K E C International Ltd

The Directors have pleasure in presenting the Ninth Annual Report, along with the audited accounts of the Company, for the year ended March 31, 2014.

1. Financial Results

2. Dividend

The Board of Directors has recommended a dividend of Rs 0.60 per equity share of Rs 2 each for the year ended March 31, 2014, on the equity share capital of the Company, aggregating to Rs 15,42,53,022 (Rupees Fifteen Crore Forty Two Lacs Fifty Three Thousand Twenty Two only). The dividend on equity shares is subject to the approval of the members at the ensuing Annual General Meeting. Further the Board of Directors proposes to transfer an amount of Rs 8.56 crore to the General Reserve.

3. Performance

Financial Performance

On a consolidated basis, the net revenue from operations increased by 13.21% to

Rs 7,901.83 crore. The net Profit increased by 2.6% to Rs 66.75 crore. On a standalone basis, the net revenue from operations increased by 17.29% to Rs 6,558.77 crore, while the net Profit was Rs 85.59 crore in FY14, as compared to Rs 4.56 crore in FY13.

During the year under review, several measures have been taken for improving the performance of the Company and to secure new orders across various businesses and geographies. The order intake for the year increased by 13.34% to Rs 8,482 crore. The closing order book has increased by 7.7% to Rs 10,200 crore by FY14 end.

While the transmission business continued to perform well both in terms of revenue and Profitability, the overall Profitability of the Company on consolidated basis was impacted due to revenue de-growth in the wholly owned subsidiary

SAE Towers. It was also impacted due to time and cost overruns in Railways, Power Systems and Water businesses. In the Cables business Profitability was impacted due to pricing pressure as also higher costs at the new manufacturing facility established at Vadodara.

Operational highlights

The key highlights for the Company’s various businesses are as follows:

Power Transmission & Distribution: This is the Company’s largest business vertical which provides end-to-end solutions for power evacuation from generating stations to consumer distribution points.

The order intake for the business increased by 12.1% to Rs 6,951 crore. The orders came from across all the regions. These also include large value orders from Tanzania Rs (772 crore), Saudi Arabia (Rs 708 crore) and Afghanistan (Rs 590 crore).

The Company is also leveraging its strong global EPC expertise along with a local foothold in American market through SAE Towers. During FY14, SAE towers entered in EPC business and secured two transmission line EPC orders in Brazil. These orders were of approx. Rs 94 crore.

The Company also expanded its international presence in Substation space by securing orders in Laos, Philippines, Malaysia, Saudi Arabia and Afghanistan during the year. Further, the Company has increased its presence in Gas Insulated Substations (GIS) by securing a

Rs 102 crore order in Bihar.

SAE Towers completed expansion of its pole production capacity at its existing facility in Mexico from 5,000 MTs to 12,000 MTs per annum. In addition to this, the Company has also completed expansion of its tower manufacturing capacity at its existing facilities in Jaipur, Jabalpur and Nagpur from 1,74,000 MTs to 2,11,200 MTs per annum.

Cables: Consequent upon the commencement of the new plant at Vadodara, the manufacturing facility at Thane has been closed down and the Company has entered into an agreement for sale of this land. The complete range of products manufactured at Thane plant are now being manufactured at the Vadodara plant. The annual order intake for the business increased by 26.5% to Rs 855 crore in FY14.

Railways: The Company has secured a large composite order from the Rail Vikas Nigam Limited, India. The order includes electrification, civil works, signalling and telecommunication works in the state of Uttar Pradesh and the order value is Rs 228 crore. The Company also intends to target projects related to Metro and dedicated freight corridors in partnerships with other Indian and foreign players.

Water: The Company secured two Sewage Treatment orders in Bengaluru and Uttarakhand of total Rs 205 crore. In addition to this, it secured its first ever Dam construction order in Madhya Pradesh of Rs 99 crore. Further, it also secured Canal construction orders in Madhya Pradesh of

Rs 75 crore. Based on orders in hand and execution in FY14, the Company is also building its pre-qualification base in this business.

