ELGI EQUIPMENTS LIMITED

ELGI EQUIPMENTS LIMITED BOARD OF DIRECTORS
50th Annual General Meeting
NON-EXECUTIVE CHAIRMAN
Date : 6th Day of December, 2010 Sri L.G. Varadarajulu
Day : Monday (Upto 19th May 2010)

Time : 10.00 a.m. MANAGING DIRECTOR
Place Dr. Jairam Varadaraj
: 'Ardra'
No.9, North Huzur Road, NON-EXECUTIVE DIRECTORS
(Near Codissia Building) Sri N.Mohan Nambiar
Coimbatore - 641 018. Dr.T.Balaji Naidu
Sri B.Vijayakumar
Book 16th December 2010 to 17th December, 2010 Sri Sudarsan Varadaraj
Closure (both dates inclusive) Dr.Ganesh Devaraj
Dates Sri M.Ramprasad

Contents CHIEF FINANCIAL OFFICER
Sri. S. Sriram
1. Notice of the 50th Annual General Meeting 3
2. Management Discussion and Analysis 10 COMPANY SECRETARY
3. Directors' Report 12 Sri. S. Raveendar
4. Corporate Governance Report 17
5. Auditor's Report 27 STATUTORY AUDITORS
6. Annual Accounts 30 M/s. RJC Associates
7. Cash Flow Statement & Analysis of performance 47 Chartered Accountants
8. Consolidated Financial Statements 49
9. Annual Report of Subsidiary Company 63 COST AUDITOR
10. Elgi Factories, Branches and Foreign Offices 84 Dr. G.L. Sankaran
Cost Accountant

BANKERS
Central Bank of India
State Bank of India

REGISTERED OFFICE
Elgi Industrial Complex,
Trichy Road, Singanallur
Coimbatore - 641 005
Phone : 91-422-2589555
Fax : 91-422-2573697
Website : www.elgi.com

REGISTRAR &
TRANSFER AGENTS
Link Intime India Private Limited
Coimbatore Branch
"Surya" 35 Mayflower Avenue
(2nd Floor) Behind Senthil Nagar
Sowripalayam Road,
Coimbatore - 641 028.



ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Notice of the 50th Annual General Meeting

NOTICE is hereby given that the 50th Annual General determined by the Board or a Committee of the
Meeting of the Company will be held on Monday, the Board prior to the issue and offer, in
6th Day of December, 2010 at 10.00AM at 'ARDRA', consultation with the authorities concerned and
No.9, North Huzur Road (Near Codissia Building), in accordance with such guidelines or other
Coimbatore 641 018 to transact the following business: provisions of law as may be prevalent at that
time but ranking pari passu with the existing
ORDINARY BUSINESS equity shares of the Company.

1. To receive, consider and adopt the audited Profit All such issue as above are to be made in
and Loss Account for the financial year ended 31st pursuance of Employees' Stock Option (ESOP)
March, 2010, the Balance Sheet as at that date, the Scheme or Employees Stock Purchase
Report of the Board of Directors and the Report of Scheme (ESPS) to be drawn up and approved
the Auditors thereon. by the Board or a committee thereof.

2. To Confirm the interim dividends paid as the final 6. To consider and if thought fit, to pass with or
dividend for financial year ended 31st March, 2010 without modification the following resolution as an
Ordinary Resolution.
3. (i) To appoint a Director in the place of
Sri. B. Vijayakumar who retires by rotation and RESOLVED THAT pursuant to Section 94(1) and
being eligible offers himself for re-appointment. other applicable provisions if any, of the
Companies Act, 1956, that the Authorised Share
. (ii) To appoint a Director in the place of Capital of the Company be and is hereby altered
Sri. N. Mohan Nambiar who retires by rotation by converting 55,00,000 12% Cumulative
and being eligible offers himself for re- Redeemable Preference Shares of Rs.10/- each
appointment. into 5,50,00,000 Equity Shares of Re.1/- each and
30,00,000 5% Redeemable Preference Shares of
4. To appoint Auditors to hold office till the conclusion Rs.10/- each into 3,00,00,000 Equity Shares of
of next Annual General Meeting and to fix their Re.1/- each and that accordingly the Authorised
remuneration. Share Capital be altered as Rs. 30,00,00,000/=
(Rupees Three Hundred Millions only) divided into
SPECIAL BUSINESS 30,00,00,000 (Three Hundred Millions only) equity
shares of Re.1/- each.
5. To consider and if thought fit, to pass with or without
modification the following resolution as a Special 7. To consider and if thought fit, to pass with or
Resolution. without modification the following resolution as an
Ordinary Resolution.
RESOLVED THAT subject to the provisions of
Section 31 and other applicable provisions, if any, RESOLVED THAT Clause V of the Memorandum of
of the Companies Act, 1956, the Articles of Association be and is hereby altered in the following
Association of the Company be and are hereby manner
altered by inserting the following new Article(s) 27
& 28 after the existing Articles 26. The existing clause V of the Memorandum of
Association be deleted and the following new
27. Any General Meeting may resolve that any Clause V be substituted thereof.
moneys, investments, or other assets forming
part of the undivided profits of the Company V. The Authorised share capital of the Company
standing to the credit of the Reserves or any is Rs.30,00,00,000 (Rupees Three Hundred
Capital Redemption Reserve Account or in the Millions only) divided into 30,00,00,000 (Three
hands of the Company and available for Hundred Million only) Equity shares of Re. 1/-
dividends or representing premiums received each and the Company shall have power to
on the issue of shares and standing to the credit increase or reduce the Capital and will be at
of share premium account be capitalized and liberty to issue any shares with special rights or
distributed amongst such of the shareholders privileges as to voting, dividend, capital or
as bonus shares as would be entitled to receive otherwise or to subject the same to any
the same. restrictions, limitations or conditions as the
Company deems fit and to vary, modify or
28. Subject to the provisions of Section 81(1A) and abrogate any such rights, privileges or
other applicable provisions, if any, of the Act and conditions in such manner as may be permitted
subject to the Articles of Association, the Board by the Companies Act, 1956 (including any
or a committee of the Board may, from time to amendment to or re-enactment thereof) and as
time, create, offer and issue to or for the benefit the Company deems fit and necessary.
of the employees including Directors and
Whole-time directors of the Company and its 8. To consider and if thought fit, to pass with or
subsidiaries such number of equity shares / without modification the following resolution as a
bonds /equity warrants/options/any other Special Resolution.
security convertible or non-convertible of the
Company, for subscription on such terms and
conditions and at such price as may be

3

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

RESOLVED THAT Article 2 of the Articles of of the company and notwithstanding the date or
Association be and is hereby altered in the following dates of allotment thereof shall be entitled to
manner; participate in full in any dividend to be declared
in respect of the financial year in which the
The existing Article 2 of the Articles of Association be allotment of the new equity shares pursuant to
deleted and the following new Article 2 be this resolution is made.
substituted thereof.
3. That the issue and allotment of the bonus
2. The Authorised share capital of the Company shares in favour of non resident members of the
is Rs.30,00,00,000 (Rupees Three Hundred Company shall be made in accordance with the
Millions only) divided into 30,00,00,000 (Three guidelines issued by the Reserve Bank of India
Hundred Million only) Equity shares of Re. 1/- from time to time.
each and the Company shall have power to
increase or reduce the Capital and will be at 4. That in the case of shares held in
liberty to issue any shares with special rights or dematerialized form, the intimation of allotment
privileges as to voting, dividend, capital or of the bonus shares shall be sent, while in case
otherwise or to subject the same to any of shares held in physical form, share
restrictions, limitations or conditions in such certificates shall be issued directly instead of
manner as may be permitted by the Companies allotment letter within the Statutory time limit
Act, 1956 (including any amendment to or re-
enactment thereof) and as the Company RESOVLED FURTHER THAT the Board be and is
deems fit and necessary. hereby authorized:

9. To consider and if thought fit, to pass with or 1. To apply, for listing of the new equity shares
without modification the following resolution as a issued as bonus shares along with the existing
Special Resolution. share capital of the Company to the Stock
Exchange(s) where the Company's shares are
RESOLVED THAT subject to the Memorandum and be listed / traded and to make an application to
Articles of Association of the Company and subject the depositories for crediting the Bonus shares
to such consents and approvals as may be required to the individual depository accounts of the
and subject to the compliance with relevant allottees;
guidelines issued by the Securities and Exchange
Board of India (SEBI), the Companies Act 1956 and 2. To modify the terms and conditions, quantum
the Foreign Exchange Management Act, 1999 an and amount to be capitalized, and number of
amount of Rs.78,935,454/- out of the amount new equity shares to be allotted, relating to the
standing to the credit of Share Premium Account as aforesaid issue of bonus shares, if the
on 31st March 2010 be capitalized and transferred circumstances so arise as would necessitate
from the said account to the equity share capital these and to settle all questions or difficulties
account and be applied to payment in full for the that may arise with regard to the allotment and
allotment of 78,935,454 fully paid equity shares of issue of the said new equity shares in such
the face value of Re.1/- each as bonus shares to the manner as they shall determine in their
holders of the existing equity shares of the absolute discretion.
Company, whose names appear on the Register of
Members of the Company or whose names appear RESOLVED FURTHER THAT the Board be and is
as the beneficial owners of the equity shares of the hereby authorized to prepare and file the necessary
Company on the records of the Depositories as on forms, documents, with Registrar of Companies and
such date (hereinafter referred to as the "Record other authorities and to do all such acts, deeds and
Date") as may be fixed by the Board of Directors of things as may be required or deemed necessary in
the Company (hereinafter referred to as the "Board" this regard.
which term shall be deemed to include any
committee of the Board) in the proportion of ONE 10. To consider and if thought fit, to pass with or
new equity share for every ONE existing equity without modification the following resolution as a
share of the Company held by them, on the following Special Resolution.
terms and conditions:
RESOLVED THAT in accordance with the
1. That the new equity shares so allotted shall be provisions contained in the Articles of Association
treated as an increase in the nominal amount of and Sections 81 (1A) and all other applicable
the paid up capital of the Company held by each provisions of the Companies Act, 1956 ("the Act")
member and not as income. and the provisions contained in the Securities and
Exchange Board of India (Employee Stock Option
2. That the new equity shares to be allotted as Scheme and Employee Stock Purchase Scheme)
bonus shares will be allotted subject to the Guidelines, 1999 ("the Guidelines") (including any
terms of the Memorandum and Articles of statutory modification(s) or re-enactment of the Act
Association of the Company, and shall rank pari or the Guidelines, for the time being in force) and
passu in all respects with and carry the same subject to such other approvals, permissions and
rights as the existing fully paid-up equity shares sanctions as may be necessary and subject to such

4

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

conditions and modifications as may be prescribed sanctions as may be necessary and subject to such
or imposed while granting such approvals, conditions and modifications as may be prescribed
permissions and sanctions which may be agreed to or imposed while granting such approvals,
by the Board of Directors of the Company permissions and sanctions which may be agreed to
(hereinafter referred to as "the Board" which term by the Board of Directors of the Company
shall be deemed to include ESPS Compensation (hereinafter referred to as "the Board" which term
Committee which the Board may constitute having shall be deemed to include ESPS Compensation
independent Directors in majority to exercise its Committee which the Board may constitute having
powers, including the powers conferred by this independent Directors in majority to exercise its
resolution), consent of the members of the powers, including the powers conferred by this
Company be and is hereby accorded to the Board to resolution), consent of the members of the
create, offer, issue/allot not more than 1,000,000 Company be and is hereby accorded to the Board to
(One Million) Equity shares of Re.1/- each in one or extend the benefits of ESPS proposed in the
more tranches to eligible employees (both present Resolution number 10 in this Notice within the
and future) and Directors of the Company whether overall limits mentioned therein, to employees /
working in India or outside India and whether they Directors of the Company's direct and Indirect
are shareholders of the Company or not through subsidiaries, whether Indian or Foreign
Employee Stock Purchase Scheme (ESPS) on Subsidiaries, existing and as and when formed and
such terms and conditions as may be fixed or whether they are shareholders of the Company or
determined by the Board. not as may time to time be allowed under prevailing
laws, rules and regulations and /or amendments
RESOLVED FURTHER THAT the said equity thereto and on such terms and conditions as may be
shares may be allotted directly to such employees/ fixed or determined by the Board on the basis of
Directors in accordance with a Scheme framed in Salient Features of ESPS mentioned in aforesaid
that behalf . resolution and its annexure.

