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Sustainability Report 2013-14

Fluid management

for a

better tomorrow

KIRLOSKAR BROTHERS LIMITED

CMD’s message…………………………………………………………................................................ 3

Strategy and Analysis………………………………………………..................................................... 6

Organization Profile…………………………………………………................................................... 8

Report Content………………………………………………….......................................................... 16

Governance: Commitments and Engagements…………................................................................. 20

Stakeholder Engagement…………........................................................................................ 23

Economic Performance……………………………………………...................................................... 28

Environmental Performance………………………………………....................................................... 32

Social Performance ..................................................................................................................... 38

Labour Practices and Decent Work………………................................................................... 38

Human Rights………………………………………….............................................................. 42

Society………………………………………………………....................................................... 42

Product Responsibility............................................................................................................ 43

Disclosure on Management Approach............................................................................................ 44

GRI index…………………………………………………………………............................................. 48

National Voluntary Guidelines....................................................................................................... 55

Independent Assurance Statement ................................................................................................ 59

Content

CMD's Message

It is my pleasure to place before you the Sustainability Report 2013-14. This is our fifth sustainability report prepared as per GRI guidelines.

KBL achieved sales revenue of Rs. 17516 Million for this year. This is lower by 6.4 % compared to the previous year's sales revenue.

In order to ensure economic sustainability, we embarked on a number of strategic initiatives and improved our business model. We implemented financial controls and policies which mitigate our financial risk and ensure business continuity. We have focused on promoting value added products meant for specific customer segments. Productivity is improved and production capacities were increased to improve the delivery performance at Kirloskarvadi, Sanand, Kaniyur, Kondhapuri and Dewas plants. This has helped us deliver products to customers as per their expectations and generate more sales revenue in product sectors. Our Kaniyur plant in Tamil Nadu has further improved its productivity and can assemble one pump in less than 20 seconds. This has increased the manufacturing capacity of the plant to 69000 pumps per month. This achievement has earned this plant the National Award in the Limca Book of Records.

Some of our key achievements include supply of Lowest Life-Cycle Cost (LLC) pumps to Delhi Jal Board and to Chennai Municipal Water Supply and Sewerage Board ( C M W S S B ) . U n d e r A s i a n D e v e l o p m e n t Bank/Jawaharlal Nehru National Urban Renewal Mission, we have supplied pumping solutions to Kolkata Environmental Improvement Investment Program (KEIIP) and Pune Municipal Corporation for Khadakwasla project. We successfully commissioned projects for Bangalore Water Supply and Sewage Board (BWSSB). We were successful in closing most of

the old projects in Irrigation sector and Water sector ensuring completion of all contractual requirements and collection of dues from the customers.

In Power sector, we are proud to be part of the nuclear development program of the Government of India. We have developed the primary sodium pumps for the Kalpakkam prototype fast breeder reactor (PFBR). We have also supplied Circulating Water Pumps for the largest installation at single location in the world. Various hydroelectric power projects ranging from 2.5 MW to 11 MW capacities were commissioned by KBL in the states of Maharashtra, Kerala and Himachal Pradesh.

We have created a dedicated network of channel partners for process market in strategic locations. In our new business model, we have established Authorized Pump-set Original Equipment Manufacturer (APOEM) as a vital element for standard products,. This has resulted in a shift from commodity sale to branded sale which ensures integration of products as per KBL standards. This new business model ensures timely availability of products at the door-step of customers. APOEMS and consultant approvals have strengthened our market presence.

KBL continues to be the leader in the fire- fighting pump market in India. In this segment, the revenue share of Multi Stage Multi Outlet (MSMO) pumps increased from 4% to 11% and Factory Mutual Approved and Underwriter Laboratories (FMUL) listed products increased from 8% to 14%. Such value added products contributed 40% to the overall fire-fighting pump business.

The economic growth rate of India is projected to be around 4.9 % in 2013-14. The country requires water and power and therefore there are significant

3

Dear Stakeholders,


opportunities in the area of infrastructure projects in the water supply. The scarcity of water and contamination of ground water due to industrialization will lead to projects in the area of waste water treatment and water recycling projects. Similarly the demand supply gap provides opportunities in the power sector.

The 12th five year plan has greater focus on irrigation which provides a positive outlook for the irrigation projects in various states of India. There are opportunities in Asian and African countries for irrigation projects. Investments in the infrastructure projects like metro rail and commercial space development will provide opportunities for business growth for our Building and Construction segment.

For environmental sustainability the company continues its focus on energy and natural resource conservation. This year our direct energy consumption has reduced by 11.3% as compared to last year. Our indirect energy consumption has decreased by 5%. The proportion of renewable energy has increased to 38.5% compared to 36% in 2012-13. We have increased recycling of water by 10% as compared to last year. Scope 1 and Scope 2 emission have reduced by 10% compared to 2012-13.

Our Pumping Energy Audit services have helped customer organizations identify areas where energy consumption in pumping systems can be reduced. This has not only reduced their energy cost but also reduced their carbon footprint. Through these services, our customers have succeeded in reducing more than 4,100 tons CO eq of emission this year.2

Our Kondhapuri plant is first to achieve certification for Energy Management System (ISO50001) in Pune

region. Dewas, Kondhapuri and Kaniyur Plants have prepared and applied for Green Co certification launched by Confederation of Indian Industries (CII). This certification standard will improve our environmental performance even further.

We believe in providing a healthy and safe environment to our employees. We monitor our safety performance and take steps to improve the same. Our Dewas plant has won the first prize, presented by "Manufacturing Today" for excellence in safety. We also conduct various health awareness programmes for our employees.

In the area of social sustainability, the company has continued its earlier initiatives in the communities. We sponsored soft skill development initiative named "Eagle"(Energizing Accelerated Growth and Leadership Excellence)atthe College of Engineering, Pune. Company employees continued their participation in Water, Sanitation and Hygiene (WASH) program designed for schools. KBL employees and volunteers have contributed more than 37000 hours for society initiatives in the area of Health, Education and Environment during the year 2013-14.Our Kirloskarvadi plant has been awarded as "Best Corporate Social Responsibility Practices" by World CSR Congress.

We are committed to monitor and improve our economic, environmental and social performance for sustainable business growth.

Sanjay C. KirloskarChairman and Managing Director

4

Strategy and Analysis


Organization Report content Governance: Profile Commitments and

Engagements

Economic Environmental Social GRI indexPerformance Performance Performance


Key Impacts

Risks

Globalization and increased focus on international business yielded good results. Revenues from international business contributed 33% of the KBL consolidated revenues. Our subsidiary SPP Pumps Limited commissioned a new plant in Atlanta, USA. This is the seventh manufacturing facility of KBL outside India. Resources were placed in key international regions like South Korea, Canada and USA for business. The Supplier of Choice agreement was signed with SNC Lavalin, Canada, for supply of pumps for their global projects.

We took measures to ensure sustainability and business continuity during course of the year. We were instrumental in developing primary heat transfer pumps for the 1X500 MW Bhavini Prototype Fast Breeder Reactor. GK-W pump series conforming to ISO 5199, complying to Minimum Efficiency Index (MEI) as per Euro norms of 2015 and 2017 were launched. 2 additional Authorized Refurbishment Centres (ARC) were inaugurated at Surat in Gujarat and Hospet in Karnataka taking the total number of such centres to 5.

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

Inadequate Information Technology security policies/procedures

Continuous pressure on margins

Delay in completion of projects

Opportunity loss in making sales

Absence of process to get products/patterns patented

Delays/inability to recover money from customer

Inability to identify potential markets/competitor's products

Country risks due to operating in foreign countries

Accepting orders with unfavorable contractual terms

Adverse fluctuation in foreign exchange rates

Inaccurate financial data/information

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

Ambitious growth of the world pump market at a CAGR of 6.7%

Indian economy is expected to grow by 6% in 2014-15

Growth Segments : Real Estate, Chemicals, Sugar, Refineries, LNG Terminals, Steel, Thermal & Nuclear Power, Wastewater, Infrastructure

Slow Growth Segments : Water Supply, Textile, Fertilizer, Automobile, Manufacturing, Petrochemicals, Coal, Paints

Enhance the marketing effectiveness through the practice of Customer Relationship Management and Key Account Management

Focus on identified key growth segments like Real Estate, Chemicals, Sugar, Refineries, LNG Terminals, Steel, Thermal & Nuclear Power, Wastewater, Infrastructure

Improve sales force effectiveness in institutional and distribution business by leveraging Information Technology systems

Reorganising to enhance focus on product and service differentiation

Focus on niche application market and market with value added products and services

Leverage financial control of project business to improve the balance sheet and enhance execution control to close projects ahead of time

Opportunities

Steps taken by the company to address risks and opportunities

6

Organization Profile

Strategy and Report content Governance: Analysis Commitments and

Engagements




We, Kirloskar Brothers Limited are one of the leading manufacturers of pumps and valves for water and other fluids. It was in 1888 that Mr. Laxmanrao Kirloskar started his business in Belgaum and business was incorporated as Kirloskar Brothers Limited in 1920.

Over the years we have developed various products and are trusted by our customers. We have supplied concrete volute pumps to the world's largest circulating water system. Our pumps can handle more than 175,000 liters of sea water per second. We have commissioned and handled largest diameter (2.8 Meter) Kaplan Turbine. We have done inhouse designing and engineering of this turbine. We have designed and developed Lowest Life Cycle Cost pumps

as it reduces energy consumption and cost saving on long run for our customers.

We have also supplied pumps to largest drinking water project in India with 900 MLD capacity. We are the only pump manufacturer who have supplied pump with highest head of 217m. We are suppliers to almost all metro rail projects in India. We have introduced multi outlet fire pumps for high rise and super high rise buildings. This is an innovative solution to space availability in larger cities. Our pumps find applications in domestic, agriculture, industry, irrigation and utilities. We have recently manufactured 3800mm butterfly valve which is largest of its kind.

