions. We even consider minor injuries which include first aid cases. From this year we have started monitoring Man DaysLost and Occupational Disease Parameters. The region wise safety score card is presented below.

Based on this monitoring, actions required in improving safety conditions are communicated to the relevant site through safety manager. We have recently set up a corporate safety committee to guide and monitor all sites and manufacturing units, to improve near miss, accident and implementation of all statutory requirements related to safety, so as to achieve our goal of zero accident and zero man days lost. These initiatives have resulted into following figures for all the plant.

Sr. No. Events Kirloskarvadi Dewas Kondhapuri Shirwal

1 No.ofFatalities 0 0 0 0

2 No. of Lost Time Incidence Cases (LTI)

6 3 0 0

3 No. of Minor injuries including First AidCases

47 16 14 0

4 No. of Near-misses 27 15 04 8

5 Frequencyrate 1.23 1.44 0 0

6 Severity rate 26.19 11.04 0 0

7 Man Days Lost 128 23 0 0

8 Occupational disease NIL NIL NIL NIL

For notice period regarding operational changes we follow the procedures mentioned in the IndustrialDisputes Act (21 days). This Act was passed by the Central Government of India to make provisions for investigation and settlement of industrial disputes and came into existence in April 1947.


79

Health and safety topics covered in formal agreements with trade unions.

Note: Man days lost and occupational diseases monitoring is started this year and so values for last year are reflected as zero.

As per the statutory requirement all the workforce in plants undergo the required medical checkup. Silicoses were the only identified occupational diseases in one of the plant (Kirloskarvadi). Nevertheless no employee has been reported for the same in the said plant in the reporting period.

As a regular activity we conduct health and safety trainings. Total training hours for this year are 1598. We have conducted 13 safety audits and number of mock drills conducted are 5.

The safety topics covered in the agreements are wearing of safety shoes, safety helmet and such other personal protective equipment (PPE) as per the requirement of the working area. To aware workmen about their safety and importance of PPEs we have mentioned that if they expect company to give compensation or any kind of medical treatment they should not fail to or neglect the use of safety gadgets or appliances provided to him.

We provide curative and preventive health services to the employees, their families as well as the community at large. We have conducted following activities.

• Annual Medical check for staff, employees and spouse (above 40 years of age).

• Blood Donation Camp as organised in Yamuna on February 22, 2012. Total 105 employees donated blood.

• On the eve of World Diabetic Day (November 14) we had organised an exhibition under aegis of Diabetic Association of India.

• Awareness programme was arranged on “First aid and Trauma Management” at Yamuna, Pune.

• Circulated reading material on “World No Tobacco Day” and World health day.

• On the eve of world sight day presented information on common vision problems.

• Awareness programme was arranged on the topic “Parenting for Modern Age” by Dr. Bhooshan Shukla.

We focus on continual up-gradation of competencies and skills of our employees. Staff category employees are given training on technical aspects as also managerial and behavioural competencies.

TRAINING

0

20

40

60

80

100

120

0 000 0

13

9

95

82

80

73

.93

52

9.7

4

2.6

6

37

.54

N of t l es

o. fa a itio. t i

in

sL I

N of los t me cidence ca es ( T )

No. f Minor injuries including fi st ai cases

o

rd

o. N ar-M sses

Nof e

ir

Severity atea d

lo t

M n ays s

Oa i

e

ccup t on diseas

160

2010-11 2011-12

140

Frequency rate

15

1

80

Identification of training needs is done for all employees and their consent is obtained through Performance Appraisal Management System (PAMS) and Competency Assessment Centres. We have modified our competency framework involving senior leaders in finalisation process of competencies. We have also developed training partners who are able to provide us training modules in requisite areas. Training partners include Wisdoms solutions, TUV-SUD, KIAMS.

We provide support to the employees to enhance personal skills and potential which would improve the organisation’s human capital. Average Training hours per employee per year for 2011-12 are as given below:

All employees are evaluated based on performance and merit. We have implemented Performance Management System (PMS) which requires target setting and review process on quarterly basis. In the performance management system, individual performance plans are cascaded from the Annual Operating Plans of the respective department.

The targets address the 4 perspectives of the Balance Score Card bringing business and customer focus to all levels. Employees have an opportunity to develop their own view of their performance and discuss it with their supervisor. Formal evaluation ratings are assigned at the end of the year.PMS instills a high performance culture in the organisation.

All employees have the opportunity to advance their careers. During the performance review a potential review and career progression plan is also discussed with each employee. All employees have the opportunity of moving to higher levels.

Thus we believe in motivating and developing skills which in turn would lead in improvement at organisational level.

Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings are as follows

Senior Management 20 hours

Middle Management 24.64 hours

Junior management 28.48 hours

Workmen 12 hours

Art of Living Reading of Engineering Drawing

Workshop on Fitness Exercises RKQP Awareness Training

Outbound Training on Team Building Safety Awareness

Effective Living & Leadership Maynard Operations Sequence Technique (MOST) Awareness

Communication Skills Project Management

FirstAid Outbound training on Team Building

Work Culture (Karya sanskruti) Positive Attitude & Creative Thinking

Basic & Advanced Excel Stress Management Programme

Naturopathy Problem Solving Techniques

Visionary leadership (Japan) Margdarshan - Counseling for Progression (HODs)

Employees receiving regular performance and career development reviews

Assumption: 1 man day = 8 hours


81

Composition of board of directors by age and gender is as given under

WORKFORCE DIVERSITY

We believe in giving equal opportunities to all based on the talent they have. We encourage recruitment of female employees in the company and motivate them at all levels. Similar is the case with age group with which we work for improvement of our business. We had 103 trainees under age group of 25 who were trained in our manufacturing plants for almost 6 to 7 months. Here they were given an opportunity to work in all sectors of the plants and then were recruited in the appropriated places in the company. Distribution of workforce base on gender is provided below.

Ratio of the basic salary of women to the basic salary of men for each employee category is presented in graph below

Presently board does not have any minority representation. Further details about the broad membersare available in the Annual Report.

As on 31st March 2012

Location Staff Workmen

Male Female Male Female

Kirloskarvadi 342 4 524 0

Dewas 135 5 469 0

Kondhapuri 45 0 29 0

Shirwal 9 0 25 0

Corporate, Pune 408 54 23 0

Total 939 63 1070 0

Age 41-50 51-60 61-70 70-80 81-90 91-100 Total

Male 1 3 6 0 1 1 12

Female 0 0 1 0 0 0 1

22.2

16.4

27.1

23.8

10.4

Agewise distribution of workforce (%)

41 to 50 > 51

< 25 26 to 30 31 to 40

0.00

0.20

0.40

0.60

0.80

1.00

1.20 1.13

Senior mgt

0.98

middle mgt

0.86

Junior mgt

88

Europe


89

HUMAN RIGHTS


84

8. HUMAN RIGHTS

Support to Freedom of Association and Collective Bargaining

Human Rights Screening for Suppliers and Contractors

Discrimination

Child Labour, Forced and Compulsory Labour

In keeping with the spirit of the Constitution of India wherein Right of Association is a FundamentalRight, we respect the rights of association of its employees and has a constructive relationship with trade unions at all locations.

Employees are free to join Trade Unions, as it believes that most individual and collective grievancescan be resolved through bipartite forums.

Approximately 2072 employees of the permanent category, who come under the unionised category, are covered by Collective Bargaining Agreements. These agreements include Health and Safety provisions along with compensation structures in the form of a Memorandum of Understanding (MoU)between the management and the recognised Union as per the provisions of the applicable labourlegislations. These MoUs are signed every three years, after negotiations between representativecommittees of the Union and the Management. While the union membership may vary from eachlocation, all eligible employees, irrespective of his membership, enjoy the benefits as agreed in the MoU.

We uphold the law of not employing children in any of its factories. It is bound by statutory legislation (Factories Act, 1948) and proper records are maintained in this regard.

We have Supplier and Dealer assessment process to take care of issues related to social aspects before inducting them in organisation. All legal and regulatory requirements need to be fulfilled before final selection. We periodically audit job contractors for adherence to labour laws and other statutory requirement like minimum wages, PF and payment of gratuity; thereby ensuring preventionof violation of Human Rights and Employment Malpractices.

In addition to Code of Conduct which covers the aspect of non-discrimination, the company has implemented a Whistle Blower Policy. The policy explicitly mentions pre-requisites to ensure that the identity of the whistle blower is kept confidential. No incidents have been reported under this policy for the year 2011-12.

We uphold the law of not employing children in any of its factories. It is bound by statutory legislation (Factories Act, 1948) and proper records are maintained in this regard. Every plant location displaysboard of no child labour in there campus. We strictly adhere to the laws of the land with regard to forced and compulsory labour, which are prohibited under various acts and statutes.


93

SOCIETY


87

9. SOCIETY

Social Initiatives

Society Perception Survey

conducted (June-July 2011) for Dewas

Prevention of Corruption

We regularly undertake activities and different medium of interaction by which we are aware about our impact on the community. We meticulously monitor our environmental and economic facets and keep checking and confirming that we do not affect the community in negative terms. We conduct society perception surveys to assess social as well as environmental impacts. Based on the suggestions given in the survey we plan for development programmes. We have been able to proactively contribute to preservation and protection of the environment and has also contributed to integrated social development.

The Details of Society Perception Survey (June - July 2011) conducted for Dewas is presented below. This survey is conducted by HRM & C Dewas. Selection of community members was doneon random sampling and survey questionnaire was filled based on the Ravi Kirloskar Quality Prize (RKQP) Model requirement.

The above graph represents the percentage of people suggesting the area in which they want company to conducted programmes for the development of the society. Highest i.e. 34% people from the local community wants us to work in environment sector. The second preference is given to health which is 32% and then education sector. Based on this survey we plan to our CSR programmes.

Similar kind of study was scheduled for Kirloskarvadi in the month of May 2012. The analysis of this will be presented in next year’s report.

Through its CSR activities, we aim to upgrade the quality of life of the communities around areas of operations. In all its CSR initiatives, we recognise and respect diverse community needs by undertaking specific and need-based initiatives across locations.

We considered society as our major stakeholder. Details of this can be seen in stakeholder engagement.

