Speaking at the AGM on Monday, Kirloskar said the company had been affected by stagnant sales and heavy pressure on prices and margins.

In addition to the slowdown, the company was saddled with high cost borrowings with interests touching the Rs 70-crore mark. Later taking to the media, Kirloskar said, "The goal for year 2000-2001 would be to become a debt free company".

To globally competitive we will have to reduce our average cost of interest, he said. Meanhwile the company has retired Rs 80 crore of high cost loans. This year it is expected to return around Rs 40 crore. During the year the company worked towards reducing costs, improving cash management and focussing on designing new eco-friendly engines.

The company's AGM for year 1998-99 was delayed due to amalgamation of ailing Shivaji Works with KOEL. The company has completed amalgamation of the ailing Solapur-based Shivaji Works. "Shivaji Works was a key supplier of castings to our company and to safeguard the company's interest the amalgamation scheme was pursued," Kirloskar said. Shivaji works will now function as a castings division of KOEL. A shareholder of Shivaji Works is entitled to one equity share of KOEL for every 25 equity shares Shivaji Works. Shivaji Works had accumulated losses of around 80 crores and had wiped out its reserves and was referred to BIFR.

For year ending March 1999, the company's small engine business grew by 12 per cent to Rs 149.5 crores. The company has already achieved Rs 150 crore sales in this years ten month period. The medium size engine unit under the power generation and industrial segment did not grow much but the company was able to tap the growing tractor market which lead to 4.5 per cent growth of Rs 345.3 crores. The large engines unit has seen some revival with the dormant marine business picking up with orders from the Navy and the Coast Guard. In the exports front, the bearings business has registered a 73 per cent jump.