RESOLVED FURTHER THAT the new Equity RESOLVED FURTHER THAT the said Equity
Shares to be issued and allotted by the Company in shares may be allotted directly to such employees/
the manner aforesaid shall rank pari passu in all Directors in accordance with a Scheme framed in
respects with the then existing Equity Shares of the that behalf .
Company unless otherwise decided by the Board of
Directors of the Company. RESOLVED FURTHER THAT the new Equity
Shares to be issued and allotted by the Company in
RESOLVED FURTHER THAT for the purpose of the manner aforesaid shall rank pari passu in all
giving effect to any creation, offer, issue, allotment respects with the then existing Equity Shares of the
or listing of Equity shares, the Board be and is Company unless otherwise decided by the Board of
hereby authorised on behalf of the Company to Directors of the Company.
evolve, decide upon and bring into effect the
Scheme and make any modifications, changes, RESOLVED FURTHER THAT for the purpose of
variations, alterations or revisions in the said giving effect to any creation, offer, issue, allotment or
Scheme from time to time or to suspend, withdraw or listing of Equity shares, the Board be and is hereby
revive the Scheme from time to time as may be authorised on behalf of the Company to evolve,
specified by any statutory authority and to do all decide upon and bring into effect the Scheme and
such acts, deeds, matters and things as it may in its make any modifications, changes, variations,
absolute discretion deem fit or necessary or alterations or revisions in the said Scheme from time
desirable for such purpose and with power on behalf to time or to suspend, withdraw or revive the
of the Company to settle any questions, difficulties, Scheme from time to time as may be specified by
or doubts that may arise in this regard without any statutory authority and to do all such acts,
requiring the Board to secure any further consent or deeds, matters and things as it may in its absolute
approval of the members of the Company." discretion deem fit or necessary or desirable for
such purpose and with power on behalf of the
11. To consider and if thought fit, to pass with or Company to settle any questions, difficulties, or
without modification the following resolution as a doubts that may arise in this regard without requiring
Special Resolution. the Board to secure any further consent or approval
of the members of the Company.
RESOLVED THAT in accordance with the
provisions contained in the Articles of Association 12. To consider and if thought fit, to pass with or without
and Sections 81 (1A) and all other applicable modification the following resolution as a Special
provisions of the Companies Act, 1956 ("the Act") Resolution.
and the provisions contained in the Securities and
Exchange Board of India (Employee Stock Option "RESOLVED THAT in accordance with the
Scheme and Employee Stock Purchase Scheme) provisions of Section 198, 269, 309 and 310 read
Guidelines, 1999 ("the Guidelines") (including any with Schedule XIII and other applicable provisions,
statutory modification(s) or re-enactment of the Act ifany, of the Companies Act, 1956 and subject to
or the Guidelines, for the time being in force) and such approvals as may be required, the
subject to such other approvals, permissions and remuneration payable to Dr. Jairam Varadaraj,

5











ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Continued focus in improving customer satisfaction Though we are partially successful in our European
resulted in sustaining the growth and brand amidst acquisition we still have a long way to go as we would
severe competition from the unorganized sector. like to be cautious in the choice of the targets.

Exports performed only marginally in line with the We have finalized the land for building a new facility and
continued economic impasse in the global market. we have initiated steps in formalizing the project plans.
The company is also working on a Plan to build our own
OPPORTUNITIES foundry to support our critical needs of high quality
components and casting. We are exploring all avenues
The demand for vehicle servicing is bound to go up as to optimize on various fronts in executing these two
the population of cars keeps on increasing. Many critical projects for support our growth aspirations.
manufacturers are launching new models of cars in the
small segment which is bound to fuel the growth in car Human Resource Development
sales and calls for strengthening and increasing the
servicing network. All this will increase the requirement Our initiatives on training our blue collar employees in
of garage equipments. collaboration with PSG College of Technology are at an
advanced stage; the last batches are undergoing
THREATS training now. They have now been organized into self
managed teams in both production and non-production
Due to shortage of space and high cost of manpower, areas; these initiatives are expected to release hitherto
many of the established garages are working towards untapped energies amongst both blue collar
increasing the productivity by implementing new employees as well as their immediate supervising
concepts and products. We are already working in this engineers.
direction and would be able to service these
requirements. The company's on-going talent management
programme to identify in-house executive talent is
The company continues to invest resources in R&D to paying off; we have been able to meet several new and
develop selected new products for the Garage emerging manpower needs in the company through in-
segment. At the same time sourcing of new products house talent.
from globally renowned manufacturers would also
continue. These efforts would help us to maintain our The company is also driving a Wellness Programme
supremacy in the market. amongst all employees; this involves 20 minutes daily
practice of carefully selected physical and breathing
MANUFACTURING ENGINEERING exercises, topped off by a few minutes of meditation.
This practice has been well received.
Manufacturing and marketing globally high value and
low variety components was the objective of this A Tribute
business. This business generated revenue of 56
million. The business employs 77 people. Mr. LG Varadaraj, our Chairman passed away on the
International business of this division contributes 6% of 19th of May, 2010. He has been the guiding force in the
the total exports. The business grew by 48%. creation and growth of this company. He was
instrumental in identifying the various products that the
Our experience with this business has not been very company ventured into during its history. Along with
encouraging with constant margin and price pressures this he architected various collaborations with
from the customers who constantly look for alternates. companies all over the world to bring cutting edge
With the growing internal demand for capacity from the technology into the company.
compressor business, the company has taken a
decision not to further its interests in growing this He sowed the seeds for a culture of caring deeply for
business. Available capacity is being utilized for in the employees. This has resulted in an organization
house growth needs and meeting the existing customer that has some very innovative HR practices. He firmly
needs. believed that people can make all the difference in an
organization and we are experiencing the fruits of this
OVERALL PERSPECTIVES belief.

While the world economy continued to improve, the He believed that our company should be a good
pace of the recovery is too weak to scale up to the pre corporate citizen and towards this end he spearheaded
crisis levels. The recovery is uneven across countries the development of schools that are managed by the
with lackluster economic activity in developed company, the participation in socially conscious
economies and below potential growth elsewhere in the movements involving water conservation, the
developing world. Our focus will continue to be on the participation in relief work in areas struck by
three critical aspects of improvement viz cost, quality catastrophe.
and cash. This will remain embedded in our activities
irrespective of the market situation. While we would miss him we will continue to steer the
company on the values laid down by him and continue
We will continue our exploration of acquiring to be a responsible corporate citizen.
compressors or compressor related businesses.
11

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Directors' Report

Dear Shareholders,

Your Directors are pleased to present the 50th Annual Report of the Company along with the audited accounts for
the year ended 31st March 2010.

FINANCIAL RESULTS

The performance of the Company is summarized in the financial statements given below: (Rs In Million)
2008-09
Particulars 2009-10

Profit before Depreciation, Tax and Non Recurring Items 1034.23 712.16
Less: Depreciation 91.96 79.52
Profit before Tax and Non Recurring Items
Less: Provision for Tax (Net of Deferred Tax) 942.27 632.64
Profit before Non Recurring Items 330.41 235.20
Less: Non Recurring Items (Net) 611.86 397.44
Net Profit after Non Recurring Items (Net of prior year adjustments)
Add: Opening Balance in P&L Account 60.07 0.00
Transfer on Amalgamation and prior year adjustment 551.79 397.44
Amount available for Appropriations 1085.55 826.25
The Directors recommend the following Appropriations (290.09) (2.74)
Dividend 1347.25 1220.95
Dividend Tax
Transfer to General Reserve 144.75 81.54
Profit carried to Balance Sheet 24.60 13.86
56.00 40.00
1085.55
1121.90

Issue of Additional Shares and Change in Share The interim dividends paid shall be the final dividend for
Capital consequent to the Scheme of financial year ended 31-03-2010.
Amalgamation.
Fixed Deposit
The Scheme of Amalgamation under Section 391 and
394 of the Companies Act, 1956 was sanctioned by the The company has not accepted any public deposits
Hon'ble High Court of judicature at Madras vide its order and hence there were no unclaimed deposits as on
dated 24/09/2010 and was filed with the Registrar of 31-03-2010
Companies, Coimbatore on 04/10/2010.
Review of Operations
As per the Scheme, Elgi Industrial Products Limited
(Formerly known as Elgi Finance Limited) has been The company ended with net sales of Rs.5811.55
merged with the Company. In accordance with the million as against Rs. 4811.86 million an increase of
exchange ratio specified in the Scheme, 7,62,600 20.78 %. The details of division wise performance and
equity shares of Re. 1/- each of Elgi Equipments other operational details are discussed at length in the
Limited are being allotted to the shareholders of Elgi Management Discussion and Analysis Report, given
Industrial Products Limited. The Authorised Share elsewhere in this report.
Capital and the paid up share capital of the Company
are being increased to Rs. 300 million and 78.94 million Subsidiary companies
respectively consequent to the above Scheme of
Amalgamation. a. The Company has been exempted from publishing
the audited financial results of its wholly owned
Additional Shares of 7,62,600 equity shares to be subsidiary companies, M/s. Adisons Precision
allotted as per the Scheme of Amalgamation will be Instruments Manufacturing Co. Ltd , M/s. Elgi
listed in the Bombay Stock Exchange Limited and Equipments (Zhejiang) Ltd., M/s. Elgi Compressors
National Stock Exchanges Limited Trading (Shanghai) Co. Ltd., M/s. Elgi Gulf (FZE)
along with this annual report, for the year 2009-10,
Conversion of partly paid-up shares into fully paid- vide letter No. 47/79/2010-CL-III, dated 24/02/2010
up shares from the Government of India, Ministry of Company
Affairs.
During the financial year the final call money of Rs.
12.75 per share consisting of 85 paise on face value b. The Company has been exempted from publishing
and Rs. 11.90 on share premium on 1,81,74,240 partly the audited financial results of its wholly owned
paid-up shares was called up for converting fully paid- subsidiary company, M/s. SA Belair along with this
up shares of Re. 1/- each annual report, for the year 2009-10, vide letter No.
47/79/2010-CL-III, dated 07/05/2010 from the
Dividend Government of India, Ministry of Company Affairs.

The Board of Directors have declared and paid an The annual accounts of the above subsidiary
interim dividend of 200 % on the paid up share capital companies are available for inspection by any
of 78.16 million pre merger of the Company during the shareholder, at the registered office of the holding
financial year 2009-10. The outflow (excl.taxes) was and subsidiary companies.
Rs. 144.75 million as against a total of Rs. 81.54
million paid for the previous financial year 2008-09 c. The Annual Report of the wholly owned Subsidiary

12

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Company M/s. ATS ELGI Limited for the year 2009-10 8. The custodial charges paid by your company to
and the information specified in Section 212 of the both NSDL and CDSL for the FY 2010-11 amounts
Companies Act, 1956 is given separately in this report. to Rs. 1,10,194/-.