Products

Pumps

End Suction Pump

Split Case Pump

Multistage Pump

Special & Engineered Pump

Monobloc Pump

Submersible Pump

Sump Pump

Valves

Butterfly Valve

Sluice valve

Non Return Valve

Kinetic Air Valve

Foot Valve

FM Approved Gate Valve

Cast Steel Gate Valve Ball Valve

Cast Steel Globe Valve Steam Trap Device

Cast Steel Check Valve Forged Steel Gate, Globe,

Check Valve Hydro Turbines

Francis Turbines

Kaplan Turbines

Pelton wheel Turbines

Packaged Systems

HYPN

Eterna

Fire Fighting System

HVACR System

Condition Monitoring System

Solar Pumping System

8

Mobile Pump Controller

Organization's Global headquarters

Yamuna, Survey No. 98 (3-7), Baner, Pune 411 045, India

Details of overseas operations can be viewed on KBL website at url mentioned below:

http://www.kirloskarpumps. com/contact-global-presence.aspx

Nature of ownership and legal form

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

9


Markets served

KBL has major operations in India with export to more than 90 countries. Our business verticals are :

Power

Water Resource Management

Irrigation

Gas Oil and Defense

Industry

Building and Construction

Distribution

Customer Service and Spares

10

Kirloskarvadi plant:

Industrial pumps (small, medium and large)

Customised pumps

Hydraulic turbines.

Scale of organisation

Net revenue17,516

Rs. million

KBL

Total number of

manufacturing units

5

Total number of employees

4151

Turbines (Nos.)

10

8

6

4

2

0

8

2

2012-13 2013-14

Large Pumps (Nos.)

350

300

250

200

150

100

50

0

262

324

2012-13 2013-14

30000

20000

10000

02012-13 2013-14

25013

19889

Small and MediumPumps (Nos.)

Number of Products sold

11


2013-14

60000

50000

40000

30000

20000

10000

0

49566

Sanand (Nos.)300000

250000

200000

150000

100000

50000

0

87134

198038

258207

2013-142012-132011-12

Kaniyur (Nos.)

270000

260000

250000

240000

2013-142012-132011-12

247490

260531

267381

Dewas (Nos.)

35000

30000

25000

20000

15000

10000

5000

02013-142012-132011-12

3331128912

26533

Valves (Nos.)Kondhapuri plant:

Valves for water supply

and sewerage boards of

different states

Dewas plant: Pumps for agricultural and domestic segment.

Shirwal and Sanand plant: Submersible pumps for agricultural and domestic applications.

Kaniyur plant: Small pumps for domestic applications

Business Areas and Operational Structure

We have 5 manufacturing plants in India. These are located at Kirloskarvadi, Kondhapuri, in Maharashtra, Dewas in Madhya Pradesh, Kaniyur in Coimbatore district of Tamil Nadu and Sanand, in Gujarat near Ahmedabad.

Kirloskar Brothers Limited has following direct

subsidiaries and Joint ventures which add value and facilitate its diverse range of activities:

Karad Projects and Motors Limited (earlier known as

Kirloskar Constructions & Engineers Limited)*

The Kolhapur Steel Limited

Subsidiary Companies:

12

Kirloskar Systech Limited

Kirloskar Corrocoat Pvt. Ltd.

Kirloskar Brothers International B. V. (KBIBV)

Direct Subsidiary companies of KBIBV

Kirloskar Brothers Europe B. V.

SPP Pumps Ltd.

Kirloskar Brothers (Thailand) Limited

SPP Pumps (MENA) L.L.C.

Micawber 784 (Proprietary) Ltd.

Subsidiary of Micawber 784 (Proprietary) Ltd.

Braybar Pumps (Proprietary) Ltd.

Complete list of subsidiaries is available in 94th Annual Report 2013-14. This report is available on company website. http://www.kirloskarpumps.com/investors-financial-information-annual-reports.aspx

*The Scheme of Arrangement and Amalgamation of Hematic Motors Private Limited with Kirloskar Constructions and Engineers Limited (the 'Scheme'), was sanctioned by the Honorable High Court of the Judicature at Bombay on March 31, 2013 and by the Honorable High Court at the Judicature at Madras on June 23, 2013. The same was made effective on July 29, 2013. Also in terms of the said Scheme, the name of the erstwhile 'Kirloskar Constructions and Engineers Limited' was changed as 'Karad Projects and Motors Limited'.

In addition to the 5 manufacturing plants mentioned in the report boundary, we had 6th plant in Shirwal (Maharashtra) which was considered as part of the scope till last year in the report boundary. The production activity of this plant is shifting to Sanand Plant in Gujarat and so it has not been considered in

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

this report. This year the number of pumps sold from Shirwal is 19107.

Kirloskar Brothers Europe BV, Netherlands is now 100% subsidiary of Kirloskar Brothers International B.V., Netherlands.

During the year, SPP Pumps LP, Georgia, USA, has acquired SyncroFlo INC, Georgia, USA. SPP Pumps LP, is a wholly owned subsidiary company of SPP Pumps Limited, UK.

Kirloskar Ebara Pumps Limited

Kirloskar Corrocoat Private Limited

KBL Kaniyur: "Mahila Mission 20" programme (Assembling of Pumps in 20 sec) has made national record and is awarded by the "LIMCA BOOK OF RECORDS"

KBL Kaniyur: Best organization for Women Talent Development Award by The 3rd Africa Women Leadership in Mauritius.

KBL Dewas: Gold award certification & Trophy for Management of Best Safety Practices in Engineering Industry in 12th Annual Greentech Safety Awards.

KBL Dewas: Best Corporate Social Responsibility Practice Award at 3rd Asia's Best CSR Practices Awards.

KBL Kirloskarvadi: “Best Corporate Social Responsibility Practises” by Global CSR Exullence and Leadership Award

International Award for Marketing- PMAA 2013

Best Business to Business Campaign

Best Trade Campaign

In Best Trade campaign category Kirloskar Brothers Limited is the only Indian company which received the Order of Merit

Joint venture

Awards

13


Report Content

Strategy and Organization Governance: Analysis Profile Commitments and

Engagements


Report content

Report Content

This Report is for the financial year 2013-14

(i.e. April 2013 to March 2014)

Previous Report was published in June 2013

Sustainabilty Reportis published annually

Report Profile

Contact:

Sheetal Nagare

Sustainability and Business Excellence

[email protected]

Report Scope and Boundary

Report content 1Report content is defined based on the material topics

Process is depicted in figure - 'Approach of Sustainable Development'.We have considered Company's vision, mission and values, stakeholder requirements and feedback, company's sustainability performance for identification of material topics. These material topics

or strategic focus are objectives and measures are developed for monitoring and review by top management. Strategic objectives

2have covered material aspects ; these are mentioned in Scope of Report section.

further detailed into strategic

1.'Topic' refers to any possible sustainability subject. GRI G4 Sustainability reporting guidelines - Implementation manual

2 The word Aspect is used in the Guidelines to refer to the list of subjects covered by the Guidelines. GRI G4 Sustainability reporting guidelines - Implementation manual

Approach of Sustainable development

Company's Vision, Mission,

Values

Stakeholder focus

Company's performance

for previous years

Risks & Opportunities

Strategic

Focus

(Materiality

topics)

Strategic

Objective –

(Material

aspects)

M

e

a

s

u

r

e

16

All the four reporting principles of defining report content featured in GRI guidelines are applied in the above approach. These principles are Materiality, Stakeholder Inclusiveness, Sustainability Context and Completeness. Mater ial i ty for sustainable development is worked out based on inputs received from internal and external stakeholders. Measure are developed which are monitored and reviewed by top management regularly. Material topics are depicted below:

Improve Financial Health of organisation

Deliver cost effective solution

Value added product and service

Best place to work

Unlock potential of employees

Create sustainable future

Build sustainable supply chain

Regulatory and legal compliance

3Scope of Report

Material topics are identified and monitored regularly.

The material aspects covered in strategic objectives are listed as follows:

Categories Aspects

Labour practices

Product and services

Economic

Environmental

Soci

al

Economic Performance

Market Presence

Energy

Emissions

Effluents and Waste

Products and Services

Compliance

Employment

Occupational Health and Safety

Training and Education

Community

Customer Health and Safety

Society

Aspect related to human rights, anticorruption, compliance and product responsibility forms a part of our code of ethics. At KBL, all are supposed to adhere to the norms and ethical behaviour prescribed in code of ethics. It relates to employees, customers, subsidiaries, suppliers, dealers and society. Material aspects mentioned above are based on the direct impacts. However indirect impact of these aspects are also considered and reported here. Based on the impacts of these aspects report boundary is formed. Details mentioned below.

The report includes 55 core key performance indicators and 30 additional performance indicators of Global Reporting Initiative Generation 3.1 (GRI- G3.1) guidelines, as applicable to the Company with an application level of 'A+'. The report has undergone external assurance by an independent assurer namely Ernst & Young LLP. The assurance statement forms a part of this report and placed at the end after GRI Index. The assurance is done in accordance with the International Standard on Assurance Engagements 3000 ("ISAE 3000") and principles of AA 1000 AS 2008. Further scope and basis of assurance is described in assurance statement provided by Ernst and Young LLP. No other relationship exists between Kirloskar Brothers Limited and Ernst and Young LLP.

The report is for all those stakeholders who may directly or indirectly get affected by our company's products or services. The report is for all our stakeholders, regulatory authorities as well as individuals and organizations interested in our performance on environmental, social and economic aspects.

3 The range of Aspects covered in a report is called the 'Scope'. (ref. GRI G4 Sustainability reporting guidelines – Implementation manual)

Data measurement techniques and the bases of calculations

We have implemented SAP enterprise Resource Management System. Various modules related to Finance, Production Planning, Materials Management, Sales and Distribution and Quality Management are implemented. The financial data has been sourced from the Annual Report. The financial processes and management processes related Quality Management System (ISO 9001), Environment Management System

17


Report Boundary

Global Headquarters

Manufacturing units

Sanand Plant

Village, SanandAhmedabad Gujarat

Dewas Plant Dewas Madhya Pradesh

Kondhapuri Plant

Kondhapuri, Dist. Pune Maharashtra

Kaniyur plant

Kaniyur Village Karumathampatti Tamil Nadu

Kirloskarvadi plant

Dist: Sangli Maharashtra

Map not to scale

(ISO 14001) and Occupational Health and Safety Assessment Series (OHSAS 18001) are audited by the internal as well as external auditors. Wherever necessary, we have explained the assumptions and/or exceptions while reporting on the GRI key performance

indicators. For certifications please refer our website at below url.Other assumptions and bases of calculations are given in respective sections.

http://www.kirloskarpumps.com/we-are-kbl-quality-policy.aspx.