We have Board of Directors audit/finance committee which meets regularly and monitors the working. We circulate a booklet on Code of Conduct to all its new employees. It includes the Whistle Blower Policy which is displayed on our website.

All employees have been trained in organisation’s anti-corruption policies and procedures through Code of Ethics. There are no incidents of corruption reported during the year 2011-12.

2% Sports

% C

ur

8ult

e

a h32% He lt24%

d

ucati

nE

o

E34% nvironment

Public Policy Positions and Participation

Legal actions if any

Senior leaders are members of various policy making entities. For example CMD is Chairman ofCII Africa Committee. He is on the Board of Trade, Government of India, and also a member of the Government-Industry joint task force.

KBL is also member of CII, Maratha Chamber of Commerce Industries & Agriculture, and IndianPump Manufacturer’s Association (IPMA).

No such legal actions have been filed against the company. No misleading statements have been made about our competitor’s products and services.

Any information regarding competitors is collected only through legally permitted sources. The Company does not engage in activities which generate or support the formation of monopolies, dominant market positions, cartels and similar unfair trade practices.

88


97

PRODUCT RESPONSIBILITY


90

Monobloc Horizontal Split Case Pump (Up) Pump (KDS)

10. PRODUCT RESPONSIBILITY

Health and Safety impacts of products

Labelling of Product and Service

We put high priority on safe working environment. We meet all safety regulations of concerned markets and goes beyond the safety regulations to provide safer products. There has been a continuous up-gradation in product safety with new technologies being brought in.

We have recently started working on ‘KBL product recycle scheme’ which is in its initiation stage. The products manufactured by us consist of components which are 90% to 100% recyclable. As part of commitment to environment KBL takes responsibility of proper disposal of the equipment at the end of the useful life. Our product is designed for long life of more than 20 years. However, in the event this product becomes unserviceable and needs to be removed from operation.

Under this scheme, we are planning to recycle our products (Pumps) manufactured in Dewas andKirloskarvadi. We would be considering the customers from Maharashtra and Madhya Pradesh for the phase 1 programme.

We are working on schemes if 10 pumps are received for recycling we will gift 1 new Kirloskar pump to the school or to a farmer. These schemes are in discussion with the committee and it may soon be finalised.

All information related to product is provided to the customers through product brochures and Installation and Operations Manuals available at the website. Our products conform to standards like IS, Factory Manual (FM), Under Laboratories (UL) and all the required information related toproduct is provided to customers.

As mentioned above, we have started our work on ‘KBL product recycle programme’, after the pilot project is run we are planning to develop detail procedure/manual with the help of which customers will be made aware about the programme and how they can give us back the product. This manual will be distributed during the purchase of the selected product. (Currently the project is under planning and experimental stage; hence it will get modified in the process.) As mentioned earlier in the report we have 5 star labeled products which signify the energy efficiency. This directly saves the stakeholders electricity cost and indirectly reduces power requirement. We have also refined labelling for our spare parts. This will help the customers in buying authentic KBL spare parts.

There were no incidents of non-compliance with regulations and voluntary codes concerning product and services information and labelled.

91

Customer Satisfaction and Results

Marketing and Communication

Customer feedback is collected through customer meets, day-to-day interactions and formal surveys. Each business sector prepares action plans to improve the customer satisfaction on continual basis. Details are provided in stakeholder engagement section.

KBL adheres to all norms, standards and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. No false claims and /or unfair means are used while promoting a product or a service. We also adhere to sustainability norms for the marketing tools such as avoiding neon signs, use of art paper calendar and promotion material. Gift articles are also made of eco-friendly materials.


101

DISCLOSURE ON MANAGEMENT APPROACH


93

11. DISCLOSURE ON MANAGEMENT APPROACH

Economic Performance

Kirloskar group of companies has the core purpose of “Enriching Lives”. We have continuously worked towards this purpose. The Mission and Vision statements describe the purpose and theaspirations of the organisation. We have ambition to become “one of the first five pump companies in the world” as articulated in the vision statement.

We have developed strategy and long range plans (LRP) in line with this vision. While moving towards the vision we believe in achieving balanced results for all the stakeholders. Therefore all the strategies and action plans are based on needs and expectations of the stakeholders.

KBL has following goals:

• Maintain leadership position in Indian market

• Achieve Return on Capital more than 25%

• Develop innovative products and solutions

• Move towards higher proportion of product business

We have identified critical success factors in order to achieve concrete progress towards our vision:

• Global Engineering,Procurement and Construction (EPC) approvals for growth in international markets

• Capability to respond to global engineering challenges

• Timely project execution

• New Product Development based on energy efficiency and cost competitiveness

We have structured ourselves to serve specific customer segments in a focused manner. Accordingly business sectors serving Water, Irrigation, Power, Building and Construction, Industry, Oil and Gas, Marine and Defence are defined. Distribution sector focuses on stock and sale of Agricultural and Domestic segment. Customer Support and Services (CSS) provides after sales service to customers.

Each of these business segments are supported by 4 manufacturing plants.

