Kirloskar Industries Ltd

To The Members,

The Directors have pleasure in presenting this 30th Annual Report with the Audited Annual Accounts of the Company for the year ended 31 March 2024.

I. FINANCIAL PERFORMANCE (STANDALONE):

(Rs. in Crores)

*On account of the sale of shares of Swaraj Engines Limited.

**Included income and expenditure related to windmill operations.

II. DIVIDEND:

Your Directors recommend 130 % dividend, i.e., Rs. 13 per equity share of Rs. 10 each (Previous year dividend 110%, i.e., Rs. 11 per equity share of Rs. 10 each) for the Financial Year ended 31 March 2024.

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, including amendments thereunder, the Company has adopted the Dividend Distribution Policy. A copy of the same is available at the website of the Company, viz. www.kirloskarindustries.com.

III. CLASSIFICATION OF THE COMPANY AS AN UNREGISTERED CORE INVESTMENT COMPANY:

The Company is an ‘Unregistered Core Investment Company' (CIC) regulated by the Reserve Bank of India (RBI), which cannot access public funds and is complying with all the regulations required for an ‘Unregistered CIC'.

IV. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. OPERATIONS OF THE COMPANY:

The Company is an unregistered Core Investment Company and continues to hold investments in group companies.

During the year under review, the Company invested Rs. 120.58 Crores to acquire 1,50,00,000 equity shares of the face value of Rs. 5 each of ISMT Limited (a step- down subsidiary of your Company being a subsidiary of Kirloskar Ferrous Industries Limited, which is a subsidiary of your Company) representing 4.99% of the paid-up equity share capital of ISMT.

During the year under review, the Company has further invested Rs. 25 Crores in ‘8.25% Non-Convertible Compulsorily Redeemable Cumulative Preference Shares' of the face value of Rs. 1,000 each, of Avante Spaces Limited (Avante), a Wholly-Owned Subsidiary of the Company.

REAL ESTATE ACTIVITIES:

The Company owns lands and buildings thereon and apartments and offices in Pune, New Delhi and Jaipur. The Company has given most of these lands, buildings and offices on a leave and license basis to group companies and other occupants. The Company is making efforts to optimize revenue from these licensed properties.

During the year under review, the Company generated revenue amounting to Rs. 27.40 Crores from its leased properties (H 27.19 Crores as on 31 March 2023).

Avante Spaces Limited (Avante), a Wholly-Owned Subsidiary of the Company, is developing real estate projects in Kothrud, Pune. Avante has completed its first commercial project, ‘One Avante' with a leasable area of ~ 1.76 Lakhs sq. fts. During the year under review, Avante has booked profits for the first time since its inception. Further, Avante's second commercial project, which is larger in scale, is currently under construction within the same layout. This project features ~ 15 Lakhs sq. fts. leasable area and is progressing as per schedule.

In terms of the Business Transfer Agreement dated 19 December 2020, Avante had allotted 6,00,00,000 Unsecured Optionally Convertible Debentures (OCDs) of Rs. 10/- each to the Company, for a consideration other than cash amounting to Rs. 60,00,00,000 (Rupees Sixty Crores Only). The Board of Directors of Avante in its meeting held on 25 April 2023, approved the conversion of 6,00,00,000 OCDs of Rs. 10 each into 27,24,868 fully paid equity shares of Avante of face value of Rs. 10 each at the price / value of Rs. 253.64 per share. Consequently, the Company now holds 1,02,34,868 equity shares of Avante with a face value of Rs. 10/- each.

WINDMILLS:

To focus on the real estate business of the Company and that of its Wholly-Owned Subsidiary and aiming to optimize returns on its investment portfolio, the Company has sold its Windmills business on a going concern basis to ISMT Limited, a related party of the Company, for a total consideration of Rs. 5,40,28,000/- (Indian Rupees Five Crores Forty Lakhs Twenty Eight Thousand only). Accordingly, the Business Transfer Agreement (BTA) was executed by and between the Company and ISMT on 12 September 2023. The necessary statutory approvals and permissions are currently being procured to complete the aforesaid transaction.

While the Company awaits requisite statutory approvals to finalise the sale, the Windmill business operations have been categorised as discontinuing operations in accordance with the Accounting Standards.

During the year under review, the Wind Energy Generators (WEGs) have generated net wind energy of around 0.91 Crores units of electricity in the period under review as against 0.84 Crores units of electricity in the previous year showing an increase of approximately 8.4% over the previous year.

During the year under review, the Company has also sold 152 RECs, which has resulted in revenue of Rs. 0.01 Crores (previous year Rs. 0.82 Crores). The Company is holding 18,465 unsold RECs as on 31 March 2024.