18

Governance:

Commitments and Engagements

Strategy and Organization Report content Analysis Profile


Governance: Commitments and

Engagements

Governance: Commitment and Engagement

The Board of Directors comprises of an optimal complement of independent professionals as well as Company executives having in-depth knowledge of business. As on 31.03.2013, there are 11 directors out of which 1 Managing Director, 1 Whole time director and 9 (82%) non-executive directors of whom 6 (55%) are independent directors.

Chairman of the board of directors is holding the

executive position as Managing Director. This arrangement provides the organization leadership which will help organization achieve its vision based on core values of organization.

We have unitary board structure and it's presented in figure below. Details of board members can be seen in link -http://www.kirloskarpumps.com/investors-board-of-directors.aspx

Committees Composition

Audit and Finance

Remuneration

Investors Grievance

Board members

Audit Committee

Remuneration Committee

Investors' Grievance Committee

The Audit Committee functions according to its terms of references.It has powers, scope and role in accordance with the provisions of Companies Act, 1956, listing requirements applicable to the Company. The same is reviewed from time to time. Whilst, the full terms of references are available in Annual report which is displayed on Company's website.

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

The Investors' Grievance Committee of the Board is empowered to oversee the redressal of investors' complaints pertaining to share transfers, non-receipt of annual reports, dividend payments, issue of duplicate certificates, transmission (with and without legal representation) of shares and other miscellaneous

complaints. The status of complaints and their redressal is disclosed in the Annual Report.

On 13th March 2014 KBL constituted 'Corporate Social Responsibility Committee'. This committee will formulate and recommend to the Board a Corporate Social Responsibility Policy, will review the policy annually and recommend any changes therein; will recommend to the Board, the amount of expenditure to be incurred for the purpose of Corporate Social Responsibility, to be specified in the policy; will monitor the policy from time to time and to report to the Board its outcome and to recommend monitoring mechanism to the Board and to do others acts as may be required to be done by any statutory modifications.

The economic topics are primarily delegated to the business sector heads and the manufacturing plant heads and heads of corporate functions that are directly and primarily in-charge of the economic activities of the business operations of the company. Responsibility of

Corporate Social Responsibility Committee

Delegating authority

Corporate Social Responsibility

20

4 independent directors

3 independent directors

1 independent director and 1 executive director

1 independent director and 2 executive director

environmental topics related to energy, use of natural resources, managing waste and certain social aspects related to people safety, people development and community initiatives is delegated to the manufacturing plant heads. Policy related social topics are delegated to head of corporate human resource management function.

The performances of the Whole-Time Directors are evaluated / reviewed by the Remuneration Committee. The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and commission. The Report on Corporate Governance in the Annual Report contains details of the remuneration drawn by the Whole-Time Directors. The remuneration by way of commission paid to the Non Executive Directors is decided by the Board of Directors. Approval of the shareholders is taken for payment of commission to Non-Executive Directors which is within the limits prescribed under the Companies Act, 1956.

Senior management works as per the annual operation plan (AOP) approved by the board members. AOP is prepared for sustainable development of the company.

Risk management policy, which outlines the risk management framework of the Company and procedure, has been approved by Audit Committee. The Committee is chaired by the Whole time director and Company Secretary, CFO, Head of Internal Audit Dept and various other senior officers of the Company are its members. The roles of the Committee is to identify the risks related to the business, monitor the same for minimizing its impact, suggests line of action, assess status of risk mitigation plans, etc.

Compensation

Risk Assessment

Conflict of interest

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

Audit & Finance committee also reviews the risk management reports and legal compliance management reports on quarterly basis, wherein the Committee is briefed about the meetings of Risk Management Committee. Separately, the Internal Auditor of the Company also presents to the Audit & Finance Committee their report on the risk assessment and internal control systems.

The board of directors' reviews the progress of the business plan during the quarterly review. They also review the process of identification of risks and opportunities and provide their inputs for the identification of risks and opportunities. The board also reviews the status of actions planned to mitigate the risks.

In addition to the above they also review the feedbacks received from stakeholders and the actions initiated based on these feedbacks. The Board attends the Annual General Body meeting where shareholders provide their views.

The board also reviews the reports of the findings of internal audits and audits conducted by outside agencies. They also deliberate on assessments conducted by Ravi Kirloskar Quality Prize (RKQP) and the CII Assessment for the implementation of business excellence model.

In addition to the above there is Kirloskar Group level review of the company performance for economic, environmental and social aspects.

As mentioned above company has constituted Risk Management Committee which conducts its meeting every month. The committee has identified the risks and ranked them as per the impact and likelihood factors. Actions are planned to mitigate the impact of these risks. The status of actions on top 7 risks is reviewed by the board in its quarterly meeting. The board of directors review the economic, environmental and social impacts, risks and opportunities every quarter.

We have appointed a professional agency to manage shareholder correspondence. We regularly monitor the performance of this agency. We have provided draft

Identification and Management of Impact, Risk and Opportunities

Review

Shareholder

21


formats of frequently used documents on website for the benefit of shareholders. We also have one designated e-mail address for redressing of shareholder grievances. The number of grievances received and resolved /disposed of by us is published in the newspaper every quarter with our financial results.

Mission: We shall be known globally as a reliable and cost effective solution provider in hydraulic machines and systems.

Vision: We shall be amongst the first five pump companies in the world by the year 2015 by becoming the preferred choice of customer as well as employees.

Values:

Developing and working with mutual trust

Building and nurturing team work

Fairness in dealing with stakeholders

Quality in everything

Commitment towards Environment

The vision statement was revisited by the senior leaders and revised as given below on 9th July 2013: Publicly displayed on our website and below url:

http://www.kirloskarpumps.com/pdf/quality-policy-details/ISO/Mission_Vision_Policy.pdf

Mission Vision Values are applicable to all working in the company. Company strategy is development based on our mission, vision, values.

We have KBL code of ethics and all at KBL are to adhere to the norms and ethical behaviour prescribed in the document. We are multi country outfit Customs, rule, regulations and practices may differ but ethical standard remains same, as prescribed in code of ethics.

Along with code of ethics internally developed principles with regards to economic, environmental and social performance are as follows.

We have Environment Health and Safety policy, people's policy, energy conservation policy; we have also signed CII - Code for Ecologically Sustainable business growth. Along with this we have internal committee for women with regards to Sexual

Mission Vision and Values

Code of Ethics

Internally developed principles

Harassment of Woman at Work Place (Prevention, Prohibition and Redressal) Act, 2013.

We encourage appointment of women employees in our company along with their retention. Understanding the problems they face in continuing office after marriage or pregnancy we have introduced sabbatical leave policy. All these policies are applicable to all the manufacturing plants and corporate office.

CMD reviews the contents of the sustainability report and provides his inputs on improving the contents of the sustainability report. He ensures that all the material aspects are covered in the report. The sustainability report is approved by the Board every year.

Approval

Kirloskar Brothers Limited has signed following

Code of Affirmative Action for the underprivileged class.

CII Code for Ecologically Sustainable Business Growth

IIRC - Integrated Reporting pilot programme

Public Affairs Forum of India

Federation of Andhra Pradesh Chambers of Commerce and Industry

Fire and Security Association of India

Confederation of Indian Industry (CII) - Western Region

Federation of Indian Chambers of Commerce and Industry (FICCI)

Indo - American Chamber of Commerce

Indian Council of Arbitration

Mahratta Chambers of Commerce Industries and Agriculture (MCCIA)

Engineering Export Promotion Council

Indian Pump Manufacturers Association

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

22

Stakeholder Engagement

We have internal and external stakeholders who support us in our growth. Concerns and suggestions given by them are considered while building strategy of the company.

We have identified key stakeholders based on frequency of interaction and impact we have on each other.

Shareholders

Government

Society

Dealers

Suppliers / Vendors

Customers

Employees

In addition to materiality identification process, we have recognised material topics which relate to our major stakeholders mentioned above. Along with them we are also engaging with financial institutions, educational institutions, experts in the field, technology

providers and various organisations like CII. Employees participate in seminars, conferences, exhibitions, educational institutes, trade fairs, paper presentation in shaping growth of our organisation.

23


Our common modes of interactions are as follows:

Annual General Body MeetingCompany

website

Newspapers/ press releases

Feedback KBL top managementinteractions

Sales and marketingteam interactions Events, seminars,

exhibitions, meet

Various Surveys

Visits of stakeholders

AnnualReports

Reviewmeetings

Online interaction - portals

Sustainability Reports

One-to-one meetings

Conferences - Presentations

Annual, Half yearly, Quarterly meets

Mailer, Brochures, In-house, MagazinesCelebrations

24

There are certain modes of interactions which are stakeholder specific for example toll free customer care number is specifically for customers care, contact details on website for investor redressal, speak out sessions, Mahasabha for employees, focus group discussion specifically for women employees, vendor portal and dealer portal for vendors and dealer respectively and Vasundhara Festival, activities by Kirloskar Foundation and Vikas Charitable trust activities for society. There are common modes of communication for getting the feedbacks like satisfaction or perception surveys for employees, vendors, dealers, customers and society.

Annual report and sustainability reports are published annually however feedbacks can be received throughout the year. AGM is also conducted annually which is a platform for direct interaction of shareholders with directors. Event, seminar, celebrations are as per the occasions. Interactions with dealers or vendors are once through annual meet and for the whole year through various meets and celebrations on festivals. Speak out sessions, Mahasabha conducted for employees is half yearly. Yearlong plan is done for society level interaction and various activities are formulated. Customer care toll free service is available for 24 hours.

We have appointed a professional agency to manage shareholder correspondence. We regularly monitor the performance of this agency. We have provided draft formats of frequently used documents on website for the benefit of shareholders.