Future Plans 9. During this year, the Company dematted 2,11,520
shares. With this, the total numbers of shares
a. Domestic dematted as on 31st March 2010 are 6,77,75,947
The Compressor business registered 21% growth Shares which represent 86.70% of the shares of
over the previous year on the backdrop of the Company.
significant economic recovery in the domestic
market. The Company's focus would be on the Directors
sustenance of this momentum and drive the
organization in fully aligning to service and after Your Directors record their profound grief on the sad
sales market. demise of our Chairman Sri.L.G.Varadarajulu on 19th
May 2010. The contribution of Shri.L.G.Varadarajulu to
b. International our Company has been immense. He touched the lives
Exports market started recovering from the of all those who came in contact with him. We pledge to
recessionary trend only during the second half of follow the path he has set out for us, and to abide by the
the financial year. The recovery is sporadic and high principles and ethics he believed in.
slow. Operations at China is stabilizing and
expected to pick up during the coming year. In accordance with the provisions of Articles of
Procedural formalities for establishing the Brazil Association of the Company Sri. B. Vijayakumar and
outfit were complete and the company will be Sri. N. Mohan Nambiar, Independent Directors of the
targeting to expand its business significantly. Company retire at the ensuing Annual General Meeting
and are being eligible offer themselves for
The company achieved a significant milestone reappointment. Your Board recommends their
during the year by acquiring a French Compressor reappointment as Directors of your Company.
company M/s. SA Belair as a wholly owned
subsidiary which will be a gateway for spreading None of your directors are disqualified from being
the business into Europe. reappointed.

Capital Expenditure and funding Directors' Responsibility Statement

The Capital Expenditure incurred and funded for the The Board of Directors confirm
year is Rs. 121.07 million, of which Rs. 63.03 million
pertain to plant and machinery. i. that in the preparation of the annual accounts, the
applicable accounting standards had been
Shareholder initiatives followed along with proper explanation relating to
material departures;
1. Your company adheres strictly to all the statutory
and other legal compliances. ii. that the directors had selected such accounting
policies and applied them consistently and made
2. Your company has been one of the first to judgments and estimate that are reasonable and
implement any initiatives for shareholder benefit prudent so as to give a true and fair view of the state
directed from SEBI. On occurrence of any event, of affairs of the company at the end of the financial
which has a bearing on the share price or year and of the profit of the company for that period;
otherwise, your company intimates the stock
exchanges, within the stipulated period. iii. that the directors had taken proper and sufficient
care for the maintenance of adequate accounting
3. Your company has in place regulations for records in accordance with the provisions of this Act
preventing and regulating insider trading and has for safeguarding the assets of the Company and for
adhered to a code of conduct and business ethics preventing and detecting fraud and other
by which the shareholder is treated at par with an irregularities.
employee on availability of information about the
company. iv. that the Directors had prepared the annual
accounts on a going concern basis.
4. Your company regularly intimates the shareholders
(through quarterly newsletters) on the performance Statutory Auditors and their appointment
of the company, even though it is not mandatory;
M/s.RJC Associates, Chartered Accountants, the
5. Your company has consistently paid dividend Statutory Auditors of the Company retire at the ensuing
throughout these years, with nil long term debts. Annual General Meeting of the Company. Your Board
recommends their reappointment as the Statutory
6. Your company has been prompt and regular in its Auditors of the Company.
replies to your queries received by them.
Cost Auditor
7. Your company also replies within the stipulated time
to all legal and statutory authorities. Approval of the Government of India through the
Ministry of Company Affairs was granted for the
appointment of Dr. G.L.Sankaran as the cost auditor of

13

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

your company for the financial year ended 31st March Practicing Company Secretary's Certificate on
2010. Compliance with the conditions of Corporate
Governance as stipulated under Clause 49 of the
Human Resources and Industrial Relations Listing Agreement is provided elsewhere in the Annual
Report.
The Company continues to enjoy the cordial
relationship with its employees at all levels. The total Acknowledgements
strength of employees as on 31st March, 2010 was
1658 Your Directors take this opportunity to place on record
their appreciation of the dedication and commitment of
Other Information employees at all levels in maintaining the sustained
growth of your Company. Your Directors thank and
The statement showing the particulars of technology express their gratitude for the support and co-operation
absorption pursuant to section 217(1)(e) of the received from Central and State Governments,
Companies Act, 1956, read with Companies stakeholders including vendors, financial institutions,
(Disclosure of Particulars in the Report of Board of banks, investors, service providers as well as
Directors)Rules, 1988, is given in the annexure forming regulatory and governmental authorities.
part of this report.
The Board also thanks the employees for their
Corporate Governance dedicated and sincere service.

A Report on Corporate Governance together with a

For and On behalf of the Board

DR. JAIRAM VARADARAJ N. MOHAN NAMBIAR
Managing Director Director

Place : Coimbatore
Date : 28/10/2010

14















ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Shareholding Distribution Schedule as on 31/03/2010

Re.1/- fully paid up

No. of shares No. of % of No.of % of total
holders holders shares shares
18.71
1 to 5000 12,879 94..49 68,06,616 2.88
3.55
5001 to 10000 300 2.20 22,47,894 2.08
1.57
10001 to 20000 185 1.36 27,74,756 1.69
3.91
20001 to 30000 67 0.49 16,28,696 75.61
100.00
30001 to 40000 35 0.26 12,23,449

40001 to 50000 28 0.20 13,22,439

50001 to 100000 43 0.31 30,54,097

100001 and above 93 0.68 5,90,98,376

Total 13,630 100.00 7,81,56,323

Categories of Shareholders as on 31/03/2010

Category Fully paid (Re. 1 each) Partly paid (Re. 0.15 paid) Total
No. of Shares % To Total No. of Shares % To Total Shares % To Total

Promoters 2,56,70,797 32.85 - - 2,56,70,797 32.84
Financial institutions/Banks 66,490 0.08 - - 66,490 0.08
Mutual Funds 6.98 - - 6.98
Foreign Institutional Investors 54,53,836 2.75 - - 54,53,836 2.74
Bodies Corporate 21,45,446 14.06 319 1.78 21,45,446 14.06
Non Resident Indians 1,09,91,172 1.03 1640 9.15 1,09,91,491 1.03
Market Maker 8,01,206 0.01 - - 8,02,846 0.01
Clearing Members 0.03 - - 0.04
Public 6,155 42.21 15958 89.07 6,155 42.22
TOTAL 31,986 100.00 17917 100.00 31,986 100.00
3,29,89,235 3,30,05,193
7,81,56,323 7,81,74,240

PROMOTERS
MUTUAL FUNDS
BODIES CORPORATE
MARKET MAKERS

PUBLIC
FINANCIAL INSTITUTIONS / BANK

FIIs
NON-RESIDENT INDIANS

CLEARING MEMBERS

22

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED
Elgi Demat Percentage
Dematerialisation of Shares and liquidity
86.70%
The Company has arrangement with National
Securities Depository Ltd. (NSDL) as well as Central Demat Physical
Depository Services (India) Limited (CDSL) for demat
facility.

During the financial year 2009-10, 2,11,520 shares
were dematted. As on 31st March,2010, Out of
7,81,74,240 shares, total shares in demat form is
6,77,75,947 Shares and 1,03,98,293 shares in physical
form. This represents 86.70% shares of the company
are in demat form and 13.30% shares are in physical
form. The shares are compulsorily tradable in demat
form with effect from 26.6.2000 for all investors.

Outstanding GDRs/ADRs/Warrants or any Convertible Instruments and their likely impact on equity.
There are no outstanding warrants or any convertible instruments. The Company has not issued GDR/ADR.

Registrar and Share Transfer Agents
(for both physical and demat segments)

Head Office : Branch:
Link Intime India Private Ltd Link Intime India Private Ltd
C-13,Pannalal Silk Mills Compound Coimbatore Branch
L.B.S.Marg, Bhandup (west) "Surya", 35, May Flower Avenue
Mumbai 400 078 (II Floor), Behind Senthil Nagar
Tel: 022-25963838 Sowripalayam Road, Coimbatore 641028
Fax: 022-25946969 Tel: 91-0422-2314792 & 2315792
E-mail : [email protected] Fax: 91-0422-2314792
E-mail: [email protected]

Compliance Officer's Details

S.Raveendar
Company Secretary
Elgi Equipments Ltd, Elgi Industrial Complex, Trichy Road, Singanallur, Coimbatore - 641005
e-mail : [email protected] Contact Nos. of Secretarial Department 91- 422- 2589136, 2589137
Fax: 91-422-2573697

In order to facilitate investor servicing, the Company has designated an e-mail-id: [email protected] mainly for
registering complaints by investors.

Share Transfer System

The company's shares being in compulsory dematerialised (demat) list are transferable through the depository
system. Shares in physical form are processed by the Registrar and Share Transfer Agents, Link Intime India Private
Limited and approved by the Shareholder and Investor Grievance Committee of the Company. The Share transfers
are processed within a period of 21 days from the date of receipt of the transfer documents by Link Intime India Private
Limited, if the documents are complete in all respects. All requests for dematerialization of shares are processed and
confirmed to the depositories, NSDL and CDSL, within 15 days. The Share holder and Investor Grievance Committee
generally meets as and when required to effect the shares received for transfer in physical form.

ISIN number allotted for equity shares

Fully paid(Re 1/- each) : INE 285A01027
Partly paid (Re 0.15 paise) : IN 9285A01033 (Non-operative)

As on 31.03.2010, 1,81,47,823 partly paid shares were converted into fully paid shares following receipt of
final call moneys.

23

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Plant location: Address for Correspondence:

1. Elgi Equipments Limited S.Raveendar
Elgi Industrial Complex Company Secretary
Trichy Road, Singanallur Elgi Equipments Ltd
Coimbatore - 641005 Elgi Industrial Complex
Trichy Road, Singanallur
Coimbatore - 641005
e-mail : [email protected]
Contact Nos. of secretarial department
91- 422- 2589136, 2589137

Declaration for code of conduct

I hereby affirm and state that all board members and senior management personnel of the company have given a
declaration pursuant to clause 49(I) (D) of the Listing Agreement and I hereby affirm compliance with the said code of
conduct for the financial year 2009-2010.

Place: Coimbatore Dr.Jairam Varadaraj
Date : 28.10.2010 Managing Director

Report on Corporate Governance 31.03.2010
Certificate

To the Members of Elgi Equipments Limited,

I have examined the compliance of conditions of Corporate Governance by M/s Elgi Equipments Limited, for the year
ended on March 31, 2010 as stipulated in clause 49 of the Listing Agreement of the said Company with Stock
Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. My examination
was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the
conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements
of the Company.

In my opinion and to the best of my information and according to the explanations given to me, I certify that the
Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing
Agreement.

I state that no investor grievance is pending for a period exceeding one month against the Company as per the
records maintained by the Investors' Relation Committee.

I further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency
or effectiveness with which the management has conducted the affairs of the Company.