OTHERS:

The Company had applied for re-classification of the Company from the "Promoter" category to the "Public" category of shareholders of Swaraj Engines Limited (SEL) and Cummins India Limited (Cummins), pursuant to the provisions of Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (the Regulations). Accordingly, SEL and Cummins received approval letters from the BSE Limited and the National Stock Exchange of India Limited, on 30 May 2023 and 26 June 2023, respectively.

The Company continues to invest its surplus funds in fixed deposits and mutual funds. These investments stood at Rs. 161.94 Crores as on 31 March 2024 (Previous year Rs. 223.03 Crores). During the year under review, the Company has deployed part of the funds in group companies and towards real estate business directly or through its subsidiaries.

B. RAISING OF FUNDS THROUGH PREFERENTIAL ALLOTMENT

The members of the Company approved the Special Resolutions as set out in the Notice of Postal Ballot dated 27 February 2023, read with Corrigendum dated 15 March 2023 (Notice), regarding the allotment of 4,55,580 Warrants Convertible into equity shares of the Company (2,27,790 Warrants to Mr. Atul Kirloskar and 2,27,790 Warrants to Mr. Rahul Kirloskar (Allottees) at a price of Rs. 2,195 each) on 29 March 2023.

Post receipt of required approvals for issuance of aforesaid securities, the Stakeholder's Relationship Committee of the Company at its meeting held on 27 April 2023, had allotted 4,55,580 Warrants convertible into an equal number of equity shares of the Company (2,27,790 Warrants to Mr. Atul Kirloskar and 2,27,790 Warrants to Mr. Rahul Kirloskar (Allottees) at a price of Rs. 2,195 each) upon receipt of 25% amount upfront. The funds raised through this preferential issue were utilised for the objects stated in the explanatory statement to the Notice.

Upon receipt of the balance 75% of the issue price, the warrant shall be converted into equity shares having a face value of Rs. 10 each.

C. COMPANY PERFORMANCE:

During the year under review, your Company earned a total income of Rs. 133.51 Crores (previous year Rs. 118.33 Crores).

During the year under review, the Company received a total dividend of Rs. 60.07 Crores (previous year Rs. 68.72 Crores) declared by the investee companies.

The Profit Before Tax (PBT) is at Rs. 102.28 Crores (previous year Rs. 93.42 Crores). The increase in the PBT is mainly on account of interest income and better returns on treasury investments.

D. HUMAN RESOURCES:

As on 31 March 2024, the Company had 34 employees (previous year 28 employees) on its roll including employees of Avante Spaces Limited, a Wholly-Owned Subsidiary company of the Company. It includes the Managing Directors and the Executive Director of both the Companies.

E. KIRLOSKAR INDUSTRIES LIMITED - EMPLOYEES STOCK APPRECIATION RIGHTS PLAN 2019:

The ‘Kirloskar Industries Limited - Employees Stock Appreciation Rights Plan 2019' (KIL ESARP 2019) was introduced in accordance with the SEBI guidelines for the employees of the Company and its subsidiaries. The Company obtained in-principle approval for the KIL ESARP 2019 from the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) on 3 December 2020 and 19 January 2021, respectively.

During the Financial Year 2023 - 2024, the members of the Company approved the amendment to the KIL ESARP 2019, by creating 3,00,000 additional Equity Settled Stock Appreciation Rights (ESARs) grant from 4,85,000 ESARs to 7,85,000 ESARs to the existing ESAR pool, by special resolution through Postal Ballot on 30 April 2023. The Company also obtained in-principle approval for the amendment to the KIL ESARP 2019 from BSE and NSE on 3 July 2023.

KIL ESARP 2019 is administered by the Nomination and Remuneration Committee of the Board of Directors of the Company.

KIL ESARP 2019 is in compliance with the applicable provisions of the Companies Act, 2013, and its Rules, SEBI (Share Based Employees Benefits) Regulations 2014, read with, SEBI (Share Based Employees Benefits and Sweat Equity) Regulations, 2021, (hereinafter referred to as Employee Benefits Regulations) and other applicable Regulations. A certificate from Mr. Mahesh J. Risbud, Practicing Company Secretary, (FCS 810 CP 185), Pune, Secretarial Auditors of the Company, confirming that the KIL ESARP 2019, has been implemented in accordance with Employees Benefits Regulations and the Special Resolution(s) passed by the members of the Company through Postal Ballot on 29 December 2019, and amendment thereto passed by the Board on 3 February 2022 to bring it in consonance with the Employees Benefits Regulations. KIL ESARP 2019 was further amended by special resolutions passed by the members through a postal ballot held on 30 April 2023. A copy of the same will also be available for inspection at the Company's Registered Office.

Under the KIL ESARP 2019, the Company has granted to date a total of 7,25,498 ESARs out of 4,84,498 ESARs at an exercise price of Rs. 500 per ESAR and 2,41,000 ESARs at an exercise price of 1,800 per ESAR to eligible employees including the Managing Director, the Executive Director, a Non-Executive Director of the Company and employees of Avante Spaces Limited (Avante), a Wholly-Owned Subsidiary company of the Company.

