Notes to Accounts of Kirloskar Industries Ltd.

Mar 31, 2025

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 recognized 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 recognized
because it cannot be measured reliably. The Company does
not recognize 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.

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.

o) Share based payments

Eligible employees in terms of the Employees Stock Options
Scheme of the Company receive remuneration in the form of
share-based payments, whereby employees render services
as consideration for equity instruments granted (equity-
settled transactions).

The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using an
appropriate valuation model.

That cost is recognised, together with a corresponding increase
in Share-Based Payment (“SBP”) reserves in equity, over the
period in which the performance and/or service conditions
are fulfilled in employee benefits expense/vesting period. The
cumulative expense recognised for equity-settled transactions
at each reporting date until the vesting date reflects the extent

to which the vesting period has expired and the Company’s
best estimate of the number of equity instruments that will
ultimately vest. The statement of profit and loss expense or
credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period
and is recognised in employee benefits expense.

In respect of options issued to employees of wholly owned
subsidiary, the Company has treated the charge as Deemed
Equity Investments in subsidiary.

No expense is recognised for awards that do not ultimately
vest, except for equity-settled transactions for which vesting
is conditional upon a market or non-vesting condition. These
are treated as vesting irrespective of whether or not the
market or non-vesting condition is satisfied, provided that all
other performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified,
the minimum expense recognised is the expense had the
terms had not been modified, if the original terms of the
award are met. An additional expense is recognised for any
modification that increases the total fair value of the share-
based payment transaction or is otherwise beneficial to the
employee as measured at the date of modification.

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 recognized 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 recognized 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) recognized
during the period is recognized 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, net of outstanding
bank overdrafts, 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
vequity 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

The Ministry of Corporate Affairs (“MCA”) has vide notification
dated May 7, 2025 notified Companies (Indian Accounting
Standards) Amendment Rules, 2025 (the ‘Rules’) which amends
certain accounting standards, and are effective from 1 April 2025
onwards. The summary of amendments is as follows -

Ind AS 21, The Effects of Changes in Foreign Exchange Rates
- These amendments provide guidance on when a currency is
considered as exchangeable, application guidance on determining
exchange ability and estimating spot rates, disclosure requirements
when the currency is not exchangeable and references to matters
contained in other Indian Accounting Standards.

Ind AS 101, First-time Adoption of Ind AS - Corresponding
amendments are made to Ind AS 101 in line with above mentioned
amendments in Ind AS 21 with respect to the entity having
functional currency that is subject to severe hyperinflation or
lacking exchange ability.

The above amendments are not applicable to the Company

NOTE 17 : ASSETS CLASSIFIED AS HELD FOR SALE

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.

(e) Each holder of equity share is entitled to one vote per share and to receive interim/ final dividend as and when declared by the Board
of Directors/ at the Annual General Meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled
to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.

* Indicates amount less than H 50,000/-

# During the year, the Company identified that, in the Financial Year 2022-23, the entire cumulative gain on sale of long-term equity investments of Swaraj Engine
Limited classified as fair value through other comprehensive income (FVTOCI) had been transferred from Other Comprehensive Income (OCI) to Retained Earnings upon
disposal of those investments. However, in accordance with Ind AS 109 - Financial Instruments, only the gain net of tax should have been transferred. Accordingly, an
amount of H 31 Crore, representing the tax effect on such gain, has been reclassified / regrouped from Retained Earnings to Other Comprehensive Income during the
year through the Statement of Changes in Equity.

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.

NOTE 24: OTHER EQUITY (CONTD..)

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 43)

4) Equity instruments through Other Comprehensive Income:

This reserve represents the cumulative gains and losses arrising 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.

# The deferred tax liability of H 31 crore arose from the sale of investment in Swaraj Engine Limited during the FY 2022-23. This amount was deducted from Other
Comprehensive Income (OCI) in the same year and subsequently credited to the profit and loss account under provision for tax. Simultaneously, as the OCI decreased
due to the sale of investment, it led to automatic impact on deferred tax as a result, the deferred tax was reduced twice for a single transaction.

NOTE 35: EARNINGS PER SHARE

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.