As part of the Company's dedication towards green initiative, an appeal was made to the shareholders, who had not registered their e-mail id's for receiving all communications in electronic format, to register the same. Further in order to provide better service to shareholders; reduce expenses and possible loss of documents in transit, shareholders were urged to register their Bank Mandate for direct credit of dividend or any other payments from the Company in the cases where it was not registered earlier.

Shareholders were also communicated the benefit of registering their Nomination for the shares held by them towards standardisation and simplification of

Frequency of Engagement

Shareholders

procedures for transmission of securities. This will enable the transmission process to be hassle free, as and when the need arises.

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

We have adopted various approaches for effectively managing relationship with our various customers groups. The approaches span over the entire product life cycle right from receiving the enquiry to the delivery of products / commissioning and handover in projects. There are learning and listening mechanisms to capture customer feedback which are triggers for improvement. Customer intimacy is focused through initiatives such as Sampark, Mithas, Mr. Customer etc. Actions on customer feedback and complaints are analyzed and the actions taken are shared with the customers. Customer feedback is collected through customer satisfaction surveys (CSS), customer visits, customer data on supplied products, complaints from customers/users, project execution, warranty claims, dealer reports / meets and analysis of lost business, customer training and inspection, customer complaint at project site. Leaders of KBL pro-actively visit to customer to collect and understand future needs and perception of the customers.

There are various platforms provided to the employees where they can give their views for their development always as well for growth of the company. These includes speak out sessions, mahasabha, union meetings, segmented employee engagement process, action planning with employees, focussed group meeting and many more. Based on the feedback received from these activities there are changes in HR policies. Some of them are introduction of sabbatical leave, increased mediclaim coverage, restructured compensation and composition. To ensure the sustainable development, vision mission and values of the company and their linkage to reality was

Customers

Employees

25


communicated to employees as they are one of the key stakeholders of our company.

We have established long term relationships with our key suppliers and partners. This has resulted in mutual growth and enhanced trust and respect for each other. More than 40 suppliers are supplying material to KBL for over 20 years. Some of the suppliers are supplying for more than 40 years. We ensure that our suppliers and dealers are working in line with our company values and strategy. We conducted awareness session on topics like sustainability, government regulations, requirements at global level, and quality standards of KBL. We are supporting them in getting ISO certification and establishing processes at their end. Our vendor / suppliers re-evaluation process is implemented for existing key suppliers which includes sustainability aspects.

As part of ENCON (Energy Conservation) week celebration, walkthrough audits are conducted at vendors and suggestions are given for improvement. ENCON literature (recording monitoring/reviewing) is also shared with these partners.

In continuation to our last year's initiatives of establishing Authorised Refurbishment Centers (ARC) this year we have gone for ISO 9001: 2008. We have supported ARC extended arm of KBL by preparing manuals, conducted audits so that there is effective deployment of systems and processes.

After implementation if CRM its being effectively use in spare parts booking, complaint registration and monitoring the compliance.

We have our Sanand plant in Coimbatore which has 100% women in manufacturing. Shortage of skilled manpower in southern region made us think on same line. We have trained women from underprivileged families with a purpose to enlighten their lives as well as

Vendor/ supplier

Dealers

to meet the demands of our customers. These women workforce are working with one of our dealer in Madurai and are trained in winding.

We have society engagement activities at each of our manufacturing locations and corporate office. Though this is based on society feedback, the society welfare programs revolve around few areas like Health, Environment, Economic development, sports and education. Highlights of some of the plants activities are given below.

Dewas: Under Public Private Partnership Dewas KBL plant has undertaken infrastructure development of ITI Niwali. Along with the local NGO, an orientation program for women under self help group was organized for learning different trait. Dewas does plantation on few occasions as mentioned in last sustainability report. In addition, they also plant trees in factory and old age home on World Environment Day. Various health checkup camps were organised including megahealth checkup camp which included Hemoglobin Test, BMI measurement & Vision test, Eye Checkup.

This year Kirloskar Foundation activity was extended to Dewas manufacturing plant, wherein employees volunteer towards society welfare in planned and structured way.

We interact with various industry bodies and government/regulatory authorities in public policy related issues. Our senior officials are active in engaging with government through multiple business forums and trade organisations. Major material topics considered here are good governance, ethical behaviour, compliance, support to developmental programmes, job creation and being a responsible company.

Society

Government

26


Strategy and Organization Report content Governance: Analysis Profile Commitments and

Engagements

Environmental Social GRI indexPerformance Performance



Economic Value Generated

We achieved sales revenue of Rs. 17516 Million for this year. This is lower by 6.4 % compared to the previous year's sales revenue.

2013-142012-132010-11 2011-12

Sales (Rs. Million)25,000

20,000

15,000

5,000

0

19,46917,819

18,72417,516

10,000

Economic Value Distributed

2013-142012-132010-11 2011-12

313329377330

346320303300

2,9952,7243,0913,157

1,5241,4971,5101351

11,69513,20412,66113,431

Interest

Depreciation

*O & OE

Employee Cost

Materials

1 10 100 1,000 10,000 100,000

*: Operations and other expenses

Summarized Balance Sheet

10,000

8,000

6,000

4,000

2,000

0

2013-142012-132010-11 2011-12

10,921 11,036 10,470 10,240

Total Assets (Net) Rs. Million

Total asset include net fixed assets, investment, net current asset and intangible assets.

10,000

8,000

6,000

4,000

2,000

0

2013-142012-132010-11 2011-12

3,48

7

3,50

02,

685

2,24

0

7,43

4

7,53

77,

786

8,00

1

7,27

6

7,37

87,

627

7,84

2

Loans Net Worth Reserves

28

278

2013-142012-132010-11 2011-12

ProposedDividend

AdditionalTax on

Dividend

GeneralReserve

SurplusCarried toBalanceSheet

1800

1600

1400

1200

1000

800

600

400

200

0

159

159

198

37 23 25 32 61 31 43 48

1,14

2 1,24

1

1,44

91,

648

Appropriations (Rs. million)

Procurement

Local Hiring

Our vendors work with us since generations. We have various development programmes for their up-gradation and up-liftment. We do not have documented policy for procurement from locally based suppliers, but most of the material is procured from local suppliers.

Procedures for auditing the vendors, studying their facility and capability evaluation are in place.

Our operations in India are located in Kirloskarvadi, Kondhapuri in Maharashtra, Dewas in Madhya Pradesh, Kaniyur, Tamil Nadu and Sanand in Gujarat. While there is no documented policy for local hiring, in order to ensure longer retention, candidates belonging

to local area are welcome to join the organisation subject to their meeting job requirements based on education and skills.

Water availability for industries is under stress in some parts of the country. According to World Bank, water shortages led to the shutdown of thermal power plants in India and lower energy production in power plants in the United States. The scarcity threatened hydropower generation in many countries, including Sri Lanka, China and Brazil.

Increasing awareness and focus on the generation of renewable energy such as solar, hydro and other options. For instance, government and other agencies are promoting solar water pumps in rural areas for the purpose of irrigation.

Risks and opportunities for the organization's activities due to climate change

Development of infrastructure investments and services for public benefit

Employees contributed

37000 man-hours (CSR)

Investments (Public Benefit)

1 million INR

29


Environmental Performance


Engagements

Economic Social GRI indexPerformance Performance



Material Consumption

Material contributes to major spending in our business. This year we were able to reduce the non-metal consumption. Details can be seen below.

We were able to reduce our paper consumption to more than 50% as compared to 2011-12. We have also reduce our materials cost.

Recycle / Reuse

Our Dewas plant consumes 56% of cast iron which is from recycled/reuse material.

Our total Energy Consumption (Direct+Indirect) has reduced by 8% since 2011-12.

Indirect Energy

Our indirect source of energy and its composition can be seen from the above pie chart. Total indirect energy

0.8

Indirect Energy (%)

0.0State Electricity Board

DG Set

Wind

Solar

38.5

60.7

Material Consumption

18000

16000

14000

12000

10000

8000

6000

4000

20000

2013-142012-132011-12Metal (MT) Non Metal (MT) Paper (kg.)

1437

4

1351

1497

8

1566

6

5248

4735

1525

8

4023

3806

Dewas

5556

58

56

%

2013-142012-13

54

52

32

Direct Energy

140000

120000

100000

80000

60000

40000

20000

02013-142012-132011-12

126700 125266116354

Total Energy consumption (GJ)

Energy

Direct non renewable energy use in KBL is through Coke, Diesel and LPG. This year our direct energy consumption has reduced by 11% as compared to last year and since 2011-12 it has reduced by 26%. In this, diesel consumption was reduced by 34% compared to 2012-13 and by 71% since 2011-12. This is a result of our continual efforts in energy conservation, regular monitoring and increased shared of Indirect Renewable source of energy.

Note: We have included Kaniyur plant in 2012-13 and Sanand plant in 2013-14 for sustainability reporting.

40000

35000

30000

25000

20000

15000

10000

5000

02013-142012-132011-12

35323

29234

25914

Direct Energy consumption (GJ)

30000

25000

20000

15000

10000

5000

0

24230

27231

102597875

0.05 1

Kirloskarvadi Dewas Kondhapuri

2013-142012-13

Renewable energy (GJ)

Overall energy consumption from the state electricity board has decreased by 10%.

This year we had concentrated more on reducing the use of energy and increasing the share of renewable energy. Awareness was created through various ways like awareness drive, ENCON competition, and awareness on energy consumption of machines.

Our overall water supplied to colony in Kirloskarvadi) consumption has increased as compared to last year. This is because of some specially engineered pump manufactured by KBL. However there is 11% reduction as compared to 2011-12.

(manufacturing plant and water

70000

60000

50000

40000

30000

20000

10000

0

4387

831

899

1184

615

912

1275

1525

1564

0 257

325

4287

4107

6154

355

331

State Board Electricity (GJ)

2013-142012-13Kirloska

rvadi

Dewas

Kondh

apuri

Sana

nd

Kaniyu

r

Corpo

rate

Total

33

consumption has reduced by 5% as compared to last year. The proportion of renewable energy has increased to 38.5% compared to 36% in 2012-13.

Water

2013-142012-132011-12

Specific Energy consumption (GJ/Rs. Mn)

20

15

10

5

0

1714

11

We were also successful in reducing specific energy consumption from 17gigajoules / Rs. Mn of production values to 11gigajoules / Rs. Mn of production values.

