k) Provisions

A provision is recognised when the Company has a present
obligation as a result of past event; it is probable that an outflow
of resources embodying economic benefits will be required to
settle the obligation, and a reliable estimate can be made of the
amount of the obligation.

When the Company expects some or all of the provision to be
reimbursed, for example, under an insurance contract, the
reimbursement is recognised as a separate asset, but only
when the reimbursement is virtually certain. The expense
relating to a provision is presented in the statement of profit
and loss net of any reimbursement.

If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.

l) Contingent liabilities

A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events beyond the control of the Company or a present
obligation that is not recognised because it is not probable that
an outflow of resources will be required to settle the obligation.
A contingent liability also arises in extremely rare cases where
there is a liability that cannot be recognised because it cannot
be measured reliably. The Company does not recognise a

contingent liability but discloses its existence in the Standalone

Financial Statements.

m) Capital Commitments

Commitments are future liabilities for contractual expenditure,

classified and disclosed as follows:

(i) estimated number of contracts remaining to be executed
on capital account and not provided for; and

(ii) other non-cancellable commitments, if any, to the extent
they are considered material and relevant in the opinion
of Management.

n) Retirement and other employee benefits

(i) Short-term Employee Benefits

The distinction between short-term and long-term
employee benefits is based on expected timing of
settlement rather than the employee’s entitlement
benefits. All employee benefits payable within twelve
months of rendering the service are classified as short¬
term benefits and are measured on an undiscounted basis
according to the terms and conditions of employment.
Such benefits include salaries, bonus, short-term
compensated absences, awards, etc. and are recognised
in the period in which the employee renders the related
service, except to the extent that it can be allocated to any
Property, Plant and Equipment.

(ii) Other-employment benefits

1. Defined contribution plan

The eligible employees of the Company are entitled
to receive benefits under the Provident Fund
and Superannuation Scheme, which are defined
contribution plans. In case of Provident Fund, both
the employee and the Company contribute monthly
at a stipulated rate to the Government provident
fund, while in case of superannuation, the Company
contributes to Life Insurance Corporation of India at
a stipulated rate. The Company has no liability for
future Provident Fund or Superannuation benefits
other than its annual contributions which are
recognised as an expense on an accrual basis.

The Company recognises contribution payable as
expenditure, when an employee renders the related

services. If the contribution payable to the scheme
for services received before Balance Sheet date
exceeds the contribution already paid, the deficit
payable to the scheme is recognised as a liability
after deducting the contribution already paid. If the
contribution already paid exceeds the contribution
due for services received before the Balance Sheet
date, then the excess recognised as an asset to the
extent that the pre-payment will lead to, for example,
a reduction in future payment or cash refund.

2. Defined benefit plan

The Company operates a defined benefit plan for
its employees, viz. gratuity. The present value of the
obligation or asset under such defined benefit plans
is determined based on the actuarial valuation using
the Projected Unit Credit Method as at the date of
the Balance Sheet. The present value of the defined
benefit obligation is determined by discounting the
estimated future cash outflows by reference to
market yields at the end of the reporting period on
Government bonds that have terms approximating
to the terms of the related obligation.

The interest cost is calculated by applying the
discount rate to the balance of the defined benefit
obligation. This cost is included in finance cost in the
Statement of Profit and Loss.

Remeasurement gains and losses arising from
experience adjustments and changes in actuarial
assumptions are recognised in the period in which
they occur, directly as other comprehensive income.
They are included in retained earnings in the
Statement of Changes in Equity.

Changes in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in profit
or loss as past service cost.

3. Benefits for long-term compensated absences:

The Company treats accumulated leave expected to
be carried forward beyond twelve months, as long¬
term employee benefit for measurement purposes.
Such long-term compensated absences are
provided for based on the actuarial valuation using
the Projected Unit Credit Method at the year end.

The dilutive effect of outstanding options is reflected as share
dilution in the computation of diluted earnings per share.

p) Financial instruments

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.