Pursuant to KIL ESARP 2019, ESARs granted shall vest after a minimum period of 1 year but not later than a maximum period of 4 years from the grant date of such ESARs.

During the year under review, the Company granted 2,41,000 ESARs to eligible employees and the NonExecutive Director of the Company, who is the Managing Director of Avante and employees of Avante under the KIL ESARP 2019.

During the year under review, the Company had vested 31,120 ESARs, in the employees of the Company and in the Non-Executive Director of the Company, who is the Managing Director of Avante to whom ESARs were granted under KIL ESARP 2019.

Details of KIL ESARP 2019, as required under Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014, read with Regulation 14 of Employees Benefits Regulations, as on 31 March 2024, are set out in ‘Annexure I' to this Report and are available on the Company's website at www.kirloskarindustries.com.

F. CAPITAL STRUCTURE

During the year under review, the Company allotted 43,653 equity shares of Rs. 10/- each to eligible employees including the Managing Director, the Executive Director, a Non-Executive Director of the Company and employees of Avante Spaces Limited (Avante), a Wholly- Owned Subsidiary company of the Company, pursuant to the ‘Kirloskar Industries Limited - Employees Stock Appreciation Rights Plan 2019' (KIL ESARP 2019).

Consequent to the aforesaid allotment, Issued Capital and Subscribed Capital of the Company was increased from 98,83,931 equity shares of Rs. 10/- each to 99,27,584 equity shares of Rs. 10/- each and Paid-up Capital was increased from 98,83,900 equity shares of Rs. 10/- each to 99,27,553 equity shares of Rs. 10/- each.

Further, the Company allotted 6,601 equity shares, 2,742 equity shares and 18,789 equity shares of Rs. 10/- each on 24 April 2024, 27 May 2024 and 15 July 2024, respectively upon exercise of Employee Stock Appreciation Rights (ESARs) vested to the eligible employees of the Company and employees of Avante, pursuant to the KIL ESARP 2019.

G. CONCERNS AND THREATS:

The Board of Directors has constituted a Risk Management Committee (the Committee) to identify the risks, mitigate the same and monitor the development and deployment of risk mitigation action plans for the businesses of the Company.

The Company has deployed a risk management process that includes risk identification, assessment and its treatment, mitigation, monitoring, and reviewing actions. The Company prioritises and manages the risks identified through its Risk Registers.

The Committee regularly presents the risk assessment and mitigation procedures adopted to assess the reliability of the risk management structure and efficiency of the process before the Audit Committee and the Board of Directors of the Company at their respective meetings.

The Committee meets every quarter, discusses all the mapped risks, evaluates future risks and reviews the mitigation plan for the identified risks for all business segments.

H. PROSPECTS:

We continue to evaluate opportunities to invest in our group companies and deploy capital to support their investment plans and / or improve our stakes in those Companies.

The real estate sector, our core focus area going forward, has performed remarkably in the last financial year and even the elevated inflation and higher interest rate regime have not shown any major impact on the real estate sector. We see marked improvement in the prospects of real estate as volume and pricing is witnessing an uptick across geographies. While commodity price inflation and availability of labour continues to be a risk, we believe the improving demand scenario bodes well for our real estate business.

The sector is likely to continue to strengthen in the quarters ahead and we will be focused on opportunities for development of own land parcels and new project acquisitions. A consolidation in the real estate sector is expected to continue, leading to an increase in the market share of branded organized players such as your Company.

Your company will be guided by superior long-term shareholder value growth in all its endeavours by maximizing returns through timely execution, optimal financing and fiscal discipline.

I. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY:

The Company has in place an adequate internal controls system to ensure operational efficiency, accuracy, and promptness in financial reporting and compliance with various laws and regulations.

The internal controls system is supported by the internal audit process. An Internal Auditor has been appointed for this purpose. The Audit Committee of the Board reviews the Internal Audit Report and the adequacy and effectiveness of internal controls periodically.

J. CAUTIONARY STATEMENT:

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Company's objectives, projections, estimates, and expectations may constitute ‘forward-looking statements' within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

K. SEBI REGULATIONS AND LISTING FEES:

The annual listing fees for the year under review have been paid to the BSE Limited and the National Stock Exchange of India Limited, where your Company's shares are listed.

L. DETAILS OF MATERIAL SUBSIDIARY:

In terms of the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (the Regulations), Kirloskar Ferrous Industries Limited (KFIL) is a material subsidiary of the Company, in which, the Company was holding 50.68 % of its total shareholding as on 31 March 2024.

The Hon'ble National Company Law Tribunal, Mumbai vide its Order dated 24 July 2024, has sanctioned the Scheme of Arrangement and Merger of ISMT Limited (Transferor Company) with Kirloskar Ferrous Industries Limited (Transferee Company) and their respective shareholders pursuant to the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, ("Scheme").