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 inadverse circumstances. Funding the plan removes volatility in Company''s financials and also benefit
risk through return on the funds made available for the plan.

NOTE 41: RELATED PARTY TRANSACTIONS

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)

NOTE 42: STOCK OPTION SCHEME

Equity Stock Appreciation Rights Plan 2019 (KIL ESARP 2019)

The Company had passed Special Resolution through Postal Ballot and approved - ''Kirloskar Industries Limited - Employee Stock
Aprreciation 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 fulfilled 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.

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.

II Modification of KIL ESOP Plan 2017 and Implementation of KIL ESARP 2019

The incremental fair values and assumptions used for computation of such incremental fair values; and fair value of additional
ESARs granted under KIL ESARP 2019

V Employee-benefit expenses recognised in the standalone Financial Statements

The Company has recorded employee stock-based compensation of H 17.78 Crores (Previous Year: H 20.05 Crores) out of which
H 7.54 Crores (Previous Year: H 8.51 Crores ) has been recognised in the Statement of Profit and Loss and H 10.24 Crores (Previous
Year : H 11.54 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 2025. During the year H 5.20 Crores
compensation has been reversed on account of retirement / superannuation of the directors. These adjustments have resulted in
net impact of H 2.34 Crores as reflected in Profit and Loss

NOTE 44: FAIR VALUE MEASUREMENTS (CONTD..)

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 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 2025 in quoted and unquoted equity securities was H 4,603.18 Crores (Previous
Year : H 3,240.32 Crores ) and H 122.97 Crores in quoted mutual funds (Previous Year : H 107.97 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 30 days from the date of invoice.

Credit risk on cash and cash equivalents and other bank balances is insignificant as the Company generally invests in bank
deposits and liquid / money market mutual funds with high credit ratings.

(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 2025 and 31 March 2024. The working capital of the Company is
positive as at each reporting date.

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.

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 2025.

NOTE 50: DIVIDEND

The Board of Directors has proposed Final Dividend of H 13 ( i.e. 130%) per equity share for FY 2024-25. (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.
Notes forming part of the Financial Statements: Note No. 1 to 51

As per our attached report of even date For and on behalf of the Board of Directors

For Kirtane & Pandit LLP Atul Kirloskar Aditi Chirmule

Chartered Accountants Chairman Executive Director

Firm Registration Number: 105215W/W100057 DIN 00007387 DIN 01138984

Parag Pansare Anandh Baheti Ashwini Mali

Partner Chief Financial Officer Company Secretary

Membership Number: 117309 ACS 19944

Date: 20 May 2025 Date: 20 May 2025

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Mar 31, 2024

k) Provisions

A provision is recognized 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 recognized 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 recognized because it cannot be measured reliably. The Company does not recognize 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

a) 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 shortterm 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 & Equipment.

b) Other-employment benefits

(i) 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 recognized 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 recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or cash refund.

(ii) 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.

(iii) 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.

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.

o) Share based payments

Eligible employees in terms of the Employees Stock Options Scheme of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments granted (equity-settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

That cost is recognised, together with a corresponding increase in Share-Based Payment (“SBP”) reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense/vesting period. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

In respect of options issued to employees of wholly owned subsidiary, the Company has treated the charge as Deemed Equity Investments in subsidiary.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification.

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.

a) 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 recognized 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 recognized 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) recognized during the period is recognized 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.

b) 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 or 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 equivalents 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, net of outstanding bank overdrafts, 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

The Institute of Chartered Accountants of India (ICAI) has issued “Exposure Draft on Supplier Finance Arrangements - Amendments to Ind AS 7 and Ind AS 107” which will require additional disclosures to enable users of financial statements to assess effects of supplier finance arrangements on the entity’s liabilities and cash flows and its exposure to liquidity risk.

No significant impacts on financial statements of the Company are expected as a result of the proposed amendments.

NOTE 36: EMPLOYEE BENEFITS EXPENSE (CONTD..)

(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 practice can have a significant impact on the defined benefit liabilities.

(iii) Future salary escalation andinflation 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.