Each business segment develops its internal vision in line with the company vision. These segments also develop strategies through a structured process of taking stock of the current business environment. It also considers the stakeholder expectations, internal performance of the previous year and SWOT analysis. Annual Operating Plans (AOP) are prepared to deliver the strategy. We have constituted a risk management committee of senior management personnel which identifies and prioritises the risks associated with the business and plan actions proactively to minimise the impacts of such risks and ensures continued sustainability of the economic performance.

The economic performance is reviewed periodically for all the business sectors, manufacturing plants and the supporting functions through a structured review process. We follow the P -D – C - Acycle for continual improvement of its economic performance which is the founding block of theISO 9001 Quality Management System implemented by us.

ndOur market standing and the outlook for Indian Pump Industry is described in the 92 Annual Report for Financial Year 2011-12. This reportis available on the website http://www.kirloskarpumps.com/investors-financial-information-annual-reports.aspx

Context: A detailed discussion on World Economic Environment, Indian Economic Environment, Global Pump Market Outlook, Indian Pump Industry and growth drivers is available in the Management Discussion and Analysis section of the Annual Report. This is available on the nd92website http://www.kirloskarpumps.com/investors-financial-information-annual-reports.aspx

Goals and Performance:

94

Environmental Performance:

Goals and Performance:

Responsibility:

Management:

Training and Awareness:

We have developed a comprehensive Environment, Health and Safety (EHS) Policy. This policy describes the commitment of the company for protection of the environment through prevention of pollution. It also stipulates compliance to all environmental norms. The policy also covers prevention of employee injuries, ill health and compliance to legal and other requirements related to environment and occupational health and safety. Our EHS policy has the following focus areas:

• Conservation of raw materials, natural resources and energy

• Reduce, reuse and recycle of wastes and its proper disposal

• Promotion of green procurement and green products

• Identification, control and/ or elimination of occupational health and safety hazards, to reduce incidents.

• Integration of EHS procedures into every operation

• Selecting and employing subcontractors who are committed to and continually demonstrate improved EHS performance

• Communication of EHS policy and creating EHS awareness amongst all

• Setting EHS objectives at relevant levels and reviewing them to ensure their achievement

Kirloskar group has instituted an Energy Conservation Award to encourage implementation of initiatives for reducing energy consumption per unit of production. Each manufacturing plant has formed Cross Functional Teams (CFTs) to work on initiatives related to reduction of energyconsumption and natural resources like water and raw materials. The reduction of material consumption is directly linked to our cost reduction initiatives for improving the competitiveness of the company products. We had targeted material cost to 69.1% of sales and could achieve 71.1% material cost to sales. Previous year the material cost as % to sales was 69.1%. We have set target for material cost at 68.7% to sales for financial year 2012-13. We have set targets for energy conservation and increase in renewable energy use. They are mentioned at relevant sections in the report.

It is the responsibility of the Business Sector Heads, Manufacturing Plant Heads and Corporate Function Heads to implement the EHS policy. The corporate management representative supportedby location management representatives are responsible reviewing and updating EHS standards and ensure compliance to the declared policy.

All the manufacturing plant locations have taken targets related to conservation of energy and natural resources. These are regularly reviewed by the top management. We have been certified for EMS 14001, OHSAS 18001 and it is audited by the certifying agency for its performance on Environment Management System.

Various initiatives are undertaken to make all employees aware of the Environmental Policies andPlans. These include celebration of Energy Conservation Week, competitions to promote increased importance of energy savings. Annual Energy Conservation Audit is conducted by an independent panel for the achievement of energy conservation targets and future plans. Awards are given to the high scoring Kirloskar Group companies. The assessors independently evaluate the performance based on the reports, site visits, presentations, discussions and observations.


95

KBL has won four awards as mentioned below:

Context:

Responsibility:

Labour Practices and Decent Work Environment

• First Runners-up performance in Energy Conservation at a Large Manufacturing Unit – KBL, Kirloskarvadi.

• Best Performance in Energy Conservation at a Small Manufacturing Unit – KBL, Kondhapuri

• Second Runners-up Performance in Energy Conservation at a Small Manufacturing Unit – KBL, Shirwal

• Best Renewable Energy Project – KBL, Kirloskarvadiand

Initiatives like “Vasundhara” festival help develop awareness not only in KBL employees but also in our local communities.

In addition to above events related to Vasundhara festival were also conducted in Jalgaon, Solapur,Kolhapur, Nagpur, Nasik, Daund, Sangli, Ratnagiri, Indore, Hospete, Koppal and Aurangabad. Details of the same can be seen on below mentioned website.

http://www.kirloskarvasundharafest.in/index.html

KBL has implemented its energy conservation initiative for more than a decade. It has made efforts to reduce its impact on GHG through use of renewable energy sources like wind and solar. The two main manufacturing plants at Kirloskarvadi and Dewas use wind power as a significant source of energy. The company established its new corporate office in 2009 which is a LEED Platinum Rated building certified by IGBC for new construction. We develop energy efficient products which are rated 5 star by the Bureau of Energy Efficiency (BEE). These pumps are 20% more energy efficient and help reduce the carbon foot print at the users end. Industry sector consumes significant energy in pumping. KBL energy audit services help industries identify the inefficiencies in the pumping system and provide solutions which have very attractive payback periods ranging from as low as 2 months to 2 years. The energy audit initiative has also helped reduce the carbon foot print of the industries. The energy audit services are undertaken by a dedicated team under Distribution Sector of the business.