Coimbatore M D Selvaraj
28.10.2010 Practicing Company Secretary

24 C.P.No.: 411 ( FCS.960)

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Ten Years Performance (Rs. In Million)

Particulars 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Sales (incl. Excise duty) 6,747.84 5,509.56 5,040.30 3,785.77 3,120.70 2,852.64 2,905.07 2,213.90 1,942.69 1,639.35

Total Income 6,829.34 5,577.33 5,108.01 3,823.32 3,185.00 2,918.31 2,965.57 2,249.56 1,988.66 1,676.89

Total Expenditure 5,791.77 4,840.51 4,448.34 3,408.98 2,823.09 2,513.34 2,944.64 2,073.86 1,734.92 1,513.20

PBDIT 1,037.57 736.81 659.67 414.34 361.91 404.97 379.31 256.49 253.73 170.18

Depreciation 97.13 82.74 70.31 69.20 93.19 96.08 88.57 72.85 68.69 66.79

Profit Before Tax 940.44 654.07 589.36 345.14 268.72 308.89 290.73 175.70 167.08 63.44

Income Tax 361.21 246.65 170.65 111.02 92.38 94.99 100.27 61.80 56.10 20.90
(inc FBT from 2005-06)

Profit After Tax 579.23 407.42 418.71 234.12 176.34 213.90 190.46 113.90 110.98 42.54

Dividend (%) 200.00 130.00 120.00 100.00 100.00 100.00 120.00 90.00 5.00 25.00

Capital Employed (LT) 2,645.21 1,967.28 1,670.92 1,343.54 1,248.37 1,187.34 989.90 751.76 783.04 898.21

Net Worth 2,645.21 1,967.28 1,670.92 1,341.83 1,202.06 1,098.49 944.41 690.74 773.80 740.19

Total Loan Funds - - - 1.82 46.31 88.85 45.51 4.32 105.09 399.87

Gross Fixed Assets 1,726.68 1,580.94 1,383.22 1,288.70 1,178.22 1,118.14 1,053.28 972.81 930.72 904.40

Net Block incl. Capital WIP 710.69 666.44 516.43 400.36 355.33 394.38 409.92 391.29 390.13 416.81

Investments 142.99 142.99 142.98 143.68 160.04 222.07 148.71 37.03 40.70 132.56

Current Assets 4,324.25 2,525.89 2,745.51 2,068.06 1,662.93 1,421.27 1,217.69 1,106.77 970.60 1,121.59

Current Liabilities 2,550.84 1,371.94 1,758.58 1,274.28 931.56 828.02 760.84 725.49 508.98 530.90

Net Working Capital 1,773.41 1,153.95 986.93 793.78 731.37 593.25 456.85 381.28 461.62 590.69

Total Tangible Assets 2,645.21 1,967.34 1,671.00 1,343.65 1,246.74 1,209.99 1,015.17 809.57 892.45 1,140.06

25

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Analysis of Performance

RATIO CATEGORY / Ratio 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03

OPERATIONAL PERFORMANCE 60.56 62.35 63.8 63.06 61.48 62.06 58.73 59.93
Material Consumption ratio (%) 0.00 0.00
Personnel expenses ratio (%) 7.80 8.15 7.16 8.04 8.33 6.61 6.29 7.7
Regular expenses (Incl VRS) 0.00 0.00 0.00 0.12 1.65 0.14 3.61 1.34
VRS payments 1.72 1.45 1.52 1.42 0.61 1.37 1.68 1.41
Profit sharing expenses 14.40 15.77 15.63 17.36 17.11 17.75 18.56 19.41
Other Expenses ratio (%) 0.01 0.03 0.08 0.10 0.13 0.08 0.04 0.79
Interest component ratio (%) 1.44 1.50 1.39 1.83 2.99 3.37 3.05 3.29
Depreciation component ratio (%) 5.03 4.10 3.04 2.65 2.41 2.98 3.02 2.43
Tax component ratio (%) 0.52 0.99 1.03 0.76 1.71 1.85 1.53 1.40
Other Income / Total Income (%) 4.50 3.92 4.44 3.45 2.92 2.64 3.56 1.88
Sales (net) per employee (Rs in million)

FINANCIAL STRUCTURING 0.00 0.00 0.00 0.00 0.00 0.00 0.05 0.00
Long Term Debt Equity Ratio 0.68 0.59 0.59 0.59 0.59 0.49 0.45 0.43
Net Working Capital / Total Assets 0.05 0.07 0.09 0.12 0.13 0.18 0.15 0.05
Investments / Total Assets 0.45 0.61 0.72 0.70 0.56 0.77 1.03 1.00
Inventory / Net Working Capital 0.50 0.71 0.95 0.82 0.90 0.83 0.76 0.92
Debtors / Net Working Capital

LIQUIDITY 1.72 1.84 1.56 1.62 1.79 1.72 1.60 1.42
Current Ratio 1.39 1.33 1.16 1.18 1.34 1.17 0.98 1.00
Liquidity Ratio

EFFICIENCY 1.98 2.09 2.09 2.03 2.02 2.16 3.42 2.13
Current Assets Turnover Ratio (CATR) 185 175 175 180 181 169 107 172
Average Current Assets - no. of days
Average Inventory - No. of days 43 43 39 44 49 54 49 47
5 66 67 87 7
RM & Components 10 14 15 13 13 18 15 14
WIP 7.84 6.28 6.32 5.77 5.41 6.77 10.09 7.47
Finished Goods 47 58 58 63 68 54 36 49
Debtors' turnover ratio (DTR) 4.20 4.33 4.00 4.07 3.64 3.90 4.62 3.17
Debtors - no of days of net sales 87 85 91 90 101 94 79 116
Trade Creditors’ Turnover Ratio (TCTR) 2.94 3.03 3.34 2.97 2.71 2.73 4.41 2.97
Trade Creditors - no of days 10.04 9.47 11.24 10.2 8.54 7.34 9.08 5.96
Capital Turnover Ratio 4.08 3.72 3.80 3.09 2.72 2.63 3.92 2.33
Net Fixed Assets Turnover Ratio (NFATR)
Gross Fixed Assets Net Turnover ratio (GFATR)

PROFITABILITY 15.92 13.19 12.81 10.93 10.45 11.89 10.97 9.97
Gross Profit Margin (%) 14.22 10.85 10.41 8.36 8.76 9.47 8.45 7.23
PBIT Margin (%) 14.23 10.87 10.48 8.23 8.61 9.68 8.75 6.92
Pre-tax Profit Margin (%) 8.07 6.77 7.45 5.59 5.65 6.70 5.73 4.49
Net Profit Margin (%) 7.77 6.22 6.79 5.11 5.48 6.07 5.41 4.1
Post Tax Margin from Operations (%) 48.48 40.42 43.45 32.27 28.6 35.8 55.15 32.28
ROTA (%) 44.44 35.87 38.79 27.41 29.53 28.95 42.60 24.66
ROCE (%)

SHAREHOLDER' EARNINGS 25.36 22.40 27.76 18.34 18.59 20.94 20.46 15.39
RONW 7.34 5.21 5.36 2.99 2.81 3.41 3.08 1.87
Earnings Per Share (current equity) 1.83 1.30 1.20 1.00 1.00 1.00 1.20 0.90
Dividend Per Share (Rs) 24.99 20.01 21.04 31.00 33.14 33.14 43.94 50.80
Dividend Payout Ratio (%) 9.20 7.96 11.15 20.74 22.24 13.92 15.34 12.87
Price Earnings Ratio (current equity) 2.72 2.52 1.89 1.49 1.60 2.11 2.54 4.79
Dividend Yield 5.57 4.14 4.51 4.66 5.80 5.68 7.65 8.01
Dividend to Net Worth Ratio (%) 32.94 25.17 21.35 17.23 19.16 17.51 15.28 12.34
Book Value per share (Rs)

26

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Auditors' Report ii) In our opinion, proper books of account as
required by law have been kept by the
REPORT TO THE MEMBERS OF Company so far as appears from our
ELGI EQUIPMENTS LIMITED examination of those books;

1. We have audited the attached Balance Sheet of iii) The Balance Sheet, Profit and Loss Account
Elgi Equipments Limited, as at 31st March 2010, and Cash Flow Statement dealt with by this
the Profit and Loss account and also the Cash report are in agreement with the books of
Flow Statement of the Company for the year account;
ended on that date annexed thereto. The financial
statements are prepared consequent to the iv) In our opinion, the Balance Sheet, Profit and
amalgamation of Elgi Industrial Products Limited Loss Account and Cash Flow Statement dealt
with this company effective from 1st April 2009 with by this report comply with the Accounting
duly approved by the Honarable High Court of Standards referred to in sub-section (3C) of
Madras vide its order dated 24th September 2010. Section 211 of the Companies Act, 1956;
These financial statements are the responsibility
of the Company's Management. Our responsibility v) On the basis of the written representations
is to express an opinion on these financial received from the Directors, as on 31st March
statements based on our audit. 2010 and taken on record by the Board of
Directors, we report that none of the Directors
2. We conducted our audit in accordance with the is disqualified as on 31st March 2010 from
auditing standards generally accepted in India. being appointed as a Director in terms of
Those standards require that we plan and perform clause (g) of sub-section (1) of section 274 of
the audit to obtain reasonable assurance about the Companies Act, 1956;
whether the financial statements are free of
material misstatement. An audit includes vi) In our opinion and to the best of our information
examining, on a test basis, evidence supporting and according to the explanations given to us,
the amounts and disclosures in the financial the said accounts give the information required
statements. An audit also includes assessing the by the Companies Act, 1956, in the manner so
accounting principles used and significant required and give a true and fair view in
estimates made by management, as well as conformity with the accounting principles
evaluating the overall financial statement generally accepted in India:
presentation. We believe that our audit provides a
reasonable basis for our opinion. a) In the case of the Balance Sheet, of the
state of the affairs of the Company as at
3. As required by the Companies (Auditor's Report) 31st March 2010;
Order, 2003 and Companies (Auditor's Report)
(Amendment) Order, 2004 (together the Order) b) In the case of the Profit and Loss Account,
issued by the Central Government of India in of the profit for the year ended on that date;
terms of Sub-Section (4A) of Section 227 of the and
Companies Act, 1956, we enclose in the
Annexure,a statement on the matters specified in c) In the case of Cash Flow Statement, of the
paragraphs 4 and 5 of the said Order. cash flows for the year ended on that date.

4. Further to our comments in the Annexure referred For RJC Associates
to above, we report that: Regn. No. : 003496S
Chartered Accountants
i) We have obtained all the information and
explanations, which to the best of our R.Jayachandran
knowledge and belief were necessary for the Partner
purposes of our audit; Membership No. 021848

Place : Coimbatore
Date : 28.10.2010

27

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Annexure to the Auditors' Report : maintained under Section 301 of the
Companies Act, 1956. Amalgamation of
Referred to in paragraph 3 of our report of even date, EPIL with the company ICD of 0.95 Million is
out standing as long term unsecured loans.
i. (a) The Company has maintained proper
records showing full particulars including iv. In our opinion and according to the information
quantitative details and situation of fixed and explanations given to us, there are adequate
assets. internal control procedures commensurate with
the size of the Company and the nature of its
(b) All the assets have been physically verified business with regard to purchases of inventory,
by the Management during the year. No fixed assets and with regard to the sale of goods
material discrepancies were noticed on and services. During the course of our audit, we
such verification. have not observed any continuing failure to
correct major weaknesses in Internal Control
(c) No substantial part of fixed assets were System.
disposed off during the year, hence it will not
have any effect on the going concern v. (a) According to the information and
assumption. explanations given to us, we are of the
opinion that the particulars of contracts or
ii. (a) The inventory has been physically verified arrangements that need to be entered into
by the Management during this year. In our the register maintained under section 301 of
opinion, the frequency of verification is the Companies Act,1956 have been so
reasonable. entered.