4. Listing

The Equity Shares of the Company continue to remain listed on BSE Limited and National Stock Exchange of India Limited. Further during the year the Company has listed its equity shares on MCX Stock Exchange Limited. The stipulated listing fees for FY15 have been paid to all the above Stock Exchanges.

5. Fixed Deposits

The Company has not accepted any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956, and the Rules framed thereunder and any re-enactments thereof.

6. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are provided in the prescribed format as an annexure to this Report.

7. Management Discussion and Analysis and Corporate Governance Report

In compliance with Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a separate section on Management Discussion and Analysis, as approved by the Board of Directors, which includes details on the state of affairs of the Company as required to be disclosed in the Directors’ Report forms a part of this Annual Report. Further, the Corporate Governance Report, duly approved by the Board of Directors, together with a certificate from the Statutory Auditors confirming the compliance with the requirements of Clause 49, also forms a part of this Annual Report.

8. Subsidiary Companies

At the beginning of FY14, the Company had twenty two direct and step down subsidiary companies. One step down subsidiary company has been incorporated in Mexico to explore the business opportunities in EPC business. Accordingly, the number of direct and step down subsidiaries of the Company stands increased to twenty three as on the date of this Report. The details pertaining to subsidiaries are mentioned under the statement made pursuant to Section 212 of the Companies Act, 1956, which forms a part of this Annual Report.

Ministry of Corporate Affairs vide Circular No: 02 / 2011 dated February 08, 2011, has, subject to compliance with certain conditions, granted general exemption to the companies from applicability of Section 212 of the Companies Act, 1956. As per the general exemption, a statement containing brief financial details of the Company’s subsidiaries for the year ended March 31, 2014, is included in this Annual Report. The Annual Accounts of these subsidiaries and the related detailed information will be made available to any Member of the Company / its subsidiaries seeking such information at any point of time and are also available for inspection by any Member of the Company / its subsidiary(ies) at the Registered Office of the Company / its subsidiary(ies).

9. Consolidated Financial Statements

In accordance with Clause 32 of the Listing Agreement entered into with the Stock Exchanges, the Consolidated Financial Statements of the Company, including the financial details of all the subsidiary companies of the Company, forms part of this Annual Report. The consolidated Financial Statements have been prepared in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India.

10. Directors

In accordance with the provisions of the Companies Act, 2013,Mr.H.V.GoenkaandMr.A.T.Vaswani,areliabletoretire by rotation and eligible for re-appointment at the ensuing Annual General Meeting. Further the Board of Directors has appointed Mr. Vinayak Chatterjee as an Additional Director w.e.f. April 30, 2014. Pursuant to Section 161 of the Companies Act, 2013, and Article 124 of the Articles of Association of the Company, Mr. Vinayak Chatterjee holds Office upto the date of the ensuing Annual General Meeting of the Company and is eligible for appointment as Director. Further as per the provisions of the Companies Act, 2013, the independent directors of the Company will have to be appointed by the members for a term upto five years, and no independent director shall be liable to retire by rotation. Further Mr. S. S. Thakur, Mr. G. L. Mirchandani, Mr. D. G. Piramal, Mr. S. M. Kulkarni, Mr. S. M. Trehan and Mr. Vinayak Chatterjee have given declaration to the Company under Section 149(6) of the Companies Act, 2013, that they qualify the criteria of independence mentioned under that sub-section. Accordingly it is proposed to appoint them as independent directors not liable to retire by rotation for a term of five years from the ensuing Annual General Meeting.

In view of the provisions of Section 165 of the Companies Act, 2013, which restricts the directorship of a director in ten public limited companies and the proposed amendment to the Listing Agreement entered into with the Stock Exchanges, which restricts the directorships of independent directors to seven listed companies only, Mr. M. K. Sharma, who was a director of the Company resigned from his Office w.e.f. March 31, 2014. The Board places on record its sincere appreciation for the valuable services rendered by Mr. M. K. Sharma during his tenure as the Member of the Board.

In compliance with Clause 49 IV (G) of the Listing Agreement, brief resume, expertise and other details of all the directors proposed to be appointed / re-appointed are attached to the Notice of the ensuing Annual General Meeting.

The Board of Directors recommends to the members the appointment of the above referred independent directors and the re-appointment of Mr. H. V. Goenka and Mr. A. T. Vaswani as the directors of the Company.