KBL has adopted People Policy and its covers the aspects of Employment Promotion, equality of opportunity and treatment, security of employment, training, wages, benefits and conditions of work, freedom of association and the right to organise, collective bargaining, consultation, examination of grievances, and settlement of industrial disputes.

Issues related to minimum age and child labour are addressed through compliance to the legal requirements for regulation of child labour. Similarly, safety and health aspects are covered in the EHS policies.

Business sector heads, manufacturing plant heads, corporate function heads along with the respective Human Resource and EHS function are jointly responsible for implementation of employment and EHS practices across all the business functions and units. The Corporate Human Resources and EHS functions review the performance of the organisation and update the standards.

Cities Dates Attendees(Film) Attendees (Exhibition)

Pune Feb 13 to 21, 2011 9300 11000

Kirloskarvadi Sep 19 to 21, 2011 2300 3600

Dewas Nov 28, 2011 2100 8000

96

Management:


Monitoring and Follow-up:

Context:

The Corporate Human Resources and the EHS functions periodically review the implementation of the policies related to employment. Internal audits are performed to ensure that compliance and audit findings are shared with the top management. Actions are planned to improve the performance in these areas.

KBL follows the best practices of engaging with the employees and regularly conducts Employee Engagement Surveys through reputed organisations like Gallup or AON Hewitt. These surveys provide valuable insights in to the needs and expectations of the employees and effectiveness of the policies and action plans initiated for improvement. Work group level and enterprise level action plans are initiated to improve the employee engagement. The Employee Engagement Survey (EES) conducted through AON Hewitt has indicated improved perception results compared to the previous year. Overall satisfaction has improved from 76% to 83%. KBL falls in category of Best Employer with the score of 74% on the parameters of employee engagement. We have improved our scores on people, safety, senior leadership, training and communication.

The people policies are shared with all employees through the structured induction programme for new employees and making these policies available on the company employee portal. Regular training is provided to Human Resource and EHS functions for ensuring effective implementation of these policies.

Regular reviews are conducted by Corporate Human Resource and unit Human Resource functions for implementation of the policies related to employment, employee health and safety. Compliance to all statutory requirements and zero accidents are the basic objectives of these policies.

KBL has articulated in its vision statement that it would strive to be “preferred choice of employees”. In addition, the people policy has the following key elements:

• Creating a value based organisation by adopting ethical work practices

• Attracting, nurturing and retaining talent,

• Creating an ambience for enhancing creativity, learning and team work,

• Creating a culture of fairness, trust, equal opportunities and individual dignity

KBL is committed to creating a culture that allows all its employees achievement of the organisational and personal goals. It strives to provide a motivating environment to its employees so that they are able to develop their capabilities and use their skills and knowledge for the benefit of the organisation. While they contribute to the organisation; a work life balance is also maintained.

KBL subscribes to all the key elements related to human rights:

• Non-discrimination - Our people policy emphasizes on “equal opportunity” – in addition the code of conduct adopted by Kirloskar Group Companies and Code of Ethics developed by KBL have included equal opportunity irrespective of race, religion, gender, national origin and disability. We are also looking forward to work with Dalit Chamber of Commerce.

• Freedom of Association and Collective Bargaining: KBL provides its employees freedom to form association and develops joint working councils to address the various issues related to work environment and business performance.

Human Rights


97

Responsibility

Context:

•

Society

Human Rights: We are planning to conduct Human Rights awareness training programmes in our company. we strictly follows the legal norms and does not employ any child labour, forced labour or compulsory labour. We have also included this norm in purchase orders where ever required. Compliance to Child Labour Act is also included in vendor assessment forms.

• Complaints and Grievance Practices: KBL has established processes to redress the grievances of employees. KBL has formed Works Committee, Safety Committee, and Canteen Committee with equal participation of workmen and management to address the issues. In addition, regular meetings are held by management with union representatives to address the grievances.

• Indigenous Rights: KBL operations do not have any impact on indigenous people and therefore this aspect is not applicable for KBL.

The overall responsibility of implementation of the human rights related to the above listed areas rests with the Business Sector Heads, Manufacturing Plant Heads and the Corporate FunctionHeads. Corporate Human Resources Head is responsible for reviewing and updating the standards related to human rights.

KBL has initiated implementation of Social Accountability Standard SA 8000 in order to establish structured framework for monitoring the compliance to human rights issues.

KBL considers human capital as an integral part of its business. KBL believes in “Creating a culture of fairness, trust, equal opportunities and individual dignity” as mentioned in its people policy. While it complies with all the statutory requirements related to human rights it goes beyond it and has adopted CII code for Affirmative Action to provide support to the underprivileged class of society. It also encourages higher participation of women in business and plans to establish manufacturing plants with very high percentage of women workforce for example it has established Coimbatore plant with almost all team associates as women.