After filing the certified true copy of the aforesaid Order along with a copy of the Scheme with the Registrar of Companies, Pune on 8 August 2024, the Scheme has become operative effective from 1 April 2023 (Appointed Date). In terms of the Scheme, ISMT Limited stands merged into and with KFIL with effect from 8 August 2024.

Consequently, as on date, the Company holds 46.08% of the total shareholding of KFIL.

During the year under review, KFIL has not sold / disposed off and leased assets more than 20% of its assets.

M. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS:

As on 31 March 2024, the Company has the following subsidiaries:

1. Avante Spaces Limited, a Wholly-owned Subsidiary Company;

2. Kirloskar Ferrous Industries Limited (KFIL), Subsidiary Company;

3. ISMT Limited, a subsidiary of the Subsidiary Company (a subsidiary of KFIL); and

4. Oliver Engineering Private Limited (a subsidiary of KFIL).

The Hon'ble National Company Law Tribunal, Mumbai vide its Order dated 24 July 2024, has sanctioned the Scheme of Arrangement and Merger of ISMT Limited (Transferor Company) with Kirloskar Ferrous Industries Limited (Transferee Company) and their respective shareholders pursuant to the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, ("Scheme").

After filing the certified true copy of the aforesaid Order along with a copy of the Scheme with the Registrar of Companies, Pune on 8 August 2024, the Scheme has become operative effective from 1 April 2023 (Appointed Date). In terms of the Scheme, ISMT Limited stands merged into and with KFIL with effect from 8 August 2024.

Consequently, the Company has the following subsidiaries:

1. Avante Spaces Limited, a Wholly-owned Subsidiary Company;

2. Kirloskar Ferrous Industries Limited (KFIL), Subsidiary Company; and

3. Oliver Engineering Private Limited, a subsidiary of the Subsidiary Company (a subsidiary of KFIL).

The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with IND AS 110, issued by the Ministry of Corporate Affairs, form part of this Annual Report. A statement containing the salient features of the Financial Statement of the subsidiary companies is attached to the Financial Statements of the Company in Form AOC-1.

Pursuant to the provisions of Section 136 of the Companies Act, 2013 and its Rules thereof including amendments thereunder, the Financial Statements along with relevant documents of the Company and its subsidiaries, are available on the Company's website, viz., www.kirloskarindustries.com.

The Financial Statements of the subsidiaries and related detailed information will be kept for inspection by any member at the Company's Registered Office and will also be made available to the members on demand, at any point of time.

BRIEF HIGHLIGHTS OF BUSINESSES OF SUBSIDIARY COMPANIES:

AVANTE SPACES LIMITED:

Avante Spaces Limited (Avante), a Wholly-Owned Subsidiary of the Company, embarked on the mixed- use development of the land parcel in Kothrud, Pune in the year 2020 and has continued to make satisfactory progress considering the challenges involved in the development of any area in the main city centre or a prime locality.

Avante has successfully navigated through various challenges, including COVID-related hurdles and regulatory changes, to complete its flagship first real estate project ‘One Avante', located in Kothrud, Pune.

Avante has received an Occupancy Certificate (OC) for its project ‘One Avante'. This development marks a significant milestone as it signals the commencement of revenue and profit recognition for the first time.

This achievement highlights the resilience and adaptability of its team, underscoring the collective contribution to the growth curve.

During the year under review, Avante completed its first project, ‘One Avante', and revenue generated from the sales of certain units in the project has been recognised in the Audited Financials. The profit before tax for the year under review stood at Rs. 88.09 Crores.

Avante's second project, which is significantly larger, is set to transform Kothrud, Pune from a prime residential area into a Central Business District for commercial spaces. Upon completion, this project is expected to achieve the Indian Green Building Council (IGBC) Platinum and Leadership in Energy and Environmental Design (LEED) Gold certifications.

Avante is making satisfactory progress on the second larger project of the Company despite the challenges such as labour shortages and constraints imposed by the Pune Municipal Corporation on construction activities.

Avante is also committed to environmental and social responsibility, continuously striving to craft world- class spaces while uplifting the overall ambience of the locality. By maintaining rigorous standards throughout all phases of development from planning and design to construction and operations, Avante ensures that the developments meet the highest criteria of quality, safety, and sustainability.

Avante's agile management, disciplined approach and emphasis on strong corporate governance are key strengths that will help the Company to build avant-garde spaces and a successful presence in the real estate sector.

KIRLOSKAR FERROUS INDUSTRIES LIMITED:

Kirloskar Ferrous Industries Limited (KFIL) is in the business of manufacture of pig iron and castings and has its manufacturing facilities located at Bevinahalli village and Hiriyur in Karnataka and Solapur in Maharashtra.