(b) The procedures of physical verification of (b) In our opinion and according to the
inventories followed by the Management are information and explanations given to us,
reasonable and adequate in relation to the the transactions made in pursuance of
size of the Company and the nature of its contracts or arrangements exceeding Rs 5
business. lakhs each have been made at prices which
are reasonable having regard to prevailing
(c) On the basis of our examination of the market prices at the relevant time.
records of inventory, we are of the opinion
that the Company is maintaining proper vi. In our opinion, the Company has an Internal Audit
records of inventory. The discrepancies System commensurate with the size and nature
noticed on verification between the physical of its business.
stocks and the book records were not
material. vii. We have broadly reviewed the books of account
relating to materials, labour and other items of
iii. (a) The Company has granted loan to cost maintained by the Company pursuant to the
Companies covered in the register rules made by the Central Government for the
maintained under Section 301 of the maintenance of cost records under Section 209
Companies Act, 1956. The maximum (1) (d) of the Companies Act, 1956 and we are of
amount involved during the Year was Rs. the opinion that prima facie the prescribed
124.04 millions and the year end balance of accounts and records have been made and
loans granted by the company was maintained.
Rs.114.04 million.
viii. (a) The Company is regular in depositing with
(b) In our opinion, the rate of interest and other appropriate authorities undisputed statutory
terms and conditions on which loans have dues including Provident Fund, Investor
been granted to the Company listed in the Education and Protection Fund, Employees
register maintained under section 301 of the State Insurance, Income Tax, Sales Tax,
Companies Act,1956, are not, prima facie, Wealth Tax, Service Tax, Customs Duty,
prejudicial to the interest of the Company. Excise Duty, Cess and other material
statutory dues applicable to it.
(c) The Company is regular in the receipt of
principal and interest. (b) According to the information and
explanations given to us, no undisputed
(d) There is no overdue amount of loans granted amounts payable in respect of Income Tax,
to Companies, listed in the register Wealth Tax, Service Tax, Sales Tax,
maintained under section 301 of the Customs Duty, Excise Duty and Cess were
Companies Act, 1956. in arrears, as at 31st March 2010 for the
year of more than six months from the date
(e) The Company has not taken any loans, they became payable.
secured or unsecured from Companies,
firms or other parties covered in the register

28

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

(c) Disputed Central Excise and Sales Tax other investments. Accordingly, the provisions of
aggregating Rs.10.56 million have not been clause 4(xiii) of the Companies (Auditor's Report)
deposited since matters are pending with Order, 2003 and Companies (Auditor's Report)
relevant forum as indicated below:- (Amendment) Order, 2004 (together the Order)
are not applicable to the Company.
Name of the Nature of Demand Forum where
Amount dispute is pending xiv. In our opinion, the terms and conditions, on which
Statute the dues the Company has given guarantee for the loan
taken by other Company from Bank, is not
Sales Tax CST & LST &Penalty 8.49 Sales Tax Appellate DC prejudicial to the interest of the Company.

Sales Tax CST & LST 17.58 Sales Tax Appellate DC xv. The Company has not obtained any long term
loan during the year under audit. However on
Total 26.07 amalgamation of EIPL with the company ICD of
Rs. 0.95 Million is outstanding as long term
Central Excise Excise Duty & Penalty 7.59 Dy. Commnr.Appeals unsecured loans.

Excise Duty & Penalty 3.16 Tribunal xvi. According to the information and explanations
given to us and on an overall examination of the
Total 10.75 Balance Sheet of the Company, we report that no
funds raised on short-term basis have been used
Grand Total 36.82 for long-term investment.

ix The Company does not have any accumulated xvii.The Company has not made any preferential
losses at the end of the financial year and has not allotment of shares to parties and Companies
incurred cash losses in the financial year and in covered in the register maintained under Section
the immediately preceding financial year. 301 of the Act.

x. In our opinion and according to the information xviii.The Company has not issued any debentures.
and explanations given to us, the Company has
not defaulted in repayment of dues to a financial xix. During the year the Company has raised money
institution, bank or debenture holders. of Rs 231.52 million by calling up the balance
amount on partly paid up share of Rs12.75 per
xi. The Company has not granted loans and share comprising of 85 paise towards face value
advances on the basis of security by way of and Rs. 11.90/- towards share premium.
pledge of shares, debentures and other
Investments. xx. To the best of our knowledge and belief and
according to the information and explanation
xii. The Company is not a chit fund, nidhi, mutual given to us, no material fraud on or by the
benefit fund or a society. Therefore the para 4(xiii) Company was noticed or reported during the
of the order are not applicable. year.

xiii. In our opinion, the Company is not dealing in or For RJC Associates
trading in shares, securities, debentures and Regn. No. : 003496S
Chartered Accountants
Place : Coimbatore
Date : 28.10.2010 R.Jayachandran
Partner
Membership No.021848

29







ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Schedules To Balance Sheet and Profit and Loss Account (Rs. In Million)
as at 31st March 2010
31.03.09
PARTICULARS 31.03.10

3. SECURED LOANS --

4. UNSECURED LOANS 0.95 -
Inter Corporate Deposit 0.95 -

5. DEFERRED TAX LIABILITY / (ASSETS) (4.83) (24.98)
As per the last Balance Sheet 26.60 20.15
Add / Less - for the Year 21.77 (4.83)

6. FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Description of As During the year As As During the year As As As
Assets
at at at at at at
Land
01/04/09 Additions Deductions 31/03/10 01/04/09 Additions Deductions 31/03/10 31/03/10 31/03/09

23.29 47.64 0.00 70.93 0.00 0.00 0.00 0.00 70.93 23.29

Buildings 198.06 1.12 0.00 199.19 110.64 7.93 0.00 118.57 80.61 87.43

Plant&Machinery 1,198.72 63.03 1.89 1,259.87 724.29 77.25 1.84 799.70 460.17 474.43

Furniture&Office 101.27 9.25 7.94 102.58 71.58 8.82 7.71 72.69 29.90 29.69
Equipments

Motor Vehicle 5.72 0.03 0.05 5.70 3.30 0.43 0.04 3.69 2.01 2.41

Canteen Equipments 2.21 0.00 0.00 2.21 1.41 0.15 0.00 1.55 0.66 0.80

Grand Total 1,529.28 121.07* 9.88 1,640.47 911.22 94.57 9.59 996.20 644.27 618.05

Previous Year 1,345.66 226.15 42.53 1,529.28 863.52 79.52 31.81 911.23 618.05 482.14

Note : Addition include asset taken over on amalgamation
Refer notes on accounts : B(1)

33

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Schedules To Balance Sheet and Profit and Loss Account

as at 31st March 2010 (Rs. In Million)

PARTICULARS No. of Face Value 31.03.10 No. of 31.03.09
7. INVESTMENTS (AT COST) Share / Units per Share / Unit Share / Units

LONG TERM

NON-TRADE QUOTED EQUITY SHARES (FULLY PAID)

Lakshmi Machine Works Ltd 50 10.00 0.01 50 0.01
0.12 300 0.12
State Bank of India 360 10.00 0.01 500 0.01
0.03 2400 0.03
HDFC Bank Limited 500 10.00 1.25 80000 1.25
7.55 229000 7.55
HDFC Limited 2400 10.00 0.54 94245 0.54
0.02 12480 0.02
Magna Electro Castings Ltd 80000 10.00 0.01 12480 0.01
5.30 2182000 5.30
Rajshree Sugars & Chemicals Ltd 229000 10.00 2.65 1091000 2.65
17.49 17.49
Pricol Ltd 94245 1.00

L.G.Balakrishnan & Bros.Ltd. 1248 10.00

LGB Forge Limited 12480 1.00

Treadsdirect Limited 2182000 1.00

Elgi Rubber Company Ltd 1091000 1.00

Total[A]

NON-TRADE UNQUOTED EQUITY SHARES (FULLY PAID)

Coimbatore Pvt.Industrial Estates Ltd. 0 1000.00 0.00 77 0.00

The Mill Officers Co-Op Housing Colony

Ltd.,Ahmedabad 5 50.00 0.00 5 0.00
0.99 99300 0.99
Elgi Securities Ltd 99300 10.00 0.99 0.99

Total[B]

INVESTMENT IN SUBSIDIARY COMPANIES

-ATS Elgi Limited(Fully Paid) 90000 10.00 180.90 90000 180.90
1.78 1 1.78
-ELGI GULF-(FZE) 1
55.66 41.50
-Elgi Equipments (Zhejiang) Limited-(China) (Share 100%) 22.75 0.00
44.98 0.00
-Elgi Compressors Trading (Shanghai) Co.,Ltd.-(China) (Share 100%)

-SA Belair -(France) (Share 100%)

-Adisons Precision Instruments Mfg.Co. Ltd.

-Equity Shares (Fully Paid) 42550 10.00 16.87 42550 16.87
0.10 49000 0.10
-Equity Shares (Partly Paid-Rs.2Paid) 49000 10.00
323.04 241.15
Total[C]

INVESTMENT IN JOINT VENTURE

Elgi Sauer Compressors Ltd[Share 26%] 169000 1.69 1.69
1.69 1.69
Total[D]

INVESTMENT IN PARTNERSHIP FIRMS

L.G.Balakrishnan & Bros (Share 98%) 124.00 124.00
0.40 0.40
Elgi Services (Share 80%)
124.40 124.40
Total[E]

Grand Total -[A+B+C+D+E] 467.61 385.72

[Total Cost of Quoted Securities Rs.17.49 million (Previous year Rs.17.49 million) and
Total Market value of quoted Securities Rs.51.53 million (Previous year Rs.34.66 million)]

34

ANNUAL REPORT 2007-08 ELGI EQUIPMENTS LIMITED

Schedules To Balance Sheet and Profit and Loss Account (Rs. In Million)
as at 31st March 2010
31.03.09
PARTICULARS 31.03.10

8. CURRENT ASSETS, LOANS AND ADVANCES

a) INVENTORIES 356.21 392.80
Raw Materials and Components 80.93 85.57
Work-in-progress 93.94
Finished Products 131.56 3.14
Consumables Spares and Stores 4.36 15.54
Loose tools
19.36 590.99
b) SUNDRY DEBTORS 592.42
(Unsecured and considered good) 96.22
Debts outstanding for a period exceeding 6 months 69.41 603.24
Other Debts 642.18 699.46
711.59

c) CASH AND BANK BALANCES 0.14 0.11
Cash on Hand 89.67 73.93
With Scheduled Banks 931.59 81.49
-in Current Accounts
-in Deposit Accounts 1021.40 155.53
(Includes Rs.11.59 million (Previous year
Rs.11.49 million) with bank as margin money

d) OTHER CURRENT ASSETS 11.74 3.24
Interest accrued 11.74 3.24

e) LOANS AND ADVANCES
(Unsecured and considered good)

Advances and Loans to Subsidiaries 0.00 25.00
-Corporate Loan 2.50 2.50
-Rent advance

Advances recoverable in cash or 114.04 0.65
in kind or for value to be received. 299.16 132.11
Loans to Companies
Others 6.99 6.42
Prepaid Expenses 796.97 523.74
Advance Payment of Income Tax
Security and Other Deposits 24.31 30.78
Income/Refund receivable 42.76 12.79
1286.73 733.99