Kirloskar Brothers was founded more than 100 years ago. It established its first manufacturing plant at Kirloskarvadi which is in rural area of district Sangli in Maharashtra (India). We have a deep rooted philosophy of serving the society. KBL considers the communities in which it operates as one of the important stakeholders. There are a number of initiatives for the society. These are generally related to environment, health and education. We have our CSR policy and company HR function at each location is responsible for engaging with the local community and develop action plans to address the needs and expectations, a corporate level CSR cell is being formed to address the CSR at strategic level.

KBL believes that serving the society is our core purpose. This is echoed in the motto of the Kirloskar Group companies as “Enriching Lives”. Therefore, sustainable development is considered as inseparable from the Corporate Social Responsibility at KBL. Improving quality of life, working towards food sufficiency, providing sustainable livelihoods, conserving resources, develop energy efficient products is therefore part of the KBL strategies. The objective of KBL is to become a Responsible Corporate Citizen

The social initiatives are aligned with the “Millennium Development Goals” of the United Nationsand KBL has focused on School Education, Maternal Health, Prevention of serious diseases, regular health checks and preventive measures for society and local communities where it operates.

KBL has adopted Code of Ethics which is communicated to all staff employees. It covers anti corruption policies and anti-competitive behaviour policies. The employees are communicated about the policy through circulation of the booklet on Code of Ethics. This code is also available on web portal to all employees.

http://www.kirloskarpumps.com/we-are-kbl-value-proposition-code-ethics-e-book.aspx

Responsibility:


Monitoring and Follow-up:

Corporate Human Resource function and location HR function heads are responsible for society initiatives. Corporate Human Resource function reviews and updates the standards related to social development and develops overall guidelines of engagement. Guidance and help is taken from the experts in the area of social work. Cross functional teams are formed in which the KBL employees volunteer for the social initiatives.

Employees engaged in social initiatives are provided with the requisite training to carry out the projects effectively.

Corporate Human Resource function reviews the progress of the projects and ensures the implementation of planned activities. It provides necessary resources to ensure timely completion of social development activities.

KBL products comply with all the applicable national and international standards related to environmental impacts, health and safety. All our manufacturing plants are certified for the OHSAS 18001 standards. Our specific segment of pumps is certified for Factory Mutual (FM) and ULrequirements and is USP for our business.

Product labelling: KBL products comply with all relevant statutory requirements.

Compliance: The compliance to the statutory and regulatory requirements is ensured through regular internal audits.

Product Responsibility:

98


99

GRI INDEX

Profile

Disclosure

Aspect Page No.

Reporting and

explanation if any

Standard Disclosure Part 1: Profile Disclosure

1.1 Statement from the most senior decision-maker of the

organisation

4

1.2 Description of key impacts, risks and opportunities 8

2.1-2.10 Organisation Profile 11

2.1 Name of the organisation 11

2.2 Primary brands, products and services 11

2.3 Operational structure of the organisation 11

2.4 Location of Organisation’s Headquarters 16

2.5 Number of countries where the organisation operates 16

2.6 Nature of ownership and legal form 12

2.7 Markets served 12

2.8 Scale of the reporting organisation 13

2.9 Significant changes during the reporting period regarding the

size, structure and ownership

12

2.10 Awards received in the reporting period 14

3.1-3.13 Report Parameters 19

3.1 Reporting Period 20

3.2 Date of most recent previous Report 20

3.4 Contact Point for questions regarding the report or its

contents

21

Report Scope and Boundary

3.3 Reporting cycle 20

3.5 Process for defining Report content 20

3.6 Boundary of the Report 21

3.7 Specific limitations on the scope or boundary of the Report 22

3.8 Basis for reporting on joint ventures, subsidiaries, leased/

outsourced operations and other entities

22

3.9 Data measurement techniques and bases of calculations

including assumptions and techniques

22

3.10 Explanation of the effect of any re-instatement of information

provided in the earlier Reports

No such

restatments have

been made

3.11 Significant changes from previous reporting period 12

3.12 GRI Content index 99

3.13 Assurance 108

Report Profile

100

4.1-4.17 Governance, Commitments and Engagement 24

Governance

4.1 Governance structure of the organisation 15, 24

4.2 The Chair of the highest Governance body 15, 24, 26

4.3 Independent and/or non-executive members 24

4.4 Mechanisms for shareholders and employees to provide

recommendations

32 , 38

4.5 Linkage between compensation for members of highest

governance body and the organisation’s performance

26

4.6 Process for the highest governance body to ensure conflicts

of interest are avoided

27

4.7 Qualifications and expertise of the members of the highest governance body

27

http://www.kirloskarpumps.com/investors-board-of-directors.aspx

4.8 Statements of mission or values, codes of conduct and principles

27

4.9 Procedures of the highest governance body for overseeing the management of economic, environmental, and social performance

28

4.10 Processes for evaluating the highest governance body’s own performance

26

Commitments to External Initiatives

4.11 The precautionary approach or principle 28

4.12 Externally developed economic, environmental, and social charters, principles

28

4.13 Memberships in Associations 28

Stakeholder engagement

4.14 List of stakeholder groups 29

4.15 Basis for identification and selection of Stakeholders 29

4.16 Approaches to stakeholder engagement, including frequency of engagement

29-45

4.17 Key topics and concerns and how the organisation has responded to those

29-45

Standard Disclosures Part 2: Disclosure on Management Approach (DMAs)