Kirloska

rvadi

Dewas

Kondh

apuri

Sana

nd

Kaniyu

r

400000

350000

300000

250000

200000

150000

100000

50000

0

2296

53

2416

125

572

8700

6994

5697

1928

2716

2013-142012-13

2355

03

2120

40

2178

6

1119

7

2011-12

3Water Consumption (m )

3Total Water Consumption (m )600000

500000

400000

300000

200000

100000

0

2013-142012-132011-12

501250

424053 442694

Water consumption in manufacturing plants is as follows:


34

Water source:

River water Corporate Office: 24161m3

Borewell waterDewas: 25571mKondhapuri: 6993 mSanand: 5697 Kaniyur: 2716 mCorporate Office: 70 m

3

3

3

3

Open well waterKirloskarvadi: 382089 m3

Bottle waterKirloskarvadi: 12.8mCorporate office: 278m

3

3

Recycled water

KBL has increased recycling of water since 2011-12. Recycled water trends for manufacturing plants and corporate office in provided in graph below.

200000

180000

160000

140000

120000

100000

80000

60000

40000

200000

167253 162858179561

2013-142012-132011-12

3Recycled Water (m )

Specific water consumption:

We were successful in reducing specific water 3consumption from 38 m /Rs. Mn of production value to

326 m /Rs. Mn of production value.

2013-142012-132011-12

35

25

15

50

38

32

26

20

30

10

40

3Specific Water consumption (m /Rs. Mn)

3Plants 2013-14 (m )

Kirloskarvadi 153822

Dewas 16773

Kondhapuri 1005

Sanand 3403

Corporate 4559

Specially engineered pumps were prepared in Kirloskarvadi plant and water was taken from colony water supply. Yamuna, Corporate office water

3consumption is 24510m this year whereas last year it 3was 21146 m .

Plantation

22002218

2012-13 2013-14

Every year, we plant trees in all our locations. importance is given to the maintenance of these planted trees.

This year Dewas plant used 66 kg of R 22.There is no other ozone depleting material released into the environment

Ozone depleting substance

Note: 1 Conversion factor for electricity is updated in this report. It is 1kWh electricity = 0.001 ton CO e. All values are changed accordingly.2

The reduction in scope 1 and 2 emission is primarily because of energy efficiency measures taken, increased contribution of energy from renewable sources and continuous monitoring and awareness created.

Plant specific emissions are as follows:

100000

10000

1000

100

10

1

2013-142012-132011-12Kirlo

skarva

diDew

as

Kondh

apuri

Corpo

rate

Sana

nd

Kaniyu

r

1578

011

935

3451

4608

400

463

103

104

1239

1222

455

Scope 1 and 2 Emissions (Tons)

1469

8

3786

384 12

47

Manufacturing

Waste - Unit 2013-14

Food Wastage -kg 9858.65

Paint sludge-tons 44.61

Used Oil-lit 347.00

Oil soaked Cotton waste -tons 25.16

Metal waste -kg 52673.68

Paper waste -kg 10117.93

Plastic waste -kg 4015.17

Burnt sand -MT 1006.60

MS material -MT 97.73

Used batteries - No. 229.00

E-waste 35.00

35

Waste

Product

Our products are serviceable and in case of operational problems either these are repaired at Authorized Refurbishment centre (ARC) or authorised service centres. Such repairs result in most of the pump components reused and only the defective parts are replaced

Emissions

Scope 1 and Scope 2 emission have reduced by around 7% compared to 2011-12 and by 10% compared to 2012-13.

2013-142012-132011-12

25000

20000

15000

10000

5000

0

20116 2097318788

Scope 1 and 2 Emissions (Tons)


Hazardous wastes generated in various production processes like oil, non - ferrous metal, hazardous waste as defined in Schedule - 4 of Hazardous waste (management & handling) Amendment Rules 2003), are sold only tocyclers/ re-refiners/re-processors registered with the Ministry of Environment and Forests (MoEF) / Central Pollution Control Board (CPCB).

The company manufactures large variety of pumps from very small pumps for domestic applications to custom designed pumps for large projects. We are making efforts to increase the use of packaging material which are recyclable. We have started using such recyclable products for packaging in our plants. Health of our customers and channel partners are of prime importance. In this regards we have switched our packaging which now complies with standards like Restriction of Hazardous Substances Directive (ROHS) and International Standards for Phytosanitary Measures No. 15 (ISPM 15).

Packaging

ROHS: It restricts the use of the six substances like Lead (Pb), Mercury (Hg), Cadmium (Cd), Hexavalent chromium (Cr6+), Polybrominated biphenyls (PBB) and Polybrominated diphenyl ether (PBDE) as they are hazardous.

ISPM 15: Its main purpose is to prevent the international transport and spread of disease and insects that could negatively affect plants or ecosystems.

Energy Conservation cell

In line with our material topics of creating sustainable future and providing value added products and service, energy conservation cell was started. By working on principle of energy efficiency, team of Certified Energy Managers & Auditors carry out Pumping Energy Audit. This cell helps organisations to understand and analyse its energy utilisation and identify areas where energy use can be reduced. We offer a unique Energy Audit Program which helps our customers in saving of electricity consumption and thus their energy cost. This service has reduced 4100 tons of carbon emission at our customer end.

36

Social Performance


Engagements

Economic Environmental GRI indexPerformance Performance

Social Performance

Social Performance

Labour Practices and Decent Work

Workforce

Manpower planning is as per organisation needs and business requirements for the year. The optimization is done through assessment of available capabilities and internal deployment with skilling, multi-skilling, job rotation, transfers, job enlargement and enrichment.

Details of workforce by employment type and location are presented in table below:

Staff 341 113 60 11 26 805

Workmen 503 433 31 0 36 33

Trainees 4 0 2 0 0 13

Temporary 2 7 22 0 11 64

Apprentice 75 67 18 0 3 0

Operator

Trainees 0 0 0 0 0 0

Earn & Learn 109 0 0 0 0 0

Trainee Sales Officer 0 2 0 0 0 14

Contract Manpower 853 178 55 69 48 65

Loca

tion

/E

mp

loym

en

t ty

pe

Kir

losk

arv

ad

i

Dew

as

Kon

dh

ap

uri

Kan

iyu

r

San

an

d

Corp

ora

te

Gender-wise data for workforce is given in table below:

Kirloskarvadi 210 7 503 0

Dewas 65 4 433 0

Kondhapuri 29 0 31 0

Kaniyur 6 3 0 0

Sanand 12 1 36 0

Corporate 579 62 33 0

Location Staff Workmen

M F M F

Total 901 77 533 0

New employee hired

Age wise distribution of new employees hired

Locations <25 25-35 36-45 46-58 Total

Total 11 33 6 8 58

Kirloskarvadi 5 2 1 1 9

Dewas 4 8 1 0 13

Kondhapuri 2 5 0 2 9

Kaniyur 3 0 0 3

Corporate 15 4 5 24

3577

2013-142012-132011-12

3635

41515000

4000

3000

2000

1000

0

Total Workforce

2013-142012-13

Staff

Workmen

Traine

es

Tempo

rary

Appren

tice

Operat

or Tra

inees

Earn

& Learn

Traine

e Sale

s Offic

er

Contr

act M

anpo

wer

3329 28

25

1 0 13 4 4 3

0 0 0 0

7

293133

30

25

20

15

10

5

0

Workforce type distribution (%)

38

Gender wise distribution of new employees hired.

58 6 52

No. of female (No.) male (No.)new hired

Workforce Diversity

To encourage diversity and promote the multi-ethnic culture, we recruit employees globally. Campus recruitment is done from different parts of the country. Employees coming from different geographical locations work on different projects.

There is no bias of gender, caste or religion. Increase in number of female employees over last three years reflects diversity, fairness and equal opportunity.

Recruitments are done on the basis of merit. We have equal opportunity clause in our Code of Conduct.

We believe in involving people in framing and improving people strategy and policies. Various forums are established to seek feedback for improving people strategies embracing team spirit and involvement. These initiatives have lead in reduction of attrition rate.

Attrition

We have reduced attrition rate in all the management levels and it can be seen below

Kaniyur 1 0 0 0

Dewas 2 2 23 11

Kirloskarvadi 1 0 39 20

Kondhapuri 0 0 8 9

Corporate 9 3 41 49

Sanand NA 0 NA 4

Location Females Males

2012-13 2013-14 2012-13 2013-14

Age wise no. of people leaving the company is as follows:

Kaniyur 0 0 0 0 0

Dewas 2 2 2 3 4

Kirloskarvadi 1 5 8 3 3

Kondhapuri 0 5 2 2 0

Corporate 9 9 12 14 8

Sanand 0 0 1 3 0

Location < 25 26-30 31-40 41-50 >51

2013-142012-132011-12

200

150

100

50

0

83 90

151

Total no. of female employees

2013-142012-132011-120

5

10

15

2015.35

12.7810.22

Attrition Rate (%)

2013-142012-132011-12

30%

25%

20%

15%

10%

5%

0%Senior

ManagementMiddle

ManagementJunior

Management

11%

11%

24.3

%

11.1

% 13.4

%

8.7%

16.1

%

12.7

%

10.6

%

Attrition - Managerial level

Gender specific attrition is provided below:

39


Details of Return to work and retention rates after parental leave is as follows

Work Force Breakdown 2012-13 2013-14

Number of females

Employees availing 3 9

Maternity leave(No.s)

Number of female

Employees availing 1 3

Maternity leave and

completing 12 months

after returning to work

Number of male

employees availing *8 NA

paternal leave

(4 days) (Kirloskarvadi)

Note: *this leave given to workmen for family planning treatment. Hence it is not considered for reporting henceforth.

We advocate women empowerment and have focused approach of having gender diversity across KBL. With this objective we have started with sabbatical leave which is given to females at the time of marriage or during pregnancy (additional to maternity leave).

We have a Safety, Health and Environment (SHE) policy, which encompass all regulatory norms along w i t h I n t e rna t i ona l Labou r Organ i sa t i on recommendations. A process is established for recording, reporting, analysing and taking action on accidents and unsafe conditions.