35

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Schedules To Balance Sheet and Profit and Loss Account (Rs. In Million)
as at 31st March 2010
31.03.09
PARTICULARS 31.03.10

9. CURRENT LIABILITIES AND PROVISIONS 167.82 83.11

a) CURRENT LIABILITIES 104.69 69.05
551.45 284.22
Acceptances
Sundry Creditors 4.62 9.29
Micro, Small and Medium Enterprises 295.95 90.35
Others
Due to Subsidiary Companies 2.98 2.71
Advance and Deposits from Customers and Others 1127.51 538.73
Unclaimed Dividends
792.82 488.96
b) PROVISIONS 11.66 17.76
97.70 81.54
Income Tax 16.60 13.86
Fringe Benefit Tax
Proposed Interim Dividend 121.20 106.68
Provision for Dividend Tax
Provision for Employee Benefits 1039.98 708.80

10. MISCELLANEOUS EXPENDITURE 13.74 15.68
8.30 4.90
Intangible Assets 7.40 6.84
Opening Balance
Add: Addition during the year 14.64 13.74
Less: Amortised during the year
0.72 1.31
11. OTHER INCOME 0.00 1.08
13.88 12.94
Profit on Sale of Assets 4.28 4.72
Profit on Sale of Investments
Royalty Receipts 0.93 0.70
Rent Receipts (TDS Rs.1.04 million) 10.45 9.88
27.91
(Previous Year Rs.1.39 million) 0.00
Dividend Receipts 58.54
Others 30.26
Gain on Exchange Fluctuation 12.93
40.29
12. INTEREST (EXPENDITURE)/INCOME 12.93
40.29
Interest Receipts (TDS-Rs. 1.77 million) 1.50
(Previous Year Rs.1.89 million) 0.00 11.43
40.29
Less:Interest Expenditure
Others (A) 392.80 305.54
(B) 85.57 77.76
13. MATERIALS CONSUMED 93.94
184.27
Opening Stock 572.31 567.57
-Raw Materials 3510.55 2978.83
-Semi-Finished Products
-Finished Products
Opening Stock
Purchases

36

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Schedules To Balance Sheet and Profit and Loss Account (Rs. In Million)
as at 31st March 2010
31.03.09
PARTICULARS 31.03.10

Closing Stock

-Raw Materials 356.21 392.80
80.93 85.57
-Semi-Finished Products 93.94
131.56
-Finished Products 568.70 572.31
3514.16 2974.09
Closing Stock (C)

Materials Consumed (A+B-C)

(Material consumed includes Machining Charges of

Rs.50.69 million) (Previous Year Rs.42.87 million)

14. SALARIES, WAGES, BONUS, GRATUITY ETC., 323.83 286.83
Salaries and Wages 3.11 3.25
Bonus
Performance Pay 70.50 48.40
Profit Share 22.10 28.20
Gratuity
Contribution to PF and other Funds 7.17 6.48
Managing Director's Remuneration (Excluding Performance Pay) 25.29 19.07
Welfare Expenses
4.66 4.40
15. OTHER EXPENSES 43.65 38.53
500.31 435.16
Consumption of Stores spares
Power,Fuel & Lighting 33.10 26.46
Factory Expenses 47.55 43.74
Tools Consumed 13.20 12.33
Repairs and Maintenance of 42.72 41.74

-Building 30.31 15.43
-Machinery 52.64 35.56
-Other Assets 12.54 12.89
Rent 11.21
Rates & Taxes 6.11
Printing & Stationery 4.31 4.70
Postage, Telegrams & Telephones 6.69 7.18
Travelling & Conveyance 9.37 9.91
Subscription, Periodicals & Filing Fees 69.47 68.11
Insurance 2.02 1.04
Donation 4.38 5.52
Legal and Professional Charges 21.81 25.34
Auditors' Remuneration 22.84 18.27
-Audit Fees
-Other Services 0.79 0.41
Miscellaneous Expenses 0.14 0.12
After Sales Expense 26.49 35.61
Research & Development Expenses 65.75 48.11
Directors' Sitting Fees 32.65 30.66
Advertisement & Publicity 0.82 0.78
Transport Charges 10.84 18.61
Packing Material 69.16 69.65
Commission & Discount 84.64 76.54
Royalty Payment 96.98 78.63
Service Tax Payments 2.94 2.58
Loss on Sale of Assets 0.11 0.33
Bad Debts Written off 0.06 0.13
Loss on Exchange Fluctuation 5.65 26.88
Assets Condemned & Written-Off 13.69 0.00
Excise duty Payments 0.12 0.00
Bank Charges 21.17 17.29
9.84 12.92
826.00 753.58

37

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Accounting Policies and Notes on Accounts

A. ACCOUNTING POLICIES Royalty : Royalty is recognised on accrual
basis in accordance with the
1) Basis for preparation of financial statements terms of the relevant agreement.

The Company follows accrual method of Rent : Rental income is recognised on
Accounting. The financial statements have been accrual basis in accordance with
prepared under the Historical cost convention on terms of respective rent
the basis of a going concern and in accordance agreements.
with the accounting standards referred to in the
Section 211(3C) of the Companies Act 1956, Interest : Interest is recognised on accrual
wherever applicable. basis taking into account the
amount outstanding and the rate
2) Inventories applicable.

Inventories have been valued at lower of cost Dividend : Dividend is recognised and
and net realisable value. The cost of accounted when the right to
inventories has been assigned using the dividend is established.
weighted average cost formula.

a) Purchased items - at FIFO - Net of

CENVAT and VAT 6) Fixed Assets
a) Fixed assets are recorded at historical cost of
b) Work-in-Progress - Purchase cost net acquisition, which includes all taxes, duties
and other direct expenses incurred up to the
of CENVAT and VAT stage of commissioning of the asset, net of
CENVAT and VAT, wherever applicable.
plus proportionate

overheads

c) Manufactured - at cost excluding

items at Factory selling overheads

and VAT b) Capital work-in-progress:
Capital work in progress consisting of assets
d) Trading Items - at cost and net of VAT under construction, erection and
commissioning are valued at cost incurred
e) Inventory items - at cost including up to the date of Balance Sheet.

at Branches / applicable taxes

Foregin Branches and duties.

3) Depreciation c) An asset is considered as impaired in
accordance with Accounting Standard 28 on
i. Depreciation is charged at the rates specified "Impairment of Asset", when at Balance
in Schedule XIV of the Companies Act, 1956 Sheet date there are indications of
as detailed below: impairment and the carrying amount of the
Asset, or where applicable the cash
1. Plant & Machinery - Straight line method generating unit to which the asset belongs,
and Vehicles exceeds its recoverable amount ( i.e. the
higher of the asset's net selling price and
2. Assets costing less - Written off in the value in use). The carrying amount is
reduced to the recoverable amount and the
than Rs.5000 year of purchase. reduction is recognized as an impairment
loss in the Profit and Loss Account.
3. All other assets - Written down value
7) Foreign Currency Transactions
method

ii. Where the historical cost of an existing

depreciable asset has undergone a change,

the change in the cost is amortized over the

residual life of the asset.

4) Research and Development Transactions in foreign currency are recorded at
exchange rate prevailing on the date of the
Revenue expenditure is charged off in the period transaction. For transactions settled within the
in which it is incurred. Capital expenditure is year, exchange variance is charged to Profit and
capitalised to the extent they have alternative Loss account. Outstanding liabilities and assets
economic use. are restated at exchange rate prevailing at the
end of the year. The resultant exchange
5) Revenue recognition variances are recognized in the profit and loss
account prepared for the year on a net off basis.
Sales : Sales, which includes excise duty,
but excludes VAT, is recognised at 8) Investments
the time of shipment of goods
from plant or from stock points. Long term investments are valued at cost and
short term investments are valued at cost or fair
Service income : Service income is recognised on value whichever is lower.
completion of service.

38

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

9) Retirement Benefits as profit sharing, performance pay etc are
measured and provided on actual basis.
a. Provident Fund : Provident Fund
contribution is as per the rates prescribed by 10) Borrowing Cost
the Employees Provident Fund Act 1952 and
the same is charged to revenue account. Borrowing cost includes:

b. Superannuation: Company has an a) Interest and Commitment charges on bank
arrangement with Life Insurance Corporation borrowings and other short term and long
of India for providing Superannuation term borrowings.
benefits to employees eligible as per
Company's Rules.Company's contribution to b) Amortization of ancillary costs incurred in
the Superannuation Fund is calculated as connection with the arrangement of
per agreed terms and provided in the borrowings.
accounts.
c) Finance charges in respect of assets
c. Leave Salary : Liability for leave acquired under finance leases or under other
encashment has been provided as per similar arrangements.
actuarial valuation.
d) Exchange differences arising from foreign
d. Gratuity :The Company operates a defined currency borrowings to the extent that they
benefit plan for the payment of post are regarded as an adjustment to interest
employment benefits for its employees in costs.
the form of Gratuity fund scheme managed
by Life Insurance Corporation of India. The 11) Deferred Tax
expenses is recognized based on the
present value of obligation is determined in Deferred Tax liability/assets are accounted for in
accordance with AS-15 (R) on "Employee respect of all timing differences, as per (AS) 22.
Benefits".

e. Other short term employee benefits: All
the other short term employee benefits such

B. NOTES ON ACCOUNTS

1) Amalgamation of Elgi Industrial Products Ltd. with the company

a) In accordance with the scheme of amalgamation approved by the Honorable High Court of Madras vide its
order dated 24th Sep 2010 the entire undertaking of Elgi Industrial Products Ltd. (EIPL) with all its assets
liabilities and reserves stand transferred to and vested in the company as a going concern with effect from
01/04/2009. The Amalgamation has been accounted under the "Pooling of Interest Method" as per
accounting standards 14 - Accounting for Amalgamation issued by Institute of Chartered Accountants of
India

b) Consequent to the above 7,62,600 Equity shares are proposed to be issued to the shareholders of EIPL as
per the Scheme of Amalgamation.

c) In view of this amalgamation of the company by the High Court Order, the figures for the current year are not
comparable with that of the previous year

2) Estimated amount of contracts remaining to be executed on capital account is Rs.1.16 million (previous year
Rs.8.80 million).

3) Contingent Liabilities not provided for

Particulars 31.03.2010 31.03.2009
(Rs. In Million) (Rs. In Million)

a) Guarantees and Letter of Credit 86.14 108.34
b) Uncalled liability in respect of Partly paid shares 0.39 0.39

39

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

4) Claims against the Company not acknowledged as debts: (Rs.In Million)

Name of Nature of Demand Amount Forum where
the Statute the dues Amount Paid/Adj. Dispute is Pending

Sales Tax LST& Penalty 8.49 8.51 Sales Tax Appellate
CST & Penalty 17.58 17.58 Tribunal (AB),Cbe.

Central Excise Excise Duty & Penalty 7.59 0.00 Dy.Commnr.Appeals
Excise Duty & Penalty 3.16 0.17 Tribunal

The Company has filed appeals with the appropriate authorities of Central Excise and Sales Tax Departments against
their claims.