(i) Financial assets

Initial recognition and measurement of financial assets

All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.

Subsequent measurement

For purposes of subsequent measurement, financial
assets are classified in the following categories:

- Debt instruments at amortised cost

- Debt instruments at Fair Value Through Profit Or
Loss (FVTPL)

- Equity instruments measured at Fair Value Through
Other Comprehensive Income (FVTOCI)

Debt instruments at amortised cost

A ‘debt instrument’ is measured at the amortised cost if
both the following conditions are met:

- The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and

- Contractual terms of the asset give rise on specified
dates to cash flows that are Solely Payments
of Principal and Interest (SPPI) on the principal
amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
Effective Interest Rate (EIR) method. Amortised cost is
calculated by considering any discount or premium on
acquisition and fees or costs that are an integral part of
the EIR. Interest income from these financial assets is
included in finance income using the effective interest
rate method.

Equity investments

All equity investments in scope of Ind AS 109 are
measured at fair value. Equity instruments which are held
for trading are classified as at FVTPL. For all other equity
instruments, the Company has made an irrevocable
election to present subsequent changes in the fair value
in the OCI. The Company makes such election on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognised in the
OCI. There is no recycling of the amounts from OCI to
Statement of Profit and Loss, on sale of investment.
However, the Company transfers the cumulative gain or
loss within the equity from OCI to Retained Earnings.

Equity instruments included within the FVTPL category
are measured at fair value with all changes recognised in
the Statement of Profit and Loss at each reporting date.

Dividends from such investments are recognised in profit
or loss when the Company’s right to receive payments
is established.

Derecognition

A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognised when:

- The rights to receive cash flows from the asset have
expired, or

- The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the
Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has
neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred
control of the asset.

When the Company has transferred its rights to receive
cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it
has retained the risks and rewards of ownership. When
it has neither transferred nor retained substantially all

of the risks and rewards of the asset, nor transferred
control of the asset, the Company continues to recognise
the transferred asset to the extent of the Company’s
continuing involvement. In that case, the Company also
recognises an associated liability. The transferred asset
and the associated liability are measured on a basis that
reflects the rights and obligations that the Company
has retained.

Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Company could be
required to repay.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies
Expected Credit Loss (ECL) model for measurement and
recognition of impairment loss on the following financial
assets and credit risk exposure:

- Financial assets that are debt instruments, and are
measured at amortised cost

- Trade receivables or any contractual right to receive
cash or another financial asset

The Company follows ‘simplified approach’ for recognition
of impairment loss allowance on trade receivables.

The application of simplified approach does not require
the Company to track changes in credit risk. Rather,
it recognises impairment loss allowance based on
lifetime ECLs at each reporting date, right from its
initial recognition.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines that
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent
period, credit quality of the instrument improves such that
there is no longer a significant increase in credit risk since
initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected life of
a financial instrument. The 12-month ECL is a portion of
the lifetime ECL which results from default events that
are possible within 12 months after the reporting date.

ECL is the difference between all contractual cash flows
that are due to the Company in accordance with the
contract and all the cash flows that the entity expects to
receive (i.e., all cash shortfalls), discounted at the original
EIR. When estimating the cash flows, an entity is required
to consider:

- All contractual terms of the financial instrument
over the expected life of the financial instrument.
However, in rare cases when the expected life of the
financial instrument cannot be estimated reliably,
then the entity is required to use the remaining
contractual term of the financial instrument

- Cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms

As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on
portfolio of its trade receivables. The provision matrix
is based on its historically observed default rates over
the expected life of the trade receivables and is adjusted
for forward-looking estimates. At every reporting date,
the historical observed default rates are updated and
changes in the forward-looking estimates are analysed.