During the year under review:

KFIL achieved Net Sales of Rs. 6,133.90 Crores as compared to Rs. 6,398.57 Crores in the previous year. The Profit Before Tax for the year under review stood at Rs. 476.83 Crores as compared to Rs. 619.26 Crores of the previous year.

KFIL continued to maintain the market leadership position in the domestic casting business.

KFIL sold 4,18,601 MT of pig iron valued at Rs. 1,805.25 during the Financial Year 2023-2024 as compared to 4,15,124 MT of pig iron valued at Rs. 2,036.86 Crores in the previous financial year.

The average realisation of pig iron for the year was around Rs. 43,100 per MT as against Rs. 49,500 per MT in the previous year.

KFIL sold 1,20,018 MT of castings aggregating to Rs. 1,508.32 Crores during the Financial Year 2023-2024 as compared to 1,30,345 MT castings aggregating to Rs. 1,673.26 Crores for the previous Financial Year.

KFIL entered new premium connections market resulting in increase in sales to oil and gas and projects sectors which in turn resulted in higher sales realization of seamless tubes. The share of sales to OCTG and Projects sectors has been increased to 29 percent from 9 percent over a span of last 2 financial years. KFIL made sales of 1,56,487 MT of Tubes valued at Rs. 2,064.80 Crores in the Financial Year 2023-2024 as compared to 1,57,143 MT of Tubes valued at Rs. 1,976.72 Crores in the previous Financial Year.

KFIL sold 69,605 MT of Steel valued at Rs. 534.52 Crores in the financial year 2023-2024 as compared to 68,165 MT of Steel valued at Rs. 556.07 Crores in the previous Financial Year. During the year, fall in the scrap prices impacted the sales realization of Steel.

Operational performance of KFIL:

Pig Iron:

During the year under review, the average price of iron ore fluctuated between Rs. 5,700 per MT to Rs. 7,000 per MT for lumps and Rs. 5,000 per MT to Rs. 6400 per MT with respect to fines. Though the prices of coal were not volatile in the first half of the Financial Year, the second half faced increasing trend. The blended average coal price was in the range of USD 210 to USD 285 during the year.

Upgradation of MBF-1 and Commissioning of Pulverised Coal Injection (PCI):

The upgradation of MBF-1 along with commissioning of PCI plant during the year under review, helped in improving the productivity and reduction in coke consumption thereby reducing the overall production cost.

Castings

During the year under review, the production of castings decreased by 4.71% when compared to the previous year.

KFIL continuously worked on developing new products, reduction in operational cost and also increasing the Machining and Proto business at both locations.

Update on Projects:

The following major projects were completed during the Financial Year:

• Pulverised coal injection at both mini blast furnaces at Koppal plant.

• After temporary shutdown for relining work, blast furnace at Hiriyur resumed operations.

• Preheaters for mini blast furnace at Hiriyur were successfully connected.

• Mini blast furnace I with bell less top commissioned.

• Direct feeding of coke with truck tipper was commissioned at mini blast furnace at Hiriyur.

• Machine shop expansion at Koppal and Solapur plants.

• Layer saw machine and inlet outlet system for furnace at Baramati plant.

• 40 MVA transformer at Jejuri plant.

• De-bottlenecking projects.

The following major projects are in progress during the year under review:

• 3000 Nm3/Hr oxygen plant for both mini blast furnaces at Koppal for oxygen enrichment.

• Expanding machining capacity based on customer requirements.

• New Moulding line (Phase II) at Solapur plant for enhancing castings capacity by additional 20,000 MT per annum.

• Phase I installation of solar power plant with capacity 70 MW DC.

• De-bottlenecking projects.

The Board of Directors of KFIL declared an interim dividend of Rs. 3 (75%) per equity share on 15 March 2024 and paid on 28 March 2024.

The Board of Directors of KFIL in its meeting held on 9 August 2024 has also recommended a final dividend of Rs. 2.50 (50%) per equity share for the Financial Year ended 31 March 2024.

Accordingly, the total dividend (inclusive of the interim dividend declared and paid) for the Financial Year 2023-2024 is 110%.

OLIVER ENGINEERING PRIVATE LIMITED

During the Financial Year 2023-2024, Kirloskar Ferrous Industries Limited (KFIL) acquired 100% of the paid-up equity share capital and the sole management control of Oliver Engineering Private Limited (‘OEPL') in terms of the Order passed by the Hon'ble National Company Law Tribunal, New Delhi and OEPL has become a Wholly Owned Subsidiary of KFIL with effect from 29 September 2023.

OEPL has a manufacturing facility with a capacity of 28,000 MT per annum situated at village Sandharsi, Tehsil Rajpura, Patiala, Punjab 140417. In order to finance the cost of setting up manufacturing unit, OEPL had availed the term loans from the lenders in the past. However, due to downturn or recession in economy leading to low level of sales and losses, OEPL faced severe liquidity constraints to meet its financial obligations and eventually the account of OEPL was classified to the NPA category by the lenders.