5) Details of Investment in Partnership Firms : (Rs. In Million)

Name of the Firm Name of the Partner 31.03.2010 31.03.2009
Capital Share % Capital Share %
Invested Invested

L.G.Balakrishnan & Bros. Elgi Equipments Ltd 124.00 98.00 124.00 98.00
Elgi Services Elgi Ultra Industries Ltd 2.50 02.00 2.50 02.00
Elgi Equipments Ltd 0.40 80.00 0.40 80.00
Elgi Ultra Industries Ltd 0.10 20.00 0.10 20.00

6) As per the profit share scheme effective from 01.04.05 which is available to employees below the level of
officers, a sum of Rs 22.10 million has been provided under head of Salaries, wages, bonus and gratuity
(previous year Rs 28.20 million )

7) Rent includes Rs.0.12 million paid to Subsidiary Company, M/s. Adisons Precision Instruments Manufacturing
Company Limited. (Previous year Rs.0.12 million)

8) The Company has been exempted by the Ministry of Corporate Affairs under section 211 (4) vide letter No.
46/40/2010-CL-III Dt. 12/3/2010 from furnishing information under para 3(i) (a) and 3 (ii) (a) (1) & (2) of part II of
Schedule VI to the Companies Act ,1956 for the year ended 31/03/10.

9) a) The Company has been exempted by the Ministry of Corporate affairs vide letter No, 47/79/2010-CL-III Dt.
24/02/2010 from publishing annual accounts of its following Subsidiary Companies as required under
Section 212(8) of the Companies Act,1956.

1. Adisons Precision Instruments Mfg.Co.Limited, Coimbatore, India

2. Elgi Equipments Zhejiang Limited, China

3. Elgi Gulf (FZE), Sharjah, UAE.

4. Elgi Compressors Trading (Shanghai ) Co. Ltd. (China)

b) The Company has been exempted by the Ministry of Corporate affairs vide letter No, 47/79/2010-CL-III Dt.
07/05/2010 from publishing annual accounts of its following Subsidiary Company as required under Section
212(8) of the Companies Act,1956.

1. SA Belair - France

However the Company undertakes that the annual accounts of the Subsidiary Companies and the related
detailed information will be made available to the Holding and Subsidiary Companies investors seeking
such information at any point of time. The annual accounts of the Subsidiary Companies are kept open for
inspection by any investor at the registered office of the Holding and Subsidiary Companies.

10) Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and Other Deposits have been
reconciled wherever letters of confirmation have been received and necessary effect has been given in the
accounts.

40

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

11) Micro, Small & Medium Enterprise under the Micro, Small & Medium Enterprise Development Act2006 have
been determined based on the information available with the Company and the required disclosures are given
below:

Section 31.03.2010 31.03.2009
(Rs.In Million) (Rs.In Million)

a) The Principal amount due to Supplier S 22 (i) 49.76 28.29
under the act S 22 (i) Nil Nil
S 22 (ii) Nil Nil
b) Interest accrued and due to Suppliers S 22 (iii) Nil Nil
on the above amount (other than Section 16) S 22 (iii) Nil Nil
S 22(iv) Nil Nil
c) Interest paid to suppliers under the act,(Section16) S 22(v) Nil Nil

d) Interest due & payable for delay (for payments
during the year beyond due date.)

e) Payment made to suppliers (other than interest)
beyond the appointed day, during the year

g) Interest accrued and remaining unpaid at the end
of year to suppliers under the Act

f) Interest due and payable to suppliers under the Act
for payments already made.

Note:

This information has been given in respect of vendors to the extent they could be indentified as "Micro and Small
enterprises "on the basis of information available with the Company.

12) Details of security given for borrowing:

Borrowing Details of Security

Open Loan, Demand Loan and First Charge over specific fixed assets of the company
Packing Credit from Banks. along with Land and Building at Singanallur,
Coimbatore and over the entire Current Assets of the
Company

13) Details of Directors' Remuneration: 31.03.2010 31.03.2009
(Rs.In Million) (Rs.In Million)
a) Computation of Net Profit in accordance with
Section 349 of the Companies Act 1956. 942.27 632.64

Net Profit as per Profit & Loss Account 6.07 6.00
ADD: - -

Managing Director’s Remuneration 0.82 6.89 0.78
Director’s Remuneration 949.16 639.42
Sitting Fees
0.72 1.31
Less: 0.00 0.72 1.08
Capital profit on sale of assets
Profit on sale of Investments 948.44 637.03
47.42 31.85
Net Profit u/s 198 6.07 6.00
Maximum remuneration payable to MD @5%
Remuneration Actually Paid

41

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

b) Managerial Remuneration : Dr.Jairam Varadaraj 31.03.2010 31.03.2009
Managing Director (Rs.In Million) (Rs.In Million)

Salary,House rent allowance 3.97 3.77
Other allowances 0.19 0.17
Performance Pay* 1.41 1.60
Contribution to Superannuation and PF 0.50 0.46

Total 6.07 6.00

* Performance Pay pertaining to 08-09

Provision for gratuity not considered since the amount is not ascertainable individually under the LIC Group Gratuity
Cash Accumulation Scheme.

14) The Company has adopted the Revised Accounting Standard 15 in respect of defined benefit plan(Gratuity)

Gratuity(Funded)
Rs. Millions

31/03/2010 31/03/2009

1.PRINCIPAL ACTUARIAL ASSUMPTIONS 8.50% 7.90%
(Expressed as weighted averages 8.00% 6.50%
Discount Rate 3.00% 3.00%
Salary escalation rate 9.30% 9.00%
Attrition rate
Expected rate of return on Plan Asset 43.69 41.99
3.22 3.07
In the following tables, all amounts are in Rupees, 4.47 4.17
Unless otherwise stated. - -
- -
II. CHANGES IN THE PRESENT VALUE OF THE OBLIGATION (PVO)- -5.77 -8.36
RECONCILIATION OF OPENING AND CLOSING BALANCES: 2.71 2.82
PVO as at the beginning of the period
Interest Cost 48.32 43.69
Current service cost
Past service cost -(non vested benefits) 38.60 35.38
Past service cost - (vested benefits) 3.49 3.17
Benefits paid 6.08 8.01
Actuarial loss/(gain) on obligation (balancing figure) -5.78 -8.36
PVO as at the end of the period 48.3243.69 0.36 0.41

III. CHANGES IN THE FAIR VALUE OF PLAN ASSETS- 42.76 38.61
RECONCILITION OF OPENING AND CLOSING BALANCES:
3.48 3.17
Fair value of plan assets as at the beginning of the period 0.36 0.41
Expected return on plan assets 3.85 3.58
Contributions
Benefits period
Actuarial gain/(loss) on plan assets (balancing figure)
Fair value of plan assets as at the end of the period

IV.ACTUAL RETURN ON PALAN ASSETS
Expected return on plan assets
Actuarial gain (loss) on plan assets
Actual return on plan assets

42

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Gratuity(Funded)
Rs. Millions

31/03/2010 31/03/2009

V. ACTUARIAL GAIN / LOSS RECOGNIZED -2.71 -2.82
Actuarial gain / (loss) for the period - Obligation 0.36 0.41
Actuarial gain / (loss) for the period - Plan Assets 2.35 2.41
Total (gain) / loss for the period 2.35 2.41
Actuarial (gain) / loss recognized in the period
Unrecognized actuarial (gain) / loss at the end of the year - -

VI. AMOUNTS RECOGNISED IN THE BALANCE SHEET AND RELATED ANALYSES

Present value of the obligation 48.32 43.69
38.61
Fair value of plan assets 42.76
5.08
Difference 5.56 -
-
Unrecognized tranditional liability -
5.08
Unrecognized past service cost- non vested benefits -

Liability recognizes in the balance sheet 5.56

VII. EXPENSES RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS: 4.47 4.17
Current service cost 3.22 3.08
Interest Cost -3.49 -3.17
Expected return on plan assets 2.35 2.41
Net actuarial (gain) /loss recognized in the year
Transitional Liability recognized in the year - -
Past service cost - non- vested benefits - -
Past service cost - vested benefits - -
Effect of the limit under para 59 (b) - -
Expenses recoginized in the statement of profit and loss 6.56 6.48

VIII. MOVEMENTS IN THE LIABILITY RECOGNIZED IN THE BALANCE SHEET. 5.08 6.61
Opening net liability 6.56 6.48
Expense as above -6.09 -8.01
Contribution paid 5.56 5.08
Closing net liability

IX. AMOUNT FOR THE CURRENT PERIOD 48.32 43.69
Present Value of obligation 42.76 38.61
Plan Assets -5.56 -5.08
Surplus (Deficit) -2.82
Experience adjustments on plan liabilities- (loss) / gain 0.26
Experience adjustments on plan assets - (loss) /gain 0.36 0.41

X.MAJOR CATEGORIES OF PLAN ASSETS 0.00% 0.00%
( AS PERCENTAGE OF TOTAL PLAN ASSETS) 0.00% 0.00%
0.00% 0.00%
Government of India Securities 0.00% 0.00%
State Government Securities 0.00% 0.00%
High Quality Corporate Bonds 0.00% 0.00%
Equity shares of listed companies 100.00% 100.00%
Property 0.00% 0.00%
Special Deposit Scheme 100.00% 100.00%
Funds managed by insurer
Others ( to specify )
Total

15) Expenditure in Foreign Currency: 31.03.2010 31.03.2009
(Rs.In Million) (Rs.In Million)
Particulars
19.34 11.51
Commission 19.00 18.87
Travelling Expenses 13.14 11.38
Other Expenses 51.48 41.76
TOTAL
43

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

16) CIF value of Imports: 31.03.2010 31.03.2009
(Rs.In million) (Rs.In million)
Particulars
375.63 381.26
Raw Materials and Components 10.04 3.26
Machinery Spares 16.65
Capital Goods 153.41
Traded Goods 108.47 90.67

17) Earnings in Foreign Exchange calculated on FOB basis:

Particulars 31.03.2010 31.03.2009
(Rs.In Million) (Rs.In Million)

Direct Exports 689.77 933.01
Indirect Exports 212.87 170.36
18) Raw materials and Stores Consumption:
31.03.2010 31.03.2009
Particulars
(Rs.In Million) % (Rs.In Million) %

Imported 498.46 14.06 442.36 14.74
Indigenous 3048.80 85.95 2558.19 85.26
Total 3547.26 100.00 3000.55 100.00

19) R&D Expenses 31.03.2010 31.03.2009
Particulars (Rs.In Million) (Rs.In Million)

Capital R&D 6.37 4.71
Salaries & Wages 38.20 27.60
R&D Materials 32.65 30.66
Maintenance
Other Expenses 0.86 0.56
Total 9.29 7.45
87.37 70.98

While the accounts of R&D department are maintained separately, for the purpose of presentation, the administrative
and other expenses are clubbed along with other functional head of expenses and presented in the Profit and Loss
Account.