DMA EC Disclosure on Management Approach EC

DMA EN Disclosure on Management Approach EN

93

DMA LA Disclosure on Management Approach LA

94

DMA HR Disclosure on Management Approach HR

95

DMA SO Disclosure on Management Approach SO

96

DMA PR Disclosure on Management Approach PR

97

98


101

Performance Indicators

Description Core / Add

Page no., Reporting and Explanation, if any

Standard Disclosures Part 3: Performance Indicator

Economic

EC1 Direct economic value generated

Core 48

EC2 Financialimplicationsandother risks and opportunities for the organisation’s activities due to climate change

Core 51

EC3 Coverage of the organisation’s defined benefit plan obligations

Core 77

EC4 SignificantFinancialAssistance Received from the Government

Core The company has received no financial assistance from the government during the reporting period.

EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation

Core In most of the cases the wages to permanent workmen are 2 times to 2.5 times of the prescribed minimum. This is to compensate for the skill and the tenure of service.

EC6 Policy, practices and proportion of spending on locally based suppliers at significant locations of operation

Core While there is no documented policy for procurement from locally based suppliers most of the material is procured from local suppliers. These are working with the company since generations. We have a vendor network which is geographically very close to our manufacturing facilities. More of it can be seen in stakeholder engagement section.

EC7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation.

Core Major areas of operations in India lie in Kirloskarvadi, Kondhapuri and Shirwal in Maharashtra and Dewas in Madhya Pradesh. While there is no documented policy for local hiring, in order to ensure longer retention, candidates belonging to local area are welcome to join the organisation subject to their meeting job requirements based on education and skills.

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in kind, or pro bono engagement.

Core 44-48, 57, 95. There are various services and activities conducted by the NGOs we are associated with. Financialassistanceforcreatinginfrastructure at schools and colleges near Kirloskarvadi is also provided by our organisation. More of this is mentioned in the Social section.

47

102

EC9 Indirect economic impacts, including extent of impacts

Add. Impact of energy efficient products: the Companies energy efficient products and services lead to significant economic savings for users. In various sectors our products have generated indirect employment for many people.

Environment

EN1 Total material used by weight or volume

Core 54

EN2 Percentage of materials used that are recycled input materials

Core 58

EN3 Direct energy consumption by primary energy source

Core 60

EN4 Indirect energy consumption by primary source

Core 61

EN5 Energy saved due to conservation and efficiency improvements.

Add 62

EN6 Initiatives to provide energy-efficient or renewable energy-based products and services, and reductions in energy requirements as a result of these initiatives

Add 64

EN7 Initiatives to reduce indirect energy consumption and reductions achieved.

Add 62, 63

EN8 Total water withdrawal by source

Core 65

EN9 Water sources significantly affected

Add 65

EN10 Percentage and total volume of water recycled and reused

Add 66

EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

Core Kirloskar Brothers Limited has no land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

Core There is no impact on protected areas and areas of high biodiversity value outside protected areas due to the company’s operations. Therefore this indicator is not applicable to our operations.

EN13 Habitats protected or restored

Add The Company protects habitat in the company premises.

EN14 Strategies, current actions and plans for managing impact on biodiversity

Add Not applicable


103

EN15 Number of IUCN speciesand national conservation list species with habitats in areas affected by operations

Add There is no impact or risk from company’s operations on such species.

EN16 Total direct and indirect greenhouse gas emissions

Core 68

EN17 Total other relevant indirect greenhouse gas emissions

Core The other indirect green house gas emissions associated with commuting of employees to office or work place and travel by rail, road or air for office work are not monitored. The mechanism to track these emissions will be established during 2012-13 and results will be reported during 2013-14.

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved

Add 68

EN19 Emissions of Ozone-Depleting substances by weight

Core AllequipmentworkingonCFC-12has been replaced by units operating on R-22 or R-134a which are non-ozone depleting. Therefore there is no emission of ozone depleting substances from any operations.

EN20 NOX, SOX, and other significant air emissions by type and weight

Core 69

EN21 Total water discharge by quality

Core 67

EN22 Total weight of waste by type and disposal method

Core 70

EN23 Significant spills of chemicals, oils and fuels in terms of total number and total volume

Core There were no significant spills of chemicals, oils or fuels in the reporting period

EN24 Weight of transported, imported, exported or treated waste deemed hazardous under the terms of Basel convention

Add 70

EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff.

Add Not reported

EN26 Initiatives to mitigate the environmental impact of products and services

Core 62, 63 , 64, 70 The Company continuously improves the energy efficiency of its products. Engine Driven Pumps are provided with acoustic enclosures / canopies to reduce the noise levels.

104

EN27 Percentage of products sold and their packaging materials that are reclaimed by category

Core 70

EN28 Incidents of and fines for non-compliance with all applicable international declarations /conventions / treaties, and national, sub-national, regional and local regulations associated with environmental issues

Core There is no incidence of any fine or non-compliance with respect to any national, regional and local regulations associated with environmental issues.