ECL impairment loss allowance (or reversal) recognised
during the period is recognised as income / expense in the
Statement of Profit and Loss. This amount is reflected
under the head ‘other expenses’ in the Statement of Profit
and Loss. The Balance Sheet presentation for various
financial instruments is described below:

- Financial assets measured as at amortised cost
and contractual revenue receivables: ECL is
presented as an allowance, i.e., as an integral part
of the measurement of those assets in the Balance
Sheet. The allowance reduces the net carrying
amount. Until the asset meets write-off criteria, the
Company does not reduce impairment allowance
from the gross carrying amount.

For assessing increase in credit risk and impairment
loss, the Company combines financial instruments on
the basis of shared credit risk characteristics with the
objective of facilitating an analysis that is designed to
enable significant increases in credit risk to be identified
on a timely basis. The Company does not have any
Purchased or Originated Credit-Impaired (POCI) financial
assets, i.e., financial assets which are credit impaired on
purchase / origination.

(ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised initially at fair value
net of, in the case of financial liabilities not classified
as FVTPL, transaction costs that are attributable to
the issue of the financial liability. Financial assets and
financial liabilities are recognised in the Balance Sheet
when the Company becomes a party to the contractual
provisions of the instrument.

Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities
held for trading and financial liabilities designated as
such upon initial recognition. Financial liabilities are
classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. This category
also includes derivative financial instruments entered
into by the Company that are not designated as hedging
instruments in hedge relationships as defined by Ind
AS 109. Gains or losses on liabilities held for trading are
recognised in the Statement of Profit and Loss.

Financial liabilities designated as such upon initial
recognition at the initial date of recognition if the criteria
in Ind AS 109 are satisfied. For liabilities designated as
FVTPL, fair value gains / losses attributable to changes
in own credit risks are recognised in OCI. These gains /
losses are not subsequently transferred to the Statement
of Profit and Loss. However, the Company may transfer
the cumulative gain or loss within equity. All other
changes in fair value of such liability are recognised in
the Statement of Profit and Loss.

Financial liabilities at amortised cost

After initial recognition, these instruments are
subsequently measured at amortised cost using the
Effective Interest Rate (EIR) method. Gains and losses
are recognised in the Statement of Profit and Loss when
the liabilities are derecognised as well as through the EIR
amortisation process.

Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation
is included as finance costs in the Statement of Profit
and Loss.

De-recognition of financial liability

A financial liability (or a part of a financial liability) is
derecognised from the Balance Sheet when, and only

when, it is extinguished i.e., when the obligation specified
in the contract is discharged or cancelled or expired.

When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective
carrying amounts is recognised in the Statement of Profit
and Loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and
the net amount is reported in the Balance Sheet if
there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle the
liabilities simultaneously.

Equity shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from
the proceeds.

q) Cash Flow Statement

Cash flows are reported using the indirect method, whereby
net profit before tax is adjusted for the effects of transactions
of a non cash nature and any deferral or accruals of past of
future cash receipts or payments. The cash flows from regular
operating, investing and financing activities of the Company
are segregated.

r) Cash and cash equivalents

Cash and cash equivalent in the Balance Sheet comprise cash
at banks and on hand and short-term deposits with original
maturity of three months or less, which are subject to an
insignificant risk of changes in value. In the Statement of Cash
Flows, cash and cash equivalents consist of cash and short¬
term deposits, as defined above, if any as they are considered
as integral part of the Company’s cash management.

s) Dividend

The Company recognises a liability to make cash distributions
to the equity holders of the Company when the distribution is
authorised, and the distribution is no longer at the discretion
of the Company. As per the provisions of the Act, a distribution
is authorised when it is approved by the shareholders except
in case of interim dividend which is approved by the Board
of Directors. A corresponding amount is recognised directly
in equity.

t) Earnings per share (EPS)

Basic EPS is calculated by dividing the Company’s earnings
for the year attributable to ordinary equity shareholders of
the Company by the weighted average number of ordinary
shares outstanding during the year. The earnings considered
in ascertaining the Company’s EPS comprise the net profit
after tax attributable to equity shareholders. The weighted
average number of equity shares outstanding during the
year is adjusted for events of bonus issue, bonus element in a
rights issue to existing shareholders, share split, and reverse
share split (consolidation of shares) other than the conversion
of potential equity shares that have changed the number of
equity shares outstanding, without a corresponding change
in resources.