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 fulfilled 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.

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 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.

(C) Credit risk

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

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 30 days from the date of invoice.

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.

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 2024.

NOTE 50: DIVIDEND

The Board of Directors has proposed final dividend of H 13 ( i.e. 130%) per equity share for FY 2023-24. (Previous year final dividend H 11 per equity share i.e. 110%).

NOTE 51

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

As per our attached report of even date For and on behalf of the Board of Directors

For Kirtane & Pandit LLP Mahesh Chhabria Aditi Chirmule

Chartered Accountants Managing Director Executive Director

Firm Registration Number: 105215W/W100057 DIN 00166049 DIN 01138984

Parag Pansare Anandh Baheti Ashwini Mali

Partner Chief Financial Officer Company Secretary

Membership Number: 117309 ACS 19944

Pune: 14 August 2024 Pune: 14 August 2024

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Mar 31, 2023

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 44)

4) Equity instruments Through Other Comprehensive Income:

This reserve represents the cumulative gains and losses arrising 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.

Note: 26A

As the Company changed from ESOP policy to ESAR policy, an amount of H 921 lakhs was transferred from the share options outstanding account to general reserve in its financial statements for the year ended year 31 March 2022. However, the said amount should have been transferred to Securities premium account to comply with the provisions of Ind AS 102. As a consequence, the balance in the general reserve has been overstated and the balance in share options outstanding account and securities premium was understated. These line items have been restated in the financial statement in the comparative period as below:

Note 37: Earnings per share

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.

(b) Defined benefit plans :

Gratuity : The Company has an unfunded defined benefit Gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years, full month''s basic salary is considered for the calculation of gratuity.

The above sensitivity analyses have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the reporting date. In practice, generally it does not occur. When we change one variable, it affects the other variables. In calculating the sensitivity, project unit credit method at the end of the reporting period has been applied.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous year.

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 inadverse circumstances. Funding the plan removes volatility in Company''s financials and also benefit risk through return on the funds made available for the plan.

Note 39: Contingent liabilities
Particulars	As at	As at
	31 March 2023	31 March 2022
a. Disputed demands
- Service tax	3	3
- Income tax [out of this H 1,065 Lakhs (Previous Year H 1,065 Lakhs) paid under protest]	1,254	1,206
b. Conveyance deed charges in respect of property	22	22
Note 40: Capital commitments
Particulars	As at	As at
	31 March 2023	31 March 2022
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)	-	-
Total	-	-

B. Disaggregation of revenue from contracts with customers

The entire revenue from contracts with customers is recognised at point in time and pertain to one line of business i.e., wind power generation.

The information relating to trade receivables from revenue from operations is disclosed in Note No. 8 and 11

Note 44: Stock option schemeEquity 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 Aprreciation 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 fulfilled 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.

Employee-benefit expenses recognised in the standalone Financial Statements

The Company has recorded employee stock-based compensation of H 290 Lakhs (Previous Year: H 238 Lakhs) out of which H64 Lakhs (Previous Year: H 64 Lakhs) has been recognised in the Statement of Profit and Loss and H 225 Lakhs (Previous Year : H 140 lakhs) 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 2023.

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

i) The fair values of equity 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 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.

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

(iv) 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.

(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.

(vi) The fair value of debt component of unsecured OCDs is computed by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

Note 47: 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 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 2023, in quoted & unquoted equity securities was J 1,46,452 Lakhs (Previous Year : J 1,18,595 lakhs quoted equity shares) and J 9,204 Lakhs in quoted mutual funds (Previous Year : Nil in quoted mutual funds ). 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 30 days from the date of invoice.

Credit risk on cash and cash equivalents and other bank balances is insignificant as the Company generally invests in bank deposits and liquid mutual funds with high credit ratings.

(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 2023 and 31 March 2022. 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 48: 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.

Note 49: 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 50: 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 51: 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 2023.

Note 52: Dividend

The Board of Directors has proposed Final Dividend ofH 11 ( i.e. 110%) per equity share for FY 2022-23. (Previous year Final dividend H 10 per equity share i.e. 100%).