20) Installed Capacity / Actual Production (Quantity in Numbers):

Particulars Installed Capacity Production

31.03.2010 31.03.2009 31.03.2010 31.03.2009

Air Compressors 32500 32500 26677 24408

21) Turnover:

Particulars 31.03.2010 31.03.2009

Quantity Value Quantity Value

(In Nos) (Rs.In Million) (In Nos) (Rs.In Million)

Air Compressors 26987 5755.51 25900 4722.98
Others 116 56.04 104 88.88
Total
27103 5811.55 26004 4811.86

22) Earning Per Share: As on As on
31.03.2010 31.03.2009
Particulars (Rs. In Million) (Rs. In Million)

Net Profit 551.79 397.44
Weighted average Number of Shares Outstanding 78.92 62.73
Nominal Value Per Share (in Rs) 1.00 1.00
Basic Earnings Per Share (in Rs) 6.99 6.34
Number of Shares after dilution (when partly paid shares become 78.92 78.17
fully paid shares)
Diluted Earning Per Share (in Rs) 6.99 5.08

44

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

23) Accounting Standard (AS) 18, Related Party Disclosures (Rs. In Million)

Particulars Subsidiaries Associates & Joint Venture Key Management Personnel
31/03/10 31/03/09 31/03/10 31/03/09 31/03/10 31/03/09
Purchase of goods
Sale of goods 9.39 10.15 303.52 148.26 --
Receiving of services 64.69 51.59 61.29 0.75 --
Providing of services 18.57 1.96 2.54 --
Finance 0.13 1.14 0.00 --
Interest Received 6.88 20.13 10.00 0.00 --
Investments 0.00 25.00 3.42 0.00 --
Remuneration 0.50 0.00 0.00 --
Balance (Receivable) 44.98 4.18 0.00 0.00 6.07 6.00
Balance (Payable) 0.00 241.15 7.98 --
42.77 2.08 22.18 --
0.00 0.00 4.50
3.25
3.31

Note:

Names of related parties and description of relationship:

1. Holding Company Elgi Equipments Limited

2. Subsidiaries Adisions Precision Instruments Manufacturing Company Limited
ATS Elgi Limited
ELGI-GULF (FZE).
Elgi Equipments Zhejiang Limited (China).
Elgi Compressors Trading (Shanghai) Co.Ltd (China).
SA Belair - France

3. Fellow Subsidiaries Nil

4. Associates a. Elgi Ultra Industries Limited.
b. Treadsdirect Limited.
c. Elgi Rubber Company Ltd.
d. L.G.Balakrishnan & Bros Limited.
e. Ellargi & Co.
f. Elgi Services.
g. LG.Balakrishnan & Bros .

5. Joint Venture Elgi Sauer Compressors Limited.
6. Key Management Personnel Dr.Jairam Varadaraj , Managing Director

24) The under noted companies constitute the "Group" in terms of Regulation 3(1) (e)( i ) of SEBI Substantial
(Acquisition of Shares & Takeovers) Regulation,1997,as amended,with effect from 09.09.2002.

a) Elgi Ultra Industries Limited
b) Treadsdirect Limited
c) Elgi Rubber Company Limited.
d) L.G.Balakrishnan & Bros.Limited
e) Elgi Securities Limited
f) Dark Horse Portfolio Investments Limited
g) Madura Public Conveyance Private Limited
h) Premier Industrial Drives Private Limited
i) Elgi Sauer Compressors Limited.

45

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

25) STATEMENT IN PURSUANCE OF SECTION 212 OF THE COMPANIES ACT, 1956

1. Name of the Subsidiary ATS Elgi Limited Adision Precision ELGI-GULF (FZE) Elgi Equipments Elgi Compressors SA Belair -
Company
Instruments Mfg. ZHEJIANG Limited Trading(Shanghai) France
2. Financial Year of the
Subsidiary Ended on Co.Limited Co.Limited

3. Holding Company's interest 31st March 2010 31st March 2010 31st March 2010 31st March 2010 31st March 2010 31st March 2010
in the Subsidiary
90,000 91,550 One Share of INR CapitalInvested CapitalInvested CapitalInvested
(100%) INR (100%) INR
EquityShares of Equity Shares of Rs 17,77,500 (100%) INR

Rs 10 each(100%) Rs 10 each (100%) (100%)

4. Net aggregate amount
of the Profit/Loss of the
Subsidiary not dealt
within the Holding
Company's Account

a) For the current financial year 50.70 0.01 6.68 (33.83) (4.93) (0.49)
of the Subsidiary Company 0.05 Nil
(Rs. in Million)
Nil
b) For the previous financial year 16.91 Nil 1.08 Nil Nil
of the Subsidiary Company
(Rs. in Million)

5. Net aggregate amount of the
Profit/Loss of the Subsidiary
dealt within the Holding
Company's Accounts

a) For the current financial Nil Nil Nil Nil Nil
year of the Subsidiary Nil Nil Nil Nil
Company

b) For the previous financial Nil
years of the Subsidiary
Company

46

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Cash Flow Statement (Rs. In Million)
31.03.2009
Particulars 31.03.2010

A.CASH FLOW FROM OPERATING ACTIVITIES: 882.20 632.64
Net Profit Before Tax (0.01) (2.74)
Add: Prior Year Adjustments
91.96 882.19 629.90
Adjustments for: 0.12
Depreciation 73.09 79.52 121.99
Assets Condemned and Written off (0.66) 955.28 10.22 751.89
(Profit)/Loss on sale of assets 7.40 (1.18)
Deferred Revenue expenditure 0.00 401.53 (272.91)
(Profit)/Loss on sale of Investments 0.00 1356.81 6.84 478.98
(Profit)/Loss on sale of Auctionable claims 5.65 (291.64) (1.08)
Bad debts written off 9.84 1065.17
Interest and Bank Charges Paid 0.00
Dividend Received (0.93) 26.88
Interest Received (40.29) 14.42
Operating Profit Before Working Capital Changes (0.70)
Adjustments for: (465.63) (12.93)
Trade and Other Receivables (1.43)
Inventories (8.30) 195.39
Deferred Revenue Expenditure 876.89 (10.77)
Trade Payables
Cash Generated From Operations (9.84) (4.90)
(281.80) (452.63)
Cash Generated from Operations
Bank Charges Paid (A) (12.92)
Direct Taxes Paid (181.70)

Net Cash From Operating Activities (194.62)
284.36

B.CASH FLOW FROM INVESTING ACTIVITIES (B) (130.10) (218.25)
Purchases of Fixed Assets 2.07 1.69
Sale of Fixed Assets
Purchase of Investments (81.89) (44.98)
Sale of Investments 0.00 1.08
Loans to Companies
Interest Received (113.39) 75.50
Dividend Received 40.29 12.93
Net Cash Used in Investing Activities 0.93
0.70
C.CASH FLOW FROM FINANCING ACTIVITIES (282.09) (171.33)

Proceeds from Issue of Share Capital 16.19 0.00
Proceeds from Issue of Share Premium 216.09 0.00
Proceeds from Short Term Borrowings 0.00
Interest Paid 0.95 (1.50)
Dividend Paid 0.00 (44.04)
(150.44)
Net Cash Used in Financing Activities (C) (45.54)
82.79 67.49
NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 865.87 88.04
155.53
OPENING BALANCE OF CASH AND CASH EQUIVALENTS 1021.40 155.53

CLOSING BALANCE OF CASH AND CASH EQUIVALENTS

Note:Figures within Bracket denote Cash Outflow.

For and on behalf of the Board "As per our report of even date"

Dr.JAIRAM VARADARAJ N. MOHAN NAMBIAR For RJC ASSOCIATES
Managing Director Director Regn. No. : 003496S
Chartered Accountants
Coimbatore S. RAVEENDAR S.SRIRAM
28.10.2010 Company Secretary Chief Financial Officer R. JAYACHANDRAN
Partner
Membership No.021848

47

ANNUAL REPORT 2009-10 ELGI EQUIPMENTS LIMITED

Balance Sheet Abstract and Company's General Business Profile

I. Registration Details 000351
18
Registration No.
State Code 31.03.10
Balance Sheet Date
15435.19
II.Capital raised during the year (Rs. In Thousands) Nil
Nil
Public Issue - (Final Call Money on Party paidup shares) Nil
Warrant conversion application money received
Bonus issue 2,604,735.38
Private Placement 2,604,735.38

III.Position of mobilisation and deployment of funds(Rs. In Thousands) 78,923.92
2,503,093.45
Total Liabilities
Total Assets 21,768.02
Sources of Funds: 950.00
Paid up capital
Reserves and Surplus 666,089.72
Deferred Tax Liabilities 467,615.85
Unsecured Loan 1,456,387.33
Application of Funds:
Net Fixed Assets 14,642.48
Investments
Net Current Assets
Miscellaneous Expenditure

IV.Performance of Company (Rs. In Thousands)

Turnover 5,882,102.86
Total Expenditure 4,999,903.02
Profit/(Loss) before tax
Profit/(Loss) after tax 882,199.84
Earning per share (Rs.) 551788.31
Dividend Rate (%)
6.99
200

V.Generic Names of Three Principal Products of Company (as per Monetary terms)

Item Code No.(ITC Code) 841440.30
Product Description Screw Compressor
Item Code No.(ITC Code)
Product Description 841440.10
Reciprocating Compressor

For and on behalf of the Board "As per our report of even date"

Dr.JAIRAM VARADARAJ N. MOHAN NAMBIAR For RJC ASSOCIATES
Managing Director Director Regn. No. : 003496S
Chartered Accountants
Coimbatore S. RAVEENDAR S.SRIRAM
28.10.2010 Company Secretary Chief Financial Officer R. JAYACHANDRAN
Partner
Membership No.021848

48

ANNUAL REPORT 2009-10 CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

Auditors' Report

REPORT TO THE MEMBERS OF ELGI subsidiaries have been audited by other auditors
EQUIPMENTS LIMITED whose reports have been furnished to us, and our
opinion, in so far as it relates to the amounts
1) We have audited the attached Consolidated included in respect of those subsidiaries, is based
Balance Sheet of M/s Elgi Equipments Limited, solely on the report of other auditors.
Coimbatore, "the Company" and it's Subsidiaries
and Joint Venture constitute "the Group" as at 4. Further we report that:
31st March 2010, the consolidated profit and
loss account for the year ended on that date and i) The consolidated financial statements have
the consolidated cash flow statements for the been prepared by the Company's Management
year ended on that date annexed thereto. These in accordance with the requirements of
consolidated financial statements are the Accounting Standard (AS-21), on Consolidated
responsibility of the Elgi Equipments Ltd's Financial Statements, and Accounting
management. Our responsibility is to express our Standards (AS-27) on Financial Reporting of
opinion on these financial statements based on interests in Joint Ventures, issued by the
our audit. Institute of Chartered Accountants on India, on
the basis of the Individual financial statements
2. We conducted our audit in accordance with the of the Elgi Equipments Ltd and its subsidiaries
auditing standards generally accepted in India. included in the consolidated financial
Those standards require that we plan and perform statements.
the audit to obtain reasonable assurance about
whether the financial statements are free of ii) Based on our audit and in consideration of the
material misstatement. An audit includes separate audit reports on individual audited
examining, on a test basis, evidence supporting financial statements of the subsidiaries of Elgi
the amounts and disclosures in the financial Equipments Ltd, and to the best of our
statements. An audit also includes assessing the information and according to the explanations
accounting principles used and significant given to us, we are of the opinion that the
estimates made by management, as well as attached Consolidated Financial Statements
evaluating the overall financial statement give a true and fair view in conformity with the
presentation. We believe that our audit provides a accounting principles generally accepted in
reasonable basis for our opinion. India:

3. We did not audit the financial statements of four a) In the case of the Consolidated Balance Sheet,
Subsidiary Companies M/s Elgi Equipments of the state of the Affairs of the "Group" as at
(Zhejiang) Ltd-China, M/s Elgi Compressors 31st March 2010;
Trading (Shanghai) Co.Ltd-China, Elgi Gulf
(FZE)-UAE and M/s Belair SA-France. These b) In the case of the Consolidated Profit and Loss
financial statements and other information of the Account, of the profit of the "Group" for the year
ended on that date; and

c) In the case of Consolidated Cash Flow
Statement, of the cash flows of the "Group" for
the year ended on that date.

Place: Coimbatore For RJC Associates
Date: 28.10.2010 Regn. No. : 003496S
Chartered Accountants

R.Jayachandran
Partner
Membership No.021848

49