Statutory Auditors

In view of the provisions of Section 139 of the Companies Act, 2013, and the Rules made thereunder, a listed company cannot appoint an audit firm as the Auditors of the Company for more than two terms of five consecutive years and which shall be subject to ratification by the members at every Annual General Meeting. For reckoning this term, the period already served by the firm as auditors shall be counted. According to the Illustration 2 appended to sub-rule 3 of Rule 6 of the Companies (Audit and Auditors) Rules, 2014, every firm of the Auditors who has completed 7 or more years as an Auditor of the prescribed classes of companies (including listed companies), can be appointed as an Auditor for a further period upto three years only. Accordingly Delloitte Haskins & Sells (DHS) is entitled to be appointed as Statutory Auditors of the Company for a further period upto three years. In view of the same it is proposed to appoint DHS as the Statutory Auditors of the Company to hold Office from the conclusion of the ensuing Annual General Meeting until the conclusion of the Twelfth Annual General Meeting and to authorise the Board of Directors to fix their remuneration. The Company has received a letter from DHS to the effect that their appointment, if made, would be within the limits prescribed under the provisions of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of the said Act. The Board of Directors recommends the appointment of DHS as the Statutory Auditors of the Company for a period of three years.

Branch Auditors

In terms of Section 143(8) of the Companies Act, 2013, the audit of the accounts of the branch Offices of the Company located outside India is required to be conducted by the person(s) or firm(s) qualified to act as Branch Auditors. The Board of Directors recommends to the members to pass the resolution, as stated in Item No.6 of the Notice, convening the ensuing Annual General Meeting.

Cost Auditors

The Central Government has approved the appointment of M/s. Kirit Mehta & Co., Cost Accountants, Mumbai, as Cost Auditors, for conducting Cost Audit in relation to Electrical Cables and Conductors and Steel Towers manufactured by the Company for FY14 under The Companies (Cost Accounting Records) Rules, 2011. The Cost Audit Report and the Compliance Report for FY13 was filed by the Cost Auditors with the Ministry of Corporate Affairs on September 30, 2013.

12. Policy on Code of Conduct and Ethics

The RPG Group has laid down a Code of Conduct and Ethics (Code) applicable to all the employees in RPG Group companies. The Code provides for the matters related to governance, compliance, ethics and other matters within the RPG Group companies. The Code also includes the policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace in accordance with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

13. Awards Received During the Year

For FY 14 the Company was conferred with the ‘Utkrishta Puraskar’ i.e. Best Transmission Line Company Award and ‘Sahbhagita Puraskar’ i.e. Support Outside Line of Duty Award from Power Grid Corporation of India Limited. Further the Company also won the prestigious, "Best Employer Award, 2013" by Aon Hewitt and the "Indo-American Corporate Excellence Award" by the Indo-American Chambers of Commerce for best Indian company operating in US. The details of these Awards & Recognition are mentioned on page 18 & 19 of this Annual Report

14. Directors’ Responsibility Statement

The Board of Directors would like to affirm that the financial statements for the year under review conform in their entirety to the requirements of the Companies Act, 1956. As stipulated in Section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that:

(i) in the preparation of the annual accounts for the year ended March 31, 2014, the applicable Accounting Standards have been followed; (ii) such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for the year under review; (iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) the annual accounts for the financial year ended March 31, 2014, have been prepared on a going concern basis.

15. Particulars of Employees

In terms of provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors’ Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report, excluding the aforesaid information, is being sent to all the members of the Company and others entitled thereto. Members who are desirous of obtaining such particulars are requested to write to the Company Secretary of the Company.

16. Acknowledgement

Your Directors take this opportunity to thank the Customers, Vendors, Financial Institutions, Banks and all other stakeholders for their continued co-operation and support to the Company. Further the Directors would also like to thank the Central and State Government authorities and Regulatory authorities for their support.

Your Directors appreciate and value the trust reposed and faith shown by every shareholder of the Company.

Last but not least the Board wishes to place on record its deep gratitude to all its employees whose enthusiasm, team efforts, devotion and sense of belongingness has made this Company proud.