Consequently, the Corporate Insolvency Resolution Process (CIRP) was initiated against OEPL by the order of the National Company Law Tribunal, New Delhi passed on 26 April 2022 under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Resolution Plan submitted by KFIL was approved by the Committee of Creditors of OEPL and subsequently approved by the National Company Law Tribunal, New Delhi vide its order dated 12 September 2023.

As the operations of the plant were suspended since last two years, refurbishment work of the equipment is in progress. The refurbishment work is expected to be completed by the first half of the Financial Year 20242025. Castings to be produced from that plant will help in catering to the raising demand from northern India and the presence of the company products PAN India. This will facilitate the expansion of geographical reach in the casting business and cater to the growing needs of customers in Northern India.

N. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Details of significant changes, i.e., change of 25% or more, as compared to the immediately previous Financial Year in key financial ratio, along with detailed explanation therefor:

Notes:

1. The Company does not have any interest cost.

2. The Company does not have any borrowings.

There are no sector-specific equivalent ratios for disclosure by the Company.

O. RETURN ON NET WORTH:

Details of change in return on net worth as compared to the immediately previous Financial Year as follows:

Note:

1. Investment in subsidiaries / group companies has not yet commenced generating additional dividends / returns.

V. PARTICULARS OF INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT TO SECTION 134 OF THE COMPANIES ACT, 2013, RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

1. EXTRACT OF ANNUAL RETURN:

In terms of the provisions of Section 92(3) read with the provision of Section 134 (3) (a) of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, including amendments thereunder, the Annual Return filed with the Ministry of Corporate Affairs (MCA), for the Financial Year 20222023, is available on the website of the Company, viz., www.kirloskarindustries.com and the Annual Return for the Financial Year 2023-2024, will be made available on the website of the Company once it is filed with the MCA

2. NUMBER OF MEETINGS OF THE BOARD:

During the year under review, Five (5) Board Meetings were convened and held, the details of which form part of the Report on Corporate Governance. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

3. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirements under Section 134 (5) of the Companies Act, 2013, in respect of Directors' Responsibility Statement, your Directors state that:

a) in the preparation of the Annual Financial Statements for the year ended 31 March 2024, the applicable accounting standards had been followed and there were no material departures;

b) accounting policies as mentioned in Note No. 2 of the Notes forming part of the Financial Statements have been selected and applied consistently. Further, judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2024 and of the Profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Annual Financial Statements have been prepared on a going concern basis;

e) proper internal financial controls were in place and that the internal financial controls were adequate and were operating effectively; and

f) proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

4. A STATEMENT ON DECLARATION BY INDEPENDENT

DIRECTORS:

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (7) of the Companies Act, 2013, and Rules thereunder including amendments thereto and Regulation 16 (1) (b) and 25 (8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including amendments thereto and also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act.

Further, pursuant to Sub-rule (1) and (2) of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 and amendments thereto, all Independent Directors confirmed that they have enrolled their name in the data bank with the Indian Institute of Corporate Affairs, New Delhi, India, within prescribed time period.

In the opinion of the Board, each of the Independent Director appointed / re-appointed during the year under review possess requisite integrity, expertise, and experience for acting as an Independent Director of the Company.

The Company has laid down a Code for the Board of Directors and Senior Management of the Company (Code of Conduct). The Code of Conduct is available on the Company's website, viz., www.kirloskarindustries.com.

All the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct.

5. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The Board has on the recommendation of the Nomination and Remuneration Committee adopted a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration.

The Nomination and Remuneration Policy is available on the website of the Company, viz., www. kirloskarindustries.com.

6. AUDITORS:

a. Statutory Auditors:

Kirtane and Pandit LLP, Chartered Accountants, (Firm Registration Number 105215W), Pune, were appointed as the Statutory Auditors of the Company under Section 139 of the Companies Act, 2013, (the Act), to hold office for a term of five years from the conclusion of the Annual General Meeting (AGM) held on 10 August 2021, till the conclusion of the AGM of the Company, to be held in the year 2026.

The Company has received a certificate from the Statutory Auditors to the effect that they are fulfilling requirements prescribed under the provisions of Section 141 of the Act.

b. Cost Auditors:

Pursuant to the Companies (Cost Records and Audit) Rules, 2014, dated 31 December 2014, the Company was not required to audit cost records for the Financial Year 2023-2024.

c. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had appointed Mr. Mahesh J. Risbud, Practicing Company Secretary, (FCS 810 CP 185), Pune, to undertake the Secretarial Audit of the Company.

The Report of the Secretarial Audit is annexed as ‘Annexure II' to this Report.

Mr. Mahesh J. Risbud, Practising Company Secretary, Pune, has submitted the Secretarial Compliance Report as laid down in SEBI Circular CIR/CFD/CMD1/27/2019 dated 8 February 2019 and has also confirmed that the Company has complied with all applicable SEBI Regulations and circulars / guidelines issued thereunder, for the Financial Year 2023-2024.