The diluted EPS is calculated on the same basis as basic EPS,
after adjusting for the effects of potential dilutive equity shares.

u) Segment reporting

i) Identification of segment

An operating segment is a component of a company
whose operating results are regularly reviewed by the
Company’s Chief Operating Decision Maker (CODM) to
make decisions about resource allocation and assess its
performance and for which discrete financial information
is available.

ii) Allocation of income and direct expenses and unallocated
expenses

Income and direct expenses allocable to segments are
classified based on items that are individually identifiable
to that segment. Common allocable costs are allocated
to each segment pro-rata on the basis of revenue of
each segment to the total revenue of the Company. The
remainder is considered as un-allocable expense.

iii) Segment policies

The Company prepares its segment information in
conformity with the accounting policies adopted for
preparing and presenting the Financial Statements of
the Company as a whole.

NOTE 5: RECENT ACCOUNTING PRONOUNCEMENTS

Ministry of Corporate Affairs ("MCA") notifies new standards or
amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as issued from time to time.

In May 2025, MCA notified amendments to Ind AS 21 - The Effects
of Changes in Foreign Exchange Rates, applicable w.e.f. April 1,
2025. The Company has reviewed the amendment and based on
its evaluation has determined that it does not have any significant
impact in its Financial Statements.

In August 2025, MCA notified the following amendments to:

Ind AS 1 - Presentation of Financial Statements

The amendment relates to classification of liabilities as current
or non-current and non-current liabilities with covenants. In
the context of classifying a liability as current, it removes the
requirement of existence of a right to defer settlement for at least
12 months after the reporting date and instead requires that the said
right should exist on the reporting date and have substance. The
amendment also introduces guidance on classification of liabilities
with covenants. The Company has no impact on these amendments
in its classification criteria of current and non-current liabilities.

Ind AS 7 - Statement of Cash Flows and Ind AS 107

Financial Instruments - Disclosures, applicable w.e.f April 1, 2025
- The amendment in Ind AS 7 requires to inform users of Financial
Statements of the existence of supplier finance arrangements and
explain the nature of the arrangements, the carrying amount of
liabilities and the range of payment due dates. Ind AS 107 has been
amended to add supplier finance arrangements as a factor that may
cause concentration of liquidity risk. The Company has reviewed
the amendment and based on its evaluation has determined that it
does not have any significant impact on its Financial Statements.

Amendment issued but not effective (effective from April 01,
2026):

The Ministry of Corporate Affairs (MCA) through notification dated
August 13, 2025, notified amendment to Ind AS 1, Presentation of
Financial Statements. This amendment removes the carve-outs in
Ind AS 1 from IAS 1 when there is a breach of a material covenant that
transforms the liability from non-current to current. The Company
will evaluate the requirements and apply these amendments from
the effective date. However, presently the Company does not see
any material impact on the Financial Statements.

NOTE 16 : ASSETS CLASSIFIED AS HELD FOR SALE DISCONTINUING OPERATIONS

Accounting Policy

Non-current assets or disposal group are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. This condition is regarded as met only when the asset or disposal group is available for
immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset or disposal group and its
sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed
sale within one year from the date of classification. As at each balance sheet date, the Management reviews the appropriateness of such
classification depending upon various factors including any regulatory approval.

Non-current assets or disposal group classified as held for sale are measured at the lower of their carrying amount and fair value less costs
to sell. Property, plant and equipments and intangible assets once classified as held for sale are not depreciated or amortised.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held
for sale, and:

- represents a separate major line of business or geographical area of operations,

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after
tax from discontinued operations in the Statement of Profit and Loss. Additional disclosures are provided hereunder. All other notes to the
Standalone Financial Statements mainly include amounts for continuing operations, unless otherwise mentioned.