EN29 Environmental impacts of transporting products and other goods and materials used for the organization’s operations and transporting members of workforce

Add. 69

EN30 Environmental protection expenditure and investments

Add. Not reported

Social: Labour Practices and Decent work

LA1 Total workforce by region Core 73

LA2 Total number and rate of employee turnover by age group, gender, and region

Core 74

LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations

Add. 77

LA4 Percentage of employees covered by collective bargaining agreement

Core 78

LA5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective bargaining agreements

Core 78

LA6 Percentage of total workforce represented in formal joint management worker health and safety committees that help monitor and advice on occupational health and safety programmes

Add. 78

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities by region

Core 78


105

LA8 Education, training, counseling, prevention, and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases

Core 79

LA9 Health and safety topics covered informal agreements with trade unions

Add. 80

LA10 Average hours of training per year per employee by employee category

Core 80

LA11 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

Add 80

LA12 Employees receiving regular performance and career development reviews

Add 80

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity

Core 81

LA14 Ratio of basic salary of men to women by employee category

Core 81

Social: Human Rights

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

Core KBL has not executed any investment agreements and therefore this indicator is not applicable.

HR2 Human rights screening for suppliers and contractors

Core 84

HR3 Employee training on policy and procedures concerning human rights

Add Booklet on Code of Ethics and Code of Conduct is given to each staff category employee present as also to every new employee.

HR4 Incidents of discrimination Core 84

HR5 Support to freedom of association and collective bargaining

Core 84

HR6 Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labour

Core 84

106

HR7 Contribution to elimination of forced and compulsory labour

Core 84

HR8 Percentage of security personnel trained in the organisation’s policies or procedures concerning aspects of human rights that are relevant to operations

Add Not reported

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken [rights of indigenous people]

Add We have not violated rights of indigenous people as none of its operations have impacted directly or indirectly any indigenous people. Therefore this item is not applicable for reporting.

Social: Society

SO1 Nature, scope, and effectiveness of any programmes and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting

Core 87

SO2 Percentage and total number of business units analysed for risks related to corruption

Core 87

SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures

Core 87

SO4 Actions taken in response to incidents of corruption

Core 87

SO5 Public policy positions and participation in public policy development and lobbying

Core 88

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country

Add There are no financial or non-monetary grants made to any political party during the reporting year.

SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes

Add 88

SO8 Fines/sanctionsfornon-compliance with laws and regulations

Core Except few mentioned elsewhere there are no fines/sanctions for non-compliance with laws and regulations.

107

Social: Product Responsibility


PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

Core 90

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes

Add The Company has never received any such sanctions for violation of regulatory norms.

PR3 Type of product and service information required by procedures and percentage of significant products and services subject to such information requirements

Core 90

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

Add 90

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

Add 91, 29 - stakeholder engagement

PR6 Programmes for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship

Core 91

PR7 Total number of incidents noncompliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes

Add There was incidence of contravention of Weights and Measures Act in respect of a product regarding adherence to sticker rules. We have paid compounding fee to the authorities.

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

Add No such complaints have been made. We respect customer privacy.

PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

Core There were no fines for non-compliance with laws and regulations concerning the provision and use of products and services.


109


111

This is the third Sustainability report published by Kirloskar Brothers Limited. We welcome your suggestions to improve our performance and reporting in the future reports. Please spare few minutes of your valuable time and give us your feedback.

Name

Designation

Organisation

Contact Address

Email

1.Relevance of Economic, Environment & Social issues covered in the report

2. Clarity of information provided on above issues in the report

3. Quality of design, layout and presentation of the report

4. Suggest any other issue which should be covered in the next sustainability report

Ms. Sheetal Nagare, Business Excellence

Kirloskar Brothers Limited, Yamuna, Survey No. 98 (3-7), Baner, Pune (INDIA) 411 045 [email protected]

Please mail your feedback to:

High

High

High

Medium

Medium

Medium

Low

Low

Low

FEEDBACK FORM FOR SUSTAINABILITY REPORT 2011-12


113

The Application level

Report Application Level

C C+ B B+ A A+

G3 Profile Disclosures

(output)

Report on:

1.1

2.1-2.10

3.1-3.8, 3.10-3.12

4.1-4.4, 4.14-4.15

Report on all criteria listed for level c+ 1.2

3.9, 3.13

4.5-4.13,

4.16-4.17

Same as requirement for level B

G3 Performance Approch Disclosure (output)

Not Required Management Approach Disclosures for each Indicator

Management Approach Disclosures for each Indicator category

G3 Performance

Indicator & SectorSupplement Performance Indicators

Report on a minimum of 10 performance Indicators, including at least one from each of. Economic, Social and Environment

Report on a minimum of 20 performance Indicators, including at least one from each of. Economic, Enviromental, Human Rights, Labor, Society, Product responsibility

Report on each core G3 and sector *supplement Indicator with due regard to the Materiality Principle by either: a) reporting on the Indicator or b) explaining the reason for its omission

*Sector Supplement in final version

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Sustainability

Reporting Guidelines

sustainability report 2011 - 2012 - impounding pumping station · 2013. 4. 8. · we are the market...

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