7. MAINTENANCE OF COST RECORDS:

Pursuant to the Companies (Cost Records and Audit) Rules, 2014, dated 31 December 2014, the Company was not required to maintain cost records relating to Electricity Industry (Windmill) in Form CRA - 1 for the Financial Year 2023-2024.

8. EXPLANATION OR COMMENTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS:

There are no qualifications, reservations or adverse remarks or disclaimer made by the Statutory Auditor in their Audit Report or by the Practicing Company Secretary in the Secretarial Audit Report for the year ended 31 March 2024.

The notes to the Accounts referred to in the Auditors Reports are self-explanatory and therefore no further clarifications are required.

9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

During the year under review, your Company has given a loan of Rs. 10 Crores (Total 191.45 Crores) to Avante Spaces Limited (Avante), a Wholly-Owned Subsidiary of the Company. Your Company has not granted any guarantee.

During the year under review, the Company has invested Rs. 25 Crores in 8.25% Non-Convertible Compulsorily Redeemable Cumulative Preference Shares of Avante.

During the year under review, the Company also acquired 1,50,00,000 equity shares of a face value of Rs. 5 each of ISMT Limited (ISMT) representing 4.99% of the paid-up equity share capital of ISMT through the market, for a total consideration of Rs. 120.58 Crores.

10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUBSECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013:

Pursuant to the provisions of Section 134 of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, the particulars of all contracts or arrangements entered into by the Company with related parties have been done at arm's length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC - 2. Related party disclosures as per the Indian Accounting Standard 24 (IND AS 24) have been provided in Note No. 41 to the Financial Statements.

None of the related party transactions entered into by the Company, were materially significant, warranting members' approval under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including amendments thereunder. The Policy on related party transactions is available on the website of the Company, viz. www.kirloskarindustries.com.

The Company also discloses related party transactions on a half-yearly basis, in the prescribed format with the Stock Exchange(s).

11. STATE OF COMPANY'S AFFAIRS:

Discussion on the state of the Company's affairs has been covered in the Management Discussion and Analysis Report.

12. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:

The particulars of the amounts proposed to be carried to reserves have been covered as part of the financial performance of the Company.

13. MATERIAL CHANGES AND COMMITMENTS, BETWEEN THE DATE OF THE BALANCE SHEET AND THE DATE OF THE REPORT:

There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which Financial Statements relate and date of this Report.

14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS, AND OUTGO:

A. Conservation of Energy and Technology Absorption:

The Company has no particulars to report regarding the conservation of energy and technology absorption as required under Section 134 (3) (m) of the Companies Act, 2013, read with Rules thereof including amendments thereunder.

B. Foreign exchange earnings and outgo:

(Rs. in Crores)

15. RISK MANAGEMENT POLICY:

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-mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, the Audit Committee, and the Board of Directors of the Company from time to time.

The risk management process works at various levels across the organization. It is an ongoing process and forms an integral part of management focus.

16. CORPORATE SOCIAL RESPONSIBILITY:

The Company has been carrying out Corporate Social Responsibility (CSR) activities. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013, and the Companies (CSR Policy) Rules, 2014.

The Annual Report on CSR activities includes details about the CSR policy developed and implemented by the Company. CSR initiatives taken during the year are annexed as ‘Annexure III' to this Report.

17. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013, and Regulation 17 (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out a performance evaluation of its own performance and that of its committees and individual Directors. Performance evaluation has been carried out as per the criteria prescribed by the Nomination and Remuneration Committee of the Board of Directors of the Company.

18. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES, AND JOINT VENTURE COMPANIES:

Note:

#The Company does not have significant influence on Kirloskar Brothers Limited (KBL) as it does not participate in the management and / or financial decisions of KBL. As such KBL is not an Associate Company of the Company under the IND AS 24 and as such its financials are not included in the Consolidated Financial Statements of the Company.

19. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

In Financial Year 2023-2024, there was no change in the nature of business of the Company.

20. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL: Directors appointed / re-appointed during the year:

Key Managerial Personnel appointed during the year:

During the year under review, there has been no change in Key Managerial Personnel of the Company.

Directors and Key Managerial Personnel resigned during the year 2023-2024:

During the year under review, there has been no change in Directors and Key Managerial Personnel of the Company.

21. DIRECTORS PROPOSED TO BE APPOINTED / REAPPOINTED AT THE ENSUING ANNUAL GENERAL MEETING:

Mr. Vinesh Kumar Jairath (DIN 00391684) who retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Company has received the requisite disclosure / declaration from Mr. Vinesh Kumar Jairath.

The brief resume and other details relating to Mr. Vinesh Kumar Jairath who is proposed to be re-appointed as required to be disclosed under Regulation 36(3) of the Regulations form part of the Statement settling out material facts annexed to the Notice of the Annual General Meeting.