Notes:

1) Security Premium:

The amount in the security premium account represents the additional amount paid by the shareholders for the issued shares in
excess of the face value of equity shares.

2) General reserve:

General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as
dividend payout, bonus issue, etc .

3) Share options outstanding account:

The share option outstanding account is used to recognise the fair value of options to the employees of the Company and its Wholly
Owned Subsidiary, under the employee stock option plans of the Company, which are unvested or unexercised as on the reporting
date (Refer Note No 42).

4) Equity instruments through Other Comprehensive Income:

This reserve represents the cumulative gains and losses arising on the fair valuation of equity instruments measured through other
comprehensive income, net of amounts reclassified to retained earnings when these equity instruments are disposed off.

5) Surplus/(Deficit) in the Statement of Profit and Loss:

This comprise of the undistributed profit after taxes.

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted
average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by adjusting profit or loss attributable to ordinary equity holders of the entity, and the weighted
average number of shares outstanding, for the effects of all dilutive potential ordinary shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

Risk Exposure & Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain
long-term obligations to make future benefit payments.

(1) Liability risks

(i) Asset-Liability mismatch risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with
the defined benefit liabilities, the Company is successfully able to neutralise valuation swings caused by interest rate
movements. Hence companies are encouraged to adopt asset-liability management.

(ii) Discount rate risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practise can have
a significant impact on the defined benefit liabilities.

(iii) Future salary escalation and inflation risk-

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries
will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially
unexpected salary increases provided at Management's discretion may lead to uncertainities in estimating this
increasing risk.

(iv) Unfunded plan risk-

This represents unmanaged risk and a growing liability. There is an inherent risk here that the Company may default
on paying the benefits in adverse circumstances. Funding the plan removes volatility in Company's financials and also
benefit risk through return on the funds made available for the plan.

ii) Other Commitment

The Company has executed Cost Overrun Shortfall Undertaking in favour of Lenders of wholly owned subsidiary i.e. Avante Spaces
Limited (ASL) whereby the Company has undertaken to provide additional funds as may be required to complete the commercial
project at Karve Road, Kothrud, Pune in the event of any shortfall in the resources of ASL in completing the said project. As at March
31, 2026, there has been no increase in total project cost as assessed by the Lenders of ASL.

NOTE 39: PROVISIONS

The disclosure required by IND AS 37 - Provisions, Contingent Liabilities and Contingent Assets prescribed under Section 133 of the
Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, is as follows:

Related parties, as defined under Clause 3 of Ind AS 24 “Related Party Disclosures”, have been identified on the basis of representation made
by the Key Management Persons and taken on record by the Board of Directors. Disclosures of transactions with related parties are as under:

(A) List of related parties as per the requirements of Ind AS 24 - Related party disclosures

(i) Subsidiaries:

Kirloskar Ferrous Industries Limited (KFIL)

Avante Spaces Limited (ASL)

(ii) Subsidiaries of Subsidiary

Oliver Engineering Private Limited

I SMT Enterprises SA, Luxembourg (Voluntary liquidation initiated on May 26, 2025 and Company liquidated on
September 01, 2025)

Structo Hydraulics AB, Sweden (Company under liquidation)

ISMT Eurpore AB, Sweden (liquidation initiated on January 09, 2025 and liquidated on December 08, 2025)

Tridem Port and Power Company Private Limited
Nagapattinam Energy Private Limited

NOTE 42: STOCK OPTION SCHEME

Equity Settled Stock Appreciation Rights Plan 2019 (KIL ESARP 2019)

The Company had passed Special Resolution through Postal Ballot and approved - 'Kirloskar Industries Limited - Employee Stock
Appreciation Right Plan 2019' ('KIL ESARP 2019') on 29 December 2019 and authorised the Board to create, offer and grant from time to
time, in one or more tranches, to employees of the Company and its subsidiary company 4,85,000 equity shares of H 10 each fully paid up.
The Company had granted an aggregate of 4,70,898 ESARs exercisable into not more than 4,85,000 equity shares of the Company face
value of H 10 each fully paid up.