We monitor on regular basis the safety statistics through monthly review sessions. The region wise safety score card is presented below.

is

Health and safety

No. of

Fatalities F 0 0 0 0 0

No. of Lost M 4 1 4 0 0Time Incidence

Cases (LTI) F 0 0 0 0 4

No. of Minor M 37 15 10 0 1injuries including First F 0 0 0 0 23Aid Cases

No. of M 8 14 16 13 1

Near-misses F 0 0 0 3 25Frequency M 0.7 0.3 1.8 0 0.4

rate F 0 0 0 0 0.9

Severity M 33.9 6.9 21.2 0 0.1

rate F 0 0 0 0 2.5

Man Days M 179 216 46 0 0

Lost (Hrs) F 0 0 0 0 47

Occupational M 0 0 0 0 0

disease (No.) F 0 0 0 0 0

M 0 0 0 0 0

Parameters

KO

N

DW

S

SA

N

KA

N

Gen

der

KO

V

Note: KOV- Kirloskarvadi, KON-Kondhapuri, DWS - Dewas, SAN- Sanand and KAN - Kaniyur. Frequency rate and severity rate represent the average values. Safety statistics includes contract labours also.

This year we have started process for monitoring of safety parameters for female employee all across the manufacturing plants.

Safety training

Locations Hours

Kirloskarvadi 579

Kaniyur 363

Dewas 474

Sanand 264

40

Annual medical check-ups are done for all workmen and staff along with their spouses.

The safety topics covered in the agreements are wearing of safety shoes, safety helmet and such other personal protective equipment (PPE) as per the requirement of the working area. In order to increase awareness in workmen about their safety and importance of PPEs, we have decided and communicated a policy.

We have Training and Development process to build people's capabilities, to achieve goals, to gain competitive advantage. Employee career progress aspirations and enhance employees employability is also considered while planning trainings.

Health and safety topics covered in formal agreements with trade unions

Training

Average Training hours per employee

Category Males Females

Senior Management 22 16

Middle Management 21 10

Junior Management 21 21

Workmen 8 6

Career Development policy, training and development, cross functional projects, action learning projects are some of the ways used to develop employees and to enhance their competencies and increase their own professional needs.Training programs are organized as per the training calendar prepared on the basis of identified training needs in PAMS, functional, organisation needs, business plans, Individual Development Plans (IDP).

Employee benefits

PF, Gratuity and Superannuation benefits are given to our employees. Other major benefits given are mentioned below.

Sabbatical leave

for female workforce

after marriage and maternity leave

Parivar Suraksha Yojana

financial relief in the form of a monthly

payment to the spouse of an employee, who

dies while in the services of the company

Worklife balance

Gymnasium

Badminton Hall

Swimming Pool

Hospital

Cafeteria

Table Tennis

Family get together

Temple

Cultural Shows

Sports Events

Housing Colony at Kirloskarvadi

School for Children

Lectures on Work life Balance

Lectures on Stress Management

Health Club

Play Ground

41


Social Performance

Human Rights

Support to Freedom of Association and Collective Bargaining

Workmen are free to join trade union and express their greivance

All the workmen of permanant category (unionized group) are covered in Collective Bargaining Agreements

These agreements include Health and Safety provisions along with compensation structures in the form of a Memorandum of Understanding (MoU) between the management and the recognised Union as per the provisions of the applicable labour legislations.

Human Rights Screening for Operations, Suppliers and Contractors

Supplier assessment process is established to take care of issues related to social aspects.

We have established Ethics Committee and appointed Head Ethics Counsellor and Regional Ethics Counsellors. They look after the implementation of Code of ethics amongst employees.

Discrimination

In addition to Code of Conduct which covers the aspect of non-discrimination, the company has implemented Whistle Blower Policy. The policy explicitly mentions pre-requisites to ensure that the identity of the whistle blower is kept confidential. No incidents have beenreported under this policy for the year 2013-14

Child labour, Forced and Compulsory Labour

We uphold the law of not employing children in any of our factories. It is bound by statutory legislation (Factories Act, 1948) and properrecords are maintained in this regard. We strictly adhere to the laws of the land with regard to forced and compulsory labour, which are prohibited under various acts and statutes.

Society

Prevention of corruption

We have Board members in audit/finance committee which meets regularly and monitors the working. We circulate a booklet on Code of Conduct to all our new employees. We also have our Whistle Blower Policy. Employees are explained about this policy in specific sessions. The Policy is displayed on our website.

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

All employees are trained in organisation’s anti-corruption policies and procedures through Code of Ethics. This is our second year when we have conducted Code of Ethics examination through e-learning portal developed last year. Code of ethics covers guidelines on anticorruption, anti-competitive behaviour, legal compliance, public policy, fairness in dealing with all our stakeholders etc The document is available publicly on our website.

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

We have established Ethics Committee and appointed Head Ethics Counsellor and Regional Ethics Counsellors. They look after the implementation of Code of ethics amongst employees. Our code of ethics includes anti-corruption aspect. There are no incidents of corruption reported during the year 2013-14

42

Legal actions if any

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

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

Training on Ethics

More than 270 employees at various management levels are trainied on ethics. we have extended this training to our regional offices also.

Product Responsibility

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

such information requirements

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

Programmes for adherence to laws, standards, and voluntary codes related to

marketing communications, including advertising, promotion, and sponsorship

We adhere to all norms, standards and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. We consider all ethical or cultural standards in communications. We are responsible towards society and vulnerable audiences like children while marketing and communication. In our advertisement gender roles are portrayed respectfully.

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

products and services

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

43




Policy

Goals and Performance

Policy

KBL aspires to be amongst the first five pump companies in the world by 2015 by becoming the preferred choice of customers and employees. Our strategy is built on this aspiration. While formulating the strategy, stakeholder inputs, market conditions, internal capabilities and competition were analyzed.

We have achieved sales revenue of Rs. 17516 Million for this year. This is lower by 6.4 % compared to the previous year's sales revenue.

Materiality and approach to sustainable development is mentioned in report parameters section of this report. 3 of the material topics which would improve the economic performance of the company are as follows:

Improve Financial Health of the organisation

Deliver cost effective solution

Create sustainable future

In order to ensure economic sustainability, we embarked on a number of strategic initiatives and improved our business model.

We constantly endeavour to balance the expectations of various stakeholders. Conflicting stakeholder expectations are regularly discussed in leadership forums such as monthly review meetings, Steering Committee meetings and during the Annual Operating Plan preparation. Shareholders and senior management of the company set guidelines every year so that a clear focus is developed and priorities are set for the strategic imperatives such as revenue, profits or cash.

2 of our 5 company values which relate to environment performance of our company are as follows.

Fairness in dealing with stakeholders and

Commitment towards Environment

We strive for healthy environment for our employees and society at large.

We have reviewed and updated our corporate Environment Health and Safety policy. In addition to

Disclosure on Management Approach

below mention 8, we have incorporated 9th focus areas i.e. Education motivation and engagement of all concern to contribute to our EHS commitment. The main intention here is to have participative approach to improve our environmental performance.

Conservation of raw materials, natural resources and energy

Reduce, reuse and recycle of wastes and its proper disposal

Promotion of green procurement and green products

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

Integration of EHS procedures into every operation

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

Communication of EHS policy and creating EHS awareness amongst all

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

We have done well in energy section by decreasing the use of non renewable energy and increasing the use of renewable energy like wind. 38% of total energy requirement in our production activities in our manufacturing plant is met by wind energy.

Our direct energy consumption has also decreased compared to last by 11% whereas indirect energy consumption has decreased by 5%. Our diesel consumption has decreased by 34% and electricity consumption from state electricity board has decreased by 10%. Specific water consumption has increased for Kirloskarvadi and Dewas, whereas for Kondhapuri and Kaniyur it has deceased.

It is the responsibility of the Manufacturing Plant Heads and Corporate Function Heads to implement the EHS policy. The corporate management representative, sustainability coordinators along with their cross functional team members are monitor and reviewing and environment performance of the company.


Responsibilities

44

Social Performance

Labour Practices and Decent Work Environment

Human Rights and Society

Policy


Responsibilities

Policy

We have updated our people policy and is available on our website and below url

ht tp://www.kir loskarpumps.com/pdf/people -policy/People%20Policy.pdf

the policy states that we believe in achieving excellence through our human capital, the strategic partner in organizational development, by nurturing their capabilities to the fullest potential, to accomplish the organisational goals. Through this policy we are committed to creating value based organization by adopting ethical work practises and creating a culture of fairness, trust, equal opportunities and individual dignity.

Strategic goals of organisation are evolved and formulated from respective sectors, operations and corporate function's long and short term plans.

We have increased response rate to employees engagement score from 93% in 2012 to 99% in 2014. The high response rate shows employees trust in the system and they know their feedback will be heard and acted upon.

KBL remains in the high performance range and 8% above industry average.

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

We adhere to the policies like Code of Conduct, Code of Ethics, Whistle Blower policy, Code of Conduct on Affirmative Actions for SCST.

Responsibilities

Policy


We have established ethics committee we have appointed ethics counsellor and regional ethics committee to ensure enforcement of code of ethics amongst the employees of KBL and other stakeholders.

We have also established Internal Complaint Committee for women workforce. 5 out of 7 members in the committee are females including one external female member.

We have Quality policy which mentions 'As manufacturers and solution providers of systems involving wide range of Pumps, Hydel Turbines, Valves, Motors, Alternators and Project management of EPC and Turnkey contracts, we shall strive to achieve ever increasing levels of satisfaction of our customers by delivering products and services that satisfy their stated needs and those needs necessary for its intended or specified use'. We satisfy all statutory and legal requirements of countries we work in. URL for quality is provided below:

http://www.kirloskarpumps.com/pdf/quality-policy-details/ISO/Quality_policy.pdf

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

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

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


45


GRI Index


Engagements

Economic Environmental Social Performance Performance Performance

GRI index

GRI Index (G 3.1)

ProfileDisclosure reference

Aspect Cross

Standard Disclosure Part 1: Profile Disclosure

48

Shirwal Plant operations are shifting to sanand plant and hence it is not considered in

report boundary.