The resolution seeking approval of the members for the re-appointment of Mr. Vinesh Kumar Jairath has been incorporated in the Notice of the forthcoming Annual General Meeting of the Company.

22. NAMES OF THE COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR:

None

23. DETAILS RELATING TO DEPOSITS, COVERED UNDER CHAPTER V OF THE COMPANIES ACT, 2013:

None

24. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN THE FUTURE:

To the best of our knowledge, the Company has not received any such order from the Regulators, Courts or Tribunals during the year, which may impact the going concern status or the Company's operation in the future.

25. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has developed a strong two-tier internal control framework comprising entity level controls and process level controls. The entity level controls of the Company include elements such as defined Code of Conduct, Whistle Blower Policy / Vigil Mechanism, rigorous management review and Management Information System (MIS) and strong internal audit mechanism. The process level controls have been ensured by implementing appropriate checks and balances to ensure adherence to Company policies and procedures, efficiency in operations and also reduce the risk of frauds.

Regular management oversight and rigorous periodic testing of internal controls makes the internal controls environment strong at the Company. The Audit Committee along with the Management oversees results of the internal audit and reviews implementation on a regular basis.

26. COMPOSITION OF THE AUDIT COMMITTEE AND OTHER COMMITTEES OF THE BOARD:

Details of the composition of committees of the Board, viz. the Audit Committee, the Nomination and Remuneration Committee, the Stakeholders Relationship Committee and the Corporate Social Responsibility Committee are provided in the Report on Corporate Governance.

27. No case of any fraud by any officer or employee of the Company has been reported by any auditor of the Company either to the Audit Committee or the Board pursuant to provisions of Section 143(12) of the Companies Act, 2013.

28. Neither any application has been made or any proceeding has been pending against the Company under the Insolvency and Bankruptcy Code, 2016.

29. The Company has not accepted any public deposit pursuant to the provisions of the Companies Act, 2013 and Rules thereof.

VI. INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

The relevant information pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as ‘Annexure IV' to this Report.

The particulars of top ten employees pursuant to the aforesaid Rules form part of this Report. In terms of Section 136 (1) of the Companies Act, 2013, the Board's Report is being sent to the members without this Annexure. The members interested in obtaining a copy of this Annexure may write to the Company Secretary at the Company's Registered Office.

VII. VIGIL MECHANISM:

The Company has a Whistle Blower Policy / Vigil Mechanism (the Policy) to deal with instances of fraud, unethical behavior, etc. The Policy provides a mechanism for Directors and employees of the Company and other persons dealing with the Company to report genuine concerns including but not limited to unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct for Board of Directors and Senior Management or ethics policy or leakage of Unpublished Price Sensitive Information (UPSI), by any person, who is in possession of UPSI, to any other person in any manner whatsoever, except as otherwise permitted under the SEBI (Prohibition of Insider Trading) Regulations, 2015, or any other instance to the Chairman of the Audit Committee of the Board of Directors of the Company. The Policy is placed on the Company's website, viz., www.kirloskarindustries.com. No case was filed during the year.

VIII. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION, AND REDRESSAL) ACT, 2013:

The Company has in place a Policy for Prevention of Sexual Harassment at the workplace. This would, inter alia, provide a mechanism for the resolution, settlements, or prosecution of acts or instances of sexual harassment at the workplace and to ensure that all employees are treated with respect and dignity.

During the year under review, the Company has complied with the provisions relating to the constitution of the Internal Committee (the Committee) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Committee comprises four members including one external member.

During the year under review, four meetings of the Committee were held on 11 May 2023, 10 July 2023, 4 October 2023 and 5 January 2024.

During the year under review, there was no complaint / case filed / pending with the Company.

IX. CASH FLOW:

A Cash Flow Statement for the year ended 31 March 2024, is attached to the Balance Sheet as a part of the Financial Statements.

X. COMPLIANCES WITH RESPECT TO APPLICABLE SECRETARIAL STANDARDS:

During the year under review, the Company has complied with all the applicable secretarial standards.

XI. CORPORATE GOVERNANCE:

In terms of Regulation 34 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance along with a Compliance Certificate issued by the Statutory Auditors of the Company is attached and forms part of the Annual Report.

XII. REMUNERATION RECEIVED BY THE MANAGING DIRECTOR / EXECUTIVE DIRECTOR FROM SUBSIDIARY COMPANIES:

XIII. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR):

Pursuant to provisions of Regulations 34(2)(f) of the Regulations, the Business Responsibility and Sustainability Report for the Financial Year 2023 - 2024, forms part of this Annual Report.

ACKNOWLEDGEMENTS:

Your Directors would like to place on record their appreciation of the contribution made and support provided to the Company by the members, employees and bankers, during the year under Report.