In terms of the KIL ESARP 2019, the vested ESARs upon exercise shall be settled by way of allotment of equity shares. Options granted
under KIL ESARP 2019 would vest after minimum period of 1 (one) year but not later than a maximum period of 4 (four) years from the date
of grant of such options. Any option granted shall be exercisable according to the terms and conditions as determined by the Nomination and
Remuneration Committee and as set forth in the Grant Letter. The number of equity shares allotted would be the product of the number of
ESARs exercised and the proportion of appreciation in each ESAR as compared to the market price on the date of exercise. The appreciation
would be the excess of market price of the equity share over the ESAR Price in terms of the KIL ESARP 2019. No shares shall be allotted
in case there is no appreciation in the price of the shares. Upon the exercise of the options, the amount equivalent to the face value of the
shares allotted would be payable by the employees to the Company.

Under the KIL ESOP 2017 Plan, the cost of equity-settled transactions (options granted) is determined by the fair value at the date when the
grant is made using an appropriate valuation model. That cost is recognised as "employee benefits expenses" together with a corresponding
"increase in Stock Options Outstanding reserves in Equity", over the period in which the vesting conditions are fulfiled by the employees.

KIL ESOP 2017 Plan was modified and was introduced as KIL ESARP 2019.

1) For unvested options of KIL ESOP 2017, in compliance with ‘IND AS 102: Share Based Payment’:

• The Company has recognised incremental fair value of ESAR which shall be amortised over the vesting period as per KIL
ESARP 2019.

• This is in addition to the fair value of original options which will be amortised over the remaining vesting period of original
options under KIL ESOP 2017.

2) For options already vested, incremental fair value shall be recognised over the vesting period of KIL ESARP 2019.

3) Further, fair value of new ESARs granted shall be recognised over the vesting period of KIL ESARP 2019.

I Fair value of the options granted:

The Company has recorded employee stock-based compensation expense relating to the options granted to the employees on
the basis of fair value of options.

The fair value of the options granted is mentioned below as per vesting period. The fair value of the options is determined using
Black-Scholes-Merton model which takes into account the exercise price, the term of the option (time to maturity), the share
price as at the grant date and expected price volatility (standard deviation) of the underlying share, the expected dividend yield
and risk-free interest rate for the term of the option.

Increase in KIL ESARP 2019 Pool Grant

The Company had passed Special Resolution through Postal Ballot and approved for the increase in the Employees Stock
Appreciation Rights Pool Grant and amendment in the 'Kirloskar Industries Limited - Employee Stock Appreciation Right Plan
2019' ('KIL ESARP 2019') on 10 March 2023 , by adding 3,00,000 ESARs into existing ESARs pool from 4,85,000 ESARs to
7,85,000 ESARs and to give authority to Board to create, offer and grant it in one or more tranches for the benefit of such persons
as mentioned in the scheme.

V Employee-benefit expenses recognised in the Standalone Financial Statements

The Company has recorded employee stock-based compensation of H 1.64 Crores (Previous Year: H 17.78 Crores) out of which
H 0.87 Crores (Previous Year: H 7.54 Crores ) has been recognised in the Statement of Profit and Loss and H 0.77 Crores (Previous
Year: H 10.24 Crores ) has been recognised as deemed investment in Wholly Owned Subsidiary relating to the options granted
to the employees of the Company and its Wholly Owned Subsidiary for the year ended 31 March 2026. During the year H 0.64
Crores compensation has been reversed on account of ESAR reversal of employees. These adjustments have resulted in net
impact of H 0.23 Crores as reflected in Profit and Loss.