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

Environment and Social performance of joint ventures, subsidiaries, leased/ outsourced

operations and any other entities is not part of the report. Economic performance is

disclosed as per the Annual Report 13-14

1. Strategy and Analysis

1.1 Statement from the most senior decision-maker of the organisation 3

1.2 Description of key impacts, risks and opportunities 6

2. Organization Profile

2.1 Name of the organisation 8

2.2 Primary brands, products and services 8

2.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries, and joint ventures 12

2.4 Location of Organisation's Headquarters 9

2.5 Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report 9

2.6 Nature of ownership and legal form 9

2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries). 10

2.8 Scale of the reporting organisation 11

2.9 Significant changes during the reporting period regarding the size, structure and ownership 13

2.10 Awards received in the reporting period 13, 14

3. Report Content

3.1 Reporting Period 16

3.2 Date of most recent previous Report 16

3.3 Reporting cycle 16

3.4 Contact point for questions regarding the report or its contents 16

Report Scope and Boundary 16

3.5 Process for defining Report content 16

3.6 Boundary of the Report 18

3.7 Specific limitations on the scope or boundary of the Report

3.8 Basis for reporting on joint ventures, subsidiaries, leased/ outsourced operations and other entities

3.9 Data measurement techniques and bases of calculations including assumptions and techniques 17, 18, 35

3.10 Explanation of the effect of any re-instatement of information provided in the earlier Reports Re-statements are

mentioned in relevant sections

3.11 Significant changes from previous reporting period 13

3.12 GRI Content index 48

3.13 Assurance Statement 59

4. Governance, Commitments, and Engagement

4.1 Governance structure of the organisation 20

4.2 The Chair of the highest Governance body 3

4.3 Independent and/or non-executive members 20

4.4 Mechanisms for shareholders and employees to provide recommendations 21, 23, 24

4.5 Linkage between compensation for members of highest governance body and the organisation's performance 21

4.6 Process for the highest governance body to ensure conflicts of interest are avoided 21

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

ProfileDisclosure reference

Aspect Cross

4.9 Procedures of the highest governance body for overseeing the management of economic,environmental, and social performance 21, 22

4.10 Processes for evaluating the highest governance body's own performance 21

Commitments to External Initiatives

4.11 The precautionary approach or principle 21

4.12 Externally developed economic, environmental, and social charters, principles 22

4.13 Memberships in associations 22

Stakeholder engagement

4.14 List of stakeholder groups 23

4.15 Basis for identification and selection of Stakeholders 23

4.16 Approaches to stakeholder engagement, including frequency of engagement 24, 25

4.17 Key topics and concerns and how the organisation has responded to those 25, 26

4.8 Statements of mission or values, codes of conduct and principles 22

DMA EC Disclosure on Management Approach EC44

DMA EN Disclosure on Management Approach EN44

DMA LA Disclosure on Management Approach LA45

DMA HR Disclosure on Management Approach HR45

DMA SO Disclosure on Management Approach SO 45

DMA PR Disclosure on Management Approach PR45

http://www.kirloskarpumps.com/we-are-kbl-sustainability-report.aspx

Performance Description Core / Add Page no., Reporting and Indicators Explanation, if any

Economic

EC1 Direct economic value generated Core 28

EC2 Financial implications and other risks and Core 28opportunities for the organization's activities due to climate change

EC3 Coverage of the organization's defined benefit Core 28, 41plan obligations

EC4 Significant Financial Assistance Received Core Other than subsidy mentioned in Annual Report, companyfrom the Government has received no financial assistance from the government

during the reporting period.

EC5 Range of ratios of standard entry level wage Add Not reportedcompared to local minimum wage at significant locations of operation

Ec6 Policy, practices and proportion of spending Core While there is no documented policy for procurement fromon locally based suppliers at significant locally based suppliers most of the material is procured from locations of operation local suppliers. These are working with the company since generations. Vendor Development: We have updated

procedures for auditing the vendor and studying their facility and capability evaluation. Now we have added parameters on human rights and environment. More of it can be seen

in stakeholder engagement, vendor/suppliers section.

Standard Disclosures Part 3: Performance indicator

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

49


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

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

EC9 Indirect economic impacts, including Add.extent of impacts

EN1 Total material used by weight or volume Core

EN2 Percentage of materials used that are Corerecycled input materials

EN3 Direct energy consumption by primary Coreenergy source

EN4 Indirect energy consumption by primary source Core

EN5 Energy saved due to conservation and Addefficiency improvements.

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

EN7 Initiatives to reduce indirect energy Addconsumption and reductions achieved.

EN8 Total water withdrawal by source Core

EN9 Water sources significantly affected Add

EN10 Percentage and total volume of water Addrecycled and reused

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

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

EN13 Habitats protected or restored Add

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

EN15 Number of IUCN species and national Addconservation list species with habitats in areas affected by operations


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

29

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

Environment

All manufacturing units are located in Industrial Development areas notified by Govt. of India. They are not located adjacent to protected areas and areas of high biodiversity value outside protected areas.

All manufacturing units are located in Industrial Development areas notified by Govt. of India. None of our activities have direct impact on biodiversity in protected areas and areas of high biodiversity value.

All manufacturing units are located in Industrial Development areas notified by Govt. of India. We protect habitat developed in the company premises.



50

32

32

32

32

32

33, 34, 36

33

33

34

34


There were no significant spills in the reporting period

All manufacturing units are located in Industrial Development areas notified by Govt. of India. Hence, this indicator is not applicable.

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

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

Not reportedSocial: Labour Practices and Decent work

51

35

35

35

35

Not reported

36

36

36

36

In all our plants the discharged water is recycled and used for gardening. All the parameters prescribed by pollution control board are within the limits except for Kaniyur where ones one of the parameter was on higher side. Water quality of discharge was included in

EN16 Total direct and indirect greenhouse Coregas emissions

EN17 Other relevant indirect greenhouse Coregas emissions

EN18 Initiatives to reduce greenhouse gas Addemissions and reductions achieved

EN19 Emissions of Ozone-Depleting substances Coreby weight

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

EN21 Total water discharge by quality Core

EN22 Total weight of waste by type and Coredisposal method

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

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

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

EN26 Initiatives to mitigate the environmental Coreimpact of products and services

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

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

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

EN30 Environmental protection expenditure Add.and investments

LA1 Total workforce by employment type, Core employment contract, and region, broken

down by gender.

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

LA3 Benefits provided to full-time employees Add.that are not provided to temporary or part-time employees, by significant locations of Operations.

38

38

41

Not reported


LA4 Percentage of employees covered by Corecollective bargaining agreement

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

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

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

LA8 Education, training, counselling, Coreprevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases

LA9 Health and safety topics covered informal Add.agreements with trade unions

LA10 Average hours of training per year per Coreemployee by gender, and by employee category.

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

LA12 Percentage of employees receiving regular Add performance and career development reviews, by gender.

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

LA14 Ratio of basic salary and remuneration Corewomen to men by employee category, by significant locations of operation.

LA15 Return to work and retention rates after Coreparental leave, by gender.

HR1 Percentage and total number of significant Coreinvestment agreements and contracts that include clauses incorporating humanrights concerns, or that have undergone human rights screening.

HR2 Percentage of significant suppliers Corecontractors, and other business partners that have undergone human rights screening, and actions taken


All i.e. 100% of permanent workmen are covered by collective bargaining agreement

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

50% workmen and 50% management are represented in safety committees

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

Evaluation of all new suppliers is done based on environment (Central Pollution Control Board norms, disposal of hazardous waste, recycling of waste, use of non-conventional resources, corporate social responsibility, compliance to Child Labour Act ) and safety (awareness level, use of PPE and on site safety conditions, protection of equipments) clause.

Social: Human Rights

52

40

41

40

41

41

41

40

Details of board members are available on our website. We have 1 female member, as minority representation. Details of board members are given at url:

http://www.kirloskarpumps.com/investors-board-of-directors.aspxalso refer Employees - page 38

KBL is a merit based organisation. We do not discriminate based on gender.

HR3 Employee training on policy and Coreprocedures concerning human rights

HR4 Total number of incidents of discrimination Coreand corrective actions taken.

HR5 Operations and significant suppliers Coreidentified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.

HR6 Operations and significant suppliers Coreidentified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor.

HR7 Operations and significant suppliers Coreidentified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.

HR8 Percentage of security personnel trained Addin the organization's policies or procedures concerning aspects of human rights that are relevant to operations

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

HR10 Percentage and total number of operations Corethat have been subject to human rights reviews and/or impact assessments.

HR11 Number of grievances related to human Corerights filed, addressed and resolved through formal grievance mechanisms.

SO1 Percentage of operations with implemented Corelocal community engagement, impact assessments, and development programs.

SO2 Percentage and total number of business Coreunits analyzed for risks related to corruption

SO3 Percentage of employees trained in Coreorganization's anti-corruption policies and procedures

SO4 Actions taken in response to incidents Coreof corruption

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

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

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


Booklet on Code of Ethics and Code of conduct is given to each staff category employee as also to every new employee. We have also conducted code of ethics examination this year. Code of ethics covers human rights aspects.

We have not had any cases of discrimination during this reporting period.

Not reported

No incidence was recorded in the reporting period

We have appointed ethics counsellors for all our manufacturing locations that look after the implementation of

There are no reportable grievances in this year

We are active members of several industry and trade bodies. We regularly participate in industry events.

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

No legal action has been instituted against the Company for anti-competitive behaviour, anti-trust and monopoly practices, during this reporting period.

Social: Society

53

42

42

42

26

42, 43

42, 43

42, 43


SO8 Fines/sanctions for non-compliance with Corelaws and regulations

SO9 Operations with significant potential or Coreactual negative impacts on local communities.

SO10 Prevention and mitigation measures Coreimplemented in operations with significant potential or actual negative impacts on local communities.

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

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

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

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

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

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

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

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

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


There is no incidence of any fine or non-compliance with respect to anti-competitive behaviour, anti-trust and monopoly practices.

No significant potential or actual negative impacts on our local communities have been identified

No significant potential or actual negative impacts on our local communities have been identified

We take care of health and safety aspects at all stages of product life cycle. It starts with Research and Development, Product Development, manufacturing, marketing, storage and final use and disposal, certifications. We keep vibrations/noise, coating painting as per the standards. As of now OECD guidelines are not application for pumps.