The following methods and assumptions were used to estimate the fair values/amortised cost as applicable

(i) The fair values of quoted instruments are measured using Level 1 hierarchy. There have been no transfers among Level 1, Level 2 and
Level 3 during the year.

(ii) The fair value of unquoted instruments - The Company has carried out fair valuation of investments in equity shares of unquoted
instruments based on discounted cash flow method under income approach based on valuation carried out by an independent valuer.
The unquoted instruments are measured using Level 3 hierarchy.

(iii) The Management assessed that the fair value of cash and cash equivalents, other bank balances, trade receivables, trade payables,
deposits and other financial assets and liabilities approximate their carrying amounts.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.

(iv) The fair value of the quoted equity shares are based on the price quotations at reporting date.

(v) The fair value of other financial liabilities as well as other financial assets is estimated by discounting future cash flows using rates
currently available for debt on similar terms, credit risk and remaining maturities.

NOTE 45: FINANCIAL RISK MANAGEMENT

The Company's activities exposes it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is
exposed to and how the entity manages the risk.

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks
identified are systematically addressed through risk mitigation actions on a continuing basis.

(A) Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in
the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign
currency exchange rates, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot
be normally predicted with reasonable accuracy.

The Company does not have any significant foreign currency obligation nor does it have any borrowings. Accordingly, the Company
does not perceive any foreign currency risk or interest rate risk.

(B) Equity price risk

Equity price risk is related to the change in market reference price of the investments in equity securities. The fair value of the
Company’s investments measured at fair value through other comprehensive income and fair value through profit and loss exposes
the Company to equity price risks. These investments are subject to changes in the market price of securities.

The fair value of Company’s investment as at 31 March 2026 in quoted & unquoted equity securities was H 4,302.40 Crores
(Previous Year : H 4,603.18 Crores ) and H 95.26 Crores in quoted mutual funds (Previous Year : H 122.97 Crores). The impact of change
in equity price risk is as under:

(C) Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables).

I. Trade receivables

Credit risk is the risk that one party to financial instrument will cause a financial loss for the other party by failing to discharge
an obligation. To manage this, the Company periodically assesses the financial reliability of customers, taking into account
the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable and forward
looking information. Individual credit limits are set accordingly. The credit period offered to customers is 10 days from the
date of invoice.

(D) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding
through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. The
flexibility in funding requirements is met by ensuring availability of adequate inflows.

The Company had no outstanding bank borrowings as of 31 March 2026 and 31 March 2025. The working capital of the Company is
positive as at each reporting date.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

NOTE 47: RATIO

The Company is termed as an Unregistered Core Investment Company (CIC) as per Reserve Bank of India Guidelines dated 13 August 2020
and is not exposed to any regulatory imposed capital requirements. Thus, the following analytical ratios are not applicable to the Company.

1) Capital to risk-weighted assets ratio (CRAR)

2) Tier I CRAR

3) Tier II CRAR

4) Liquidity Coverage Ratio

NOTE 48: RELATIONSHIP WITH STRUCK OFF COMPANIES

During the year the company has not made any transactions with companies struck off under Section 248 of the Companies Act, 2013 or
Section 560 of Companies Act, 1956.

NOTE 49: EVENT AFTER REPORTING PERIOD

According to the Management's evaluation of events subsequent to the Balance Sheet date, there were no significant adjusting events that
occurred other than those disclosed/given effect to, in these Financial Statements as of 31 March 2026.

NOTE 50: DIVIDEND

The Board of Directors has proposed Final Dividend of H 13 ( i.e. 130%) per equity share for FY 2025-26. (Previous year Final dividend
H 13 per equity share i.e. 130%).

NOTE 51

Previous year's figures have been regrouped wherever considered necessary to make them comparable with those of the current year.

NOTE 46: CAPITAL MANAGEMENT

The Company’s objectives when managing capital are to :

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for
other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

The Company's capital structure completely comprises of equity component. In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares etc.

No changes were made in the objectives, policies or processes for managing capital during the year and during the Previous Year.