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

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

24 - stakeholder engagement

Nil

No such complaints have been made. The Company respects customer privacy.

Social: Product Responsibility

54

43

43

43

National Voluntary Guidelines alignment with Sustainability report

Sr. No Principle Core Elements KBL Sustainability Page no.Report 13-14

Businesses should conduct and govern

1 themselves with Ethics, Transparency andAccountability

Businesses should develop governance structures, procedures and practices that ensure ethical conduct at all levels; and promote the adoption of this principle across its value chain

Businesses should communicate transparently and assure access to information about their decisions that impact relevant stakeholders

Businesses should not engage in practices that are abusive, corrupt, or anti-competition

Businesses should truthfully discharge their responsibility on financial and other mandatory disclosures.

Businesses should report on the status of their adoption of these Guidelines as suggested in the reporting framework in this document.

Businesses should avoid complicity with the actions of any third party that violates any of the principles contained in these Guidelines

Businesses should assure safety and optimal resource use over the life-cycle of the product - from design to disposal - and ensure that everyone connected with it- designers, producers, value chain members, customers and recyclers are aware of their responsibilities.

Businesses should raise the consumer's awareness of their rights through education, product labelling, appropriate and helpful marketing communication, full details of contents and composition and promotion of safe usage and disposal of their products and services.

In designing the product, businesses should ensure that the manufacturing processes and technologies required to produce it are resource efficient and sustainable.

Businesses should regularly review and improve upon the process of new technology development, deployment and commercialization, incorporating social, ethical, and environmental considerations

Businesses should recognize and respect the rights of people who may be owners of traditional knowledge, and other forms of intellectual property

Businesses should recognize that over-consumption results in unsustainable exploitation of our planet's resources, and should therefore promote sustainable consumption, including recycling of resources.

Businesses should respect the right to freedom of association, participation, collective bargaining, and provide access to appropriate grievance redressal mechanisms.

Businesses should provide and maintain equal opportunities at the time of recruitment as well as during the course of employment irrespective of caste, creed, gender, race, religion, disability or sexual orientation.

Businesses should not use child labour, forced labour or any form of involuntary labour, paid or unpaid.

Governance Structure, Society and Human Rights


Prevention of corruption, Whistle Blower Policy, Code of Ethics

Annual Report

Society and Human Rights

55-58


Marketing and Communication.


Customer Interaction

Product ResponsibilityCompany uses 38% of energy from renewable resources

Company uses 38% of energy from renewable resources

Human Rights, Society Engagement

Environment performance

Businesses should provide goods and

2 services that are safe and contribute to sustainability throughout their life cycle

Businesses should 3 promote the

wellbeing of all employees

Support to Freedom of Association and Collective Bargaining, Whistle blower policy

Workforce Diversity, Discrimination

Child labour, Forced and Compulsory Labour

55

20, 42, 43

23-26

25, 42, 43

25-26,42-43

43, 54

43, 54

43, 35

32-35, 43

25-26,42-43

32-35

42, 52

39

42, 43

NVG not mandatory to KBL, Sustainability report provides cross linkages with NVG



Businesses should take cognizance of the work-life balance of its employees, especially that of women.

Businesses should provide facilities for the wellbeing of its employees including those with special needs. They should ensure timely payment of fair living wages to meet basic needs and economic security of the employees.

Businesses should provide a workplace environment that is safe, hygienic human, and which upholds the dignity of the employees. Business should communicate this provision to their employees and train them on a regularbasis.

Businesses should ensure continuous skill and competence upgrading of all employees by providing access to necessary learning opportunities, on an equal and non-discriminatory basis. They should promote employee morale and career development through enlightened human resource interventions.

Businesses should create systems and practices to ensure a harassment free workplace where employees feel safe and secure in discharging their responsibilities.

Businesses should systematically identify their stakeholders, understand their concerns, define purpose and scope of engagement, and commit to engaging with them

Businesses should acknowledge, assume responsibility and be transparent about the impact of their policies, decisions, product & services and associated operations on the stakeholders

Businesses should give special attention to stakeholders in areas that are underdeveloped.

Businesses should resolve differences with stakeholders in a just, fair and equitable manner

Businesses should understand the human rights content of the Constitution of India, national laws and policies and the content of International Bill of Human Rights. Businesses should appreciate that human rights are inherent, universal, indivisible and interdependent in nature

Businesses should integrate respect for human rights in management systems, in particular through assessing and managing human rights impacts of operations, and ensuring all individuals impacted by the business have access to grievance mechanisms.

Businesses should recognize and respect the human rights of all relevant stakeholders and groups within and beyond the workplace, including that of communities, consumers and vulnerable and marginalized groups.

Businesses should, within their sphere of influence, promote the awareness and realization of human rights across their value chain

Businesses should not be complicit with human rights abuses by a third party.

Labour Practices and Decent Work Environment

Benefits to Employees

Health and Safety

Training

Employee Engagement, Labour Practices and Decent Work Environment, Human rights

Businesses should respect the interests of, and be

4 responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised

Major Stakeholder groups engaged by the organization

Stakeholder Engagement section

Society Engagement


Businesses should 5 respect and promote

human rights

Human rights

Human rights

Human rights

Human rights

56

Human rights

38

41

40

41

25-26, 38, 42

23

23-26

24-26

23-26

42-43

42-43

42-43

42-43

42-43


Businesses should utilize natural and manmade resources in an optimal and responsible manner and ensure the sustainability of resources by reducing, reusing, recycling and managing waste

Businesses should take measures to check and prevent pollution. They should assess the environmental damage and bear the cost of pollution abatement with due regard to public interest.

Businesses should ensure that benefits arising out of access and commercialization of biological and other natural resources and associated traditional knowledge are shared equitably.

Businesses should continuously seek to improve their environmental performance by adopting cleaner production methods, promoting use of energy efficient and environment friendly technologies and use of renewable energy

Businesses should develop Environment Management Systems (EMS) and contingency plans and processes that help them in preventing, mitigating and controlling environmental damages and disasters, which may be caused due to their operations or that of a member of its value chain

Businesses should report their environmental performance, including the assessment of potential environmental risks associated with their operations, to the stakeholders in a fair and transparent manner.

Businesses should proactively persuade and support its value chain to adopt this principle

Businesses, while pursuing policy advocacy, must ensure that their advocacy positions are consistent with the Principles and Core Elements contained in these Guidelines.

To the extent possible, businesses should utilize the trade and industry chambers and associations and other such collective platforms to undertake such policy advocacy

Businesses should understand their impact on social and economic development, and respond through appropriate action to minimise the negative impacts.

Businesses should innovate and invest in products, technologies and processes that promote the wellbeing of society.

Businesses should make efforts to complement and support the development priorities at local and national levels, and assure appropriate resettlement and rehabilitation of communities who have been displaced owing to their business operations.

Businesses operating in regions that are underdeveloped should be especially sensitive to local concerns.


Emissions an initiatives

Initiatives to reduce greenhouse gas emissions and reductions achieved.

Management: EMS


Sustainability reports

Stakeholder engagement

Memberships with associations and/or national/international advocacy organizations

Memberships with associations and/or national/international advocacy organizations

Social engagement

Company has developed products like Solar pumping system, Mobile pump controller

Not applicable

Social engagement

Business should respect, protect, and

6 make efforts to restore the environment

Businesses, when engaged in influencing public

7 and regulatory policy, should do so in a responsible manner

Businesses should support inclusive

8 growth andequitable development

57

32-35

32-35

32-35

32-35

32-35

23-26

22

22

23-26

23-26



Businesses, while serving the needs of their customers, should take into account the overall well-being of the customers and that of society.

Businesses should ensure that they do not restrict the freedom of choice and free competition in any manner while designing, promoting and selling their products.

Businesses should disclose all information truthfully and factually, through labelling and other means, including the risks to the individual, to society and to the planet from the use of the products, so that the customers can exercise their freedom to consume in a responsible manner. Where required, businesses should also educate their customers on the safe and responsible usage of their products and services

Businesses should promote and advertise their products in ways that do not mislead or confuse the consumers or violate any of the principles in these Guidelines.

Businesses should exercise due care and caution while providing goods and services that result in over exploitation of natural resources or lead to excessive conspicuous consumption.

Businesses should provide adequate grievance handling mechanisms to address customer concerns and feedback.

Customers

Human rights and Society

Labelling of product and service

Marketing and communication

Environment Performance

Customer Engagement

Businesses should engage with and provide value to

9 their customers and consumers in a responsible manner

58

23-25, 43, 54

42, 43

43, 54

43, 54

32-35

23-25, 43, 54

ReportApplication Level C C+ B B+ A A+

ProfileDisclosures

Disclosures onManagement

Approach

PerformanceIndicators &

Sector SupplementPerformance Indicators

Report on:1.12.1 . 2.103.1 . 3.8, 3.10 . 3.124.1 . 4.4, 4.14 . 4.15

Not Required

Report fully on a minimum of any 10Performance Indicators, includingat least one from each of: social,economic, and environment.**

Report on all criteria listed forLevel C plus:1.23.9, 3.134.5 . 4.13, 4.16. 4.17

Management Approach Disclosuresfor each Indicator Category

Report fully on a minimum of any 20Performance Indicators, at least one from each of: economic, environment, human rights, labor,society, product responsibility.***

Same as requirement for Level B

Management Approach Disclosuresfor each Indicator Category

Respond on each core and SectorSupplement* indicator with dueregard to the materiality Principleby either: a) reporting on the indicator or b) explaining the reasonfor its omission.

Stan

dard

Disc

losu

res

Repo

rt Ex

tern

ally

Ass

ured

Repo

rt Ex

tern

ally

Ass

ured

Repo

rt Ex

tern

ally

Ass

ured

The Application level is A+

GRI – G3.1

Sustainability Reporting Guidelines

A+

FEEDBACK FORM FOR SUSTAINABILITY REPORT 2013-14

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

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

Name :

Designation :

Organization :

Contact Address :

Email :

Please mail your feedback to:[email protected]

High Medium Low

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

High Medium Low

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

High Medium Low

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


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