Note 53

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

---

Mar 31, 2022

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. 46).

4) Equity instruments through other comprehensive income

This reserve represents the cumulative gains and losses arrising 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.

NOTE 38: EARNINGS PER SHARE

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.

NOTE 39: BUSINESS COMBINATION

During the Previous Year, the Company transferred the ‘Real Estate Business Undertaking at Kothrud’ (a business under common control) to its Wholly Owned Subsidiary, ‘Avante Spaces Limited (ASL) (Formerly known as Wellness Space Developers Limited) , as a going concern on a ‘Slump Sale’ basis vide Business Transfer Agreement dated 19 December, 2020, for consideration of H 7,500/- Lakhs. During the year purchase consideration of H 7,500/- Lakhs is discharged by ASL by way of allotment of 6,00,00,000 non-interest bearing Unsecured Optionally Convertible Debentures (OCD) of H 10 each, for a consideration other than cash amounting to H 6,000 Lakhs. The balance consideration of H 1,500 Lakhs has been settled in cash.

(b) Defined benefit plans

Gratuity : The Company has an unfunded defined benefit Gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years, full month’s basic salary is considered for the calculation of gratuity.

The above sensitivity analyses have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the reporting date. In practice, generally it does not occur. When we change one variable, it affects the other variables. In calculating the sensitivity, project unit credit method at the end of the reporting period has been applied.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous year.

Risk exposure

Through its defined benefit plans, the entity is exposed to a number of risks, the most significant of which are detailed below:

(A) Changes in bond yields

A decrease in bond yields will increase plan liabilities.

(B) Legislative risk

The Government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the defined benefit obligation and the same will have to be recognised immediately in the year when any such amendment is effective.

(C) 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 inadverse circumstances. Funding the plan removes volatility in Company’s financials and also benefit risk through return on the funds made available for the plan.

NOTE 41: CONTINGENT LIABILITIES
Particulars	As at 31 March 2022	As at 31 March 2021
a. Disputed demands
- Service tax	3	3
- Income tax [out of this H 1,065 Lakhs (Previous Year H 1,065 Lakhs) paid under protest]	1,206	1,234
b. Conveyance deed charges in respect of property	22	22

NOTE 46: STOCK OPTION SCHEMEKirloskar Industries Limited - Equity Settled Stock Appreciation Rights Plan 2019 (KIL ESARP 2019)

The Company had passed Special Resolution through Postal Ballot and approved - ‘Kirloskar Industried Limited - Employees Stock Aprreciation Rights 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. 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.

For options granted under KIL ESOP 2017 Plan, the cost of equity-settled transactions 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 fulfilled by the employees. Consequent to modification in KIL ESOP 2017 with KIL ESARP 2019, for unvested options of KIL ESOP 2017, the Company has recognised incremental fair value of ESAR which shall be amortised over the vesting period as per KIL ESARP 2019 in addition to fair value of original options which will be amortised over the remaining vesting period of original options, in compliance with ‘IND AS 102: Share Based Payment’. For options already vested, incremental fair value shall be recognised over the vesting period of KIL ESARP 2019. Further, fair value of new ESARs granted shall be recognised over the vesting period of KIL ESARP 2019.

$ Weighted average share price disclosure is not applicable since share options are not exercised during the Previous Year.

*Represents the base price with reference to which the appreciation per share shall be computed to determine the number of shares eligible for exercise.

III 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.

V Rationale for the variables used

The variables used for calculating the fair values and their rationale are as follows:

a. Stock Price

The closing market price on the National Stock Exchange of India Limited (NSE) on the date of grant has been considered for the purpose of valuation.

b. Volatility

Volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during a period. The measure of volatility used in the Black-Scholes-Merton option pricing model is the annualised standard deviation of the continuously compounded rates of return on the stock over a period of time. For calculating volatility, the daily volaitility of stock prices on NSE, over a period prior to the grant date, corresponding with the expected life of the options has been considered.

The period to be considered for volatility has to be adequate to represent a consistent trend in the price movements. It is also important that movements due to abnormal events get evened out. The period considered for the working is commensurate with the expected life of the option.

The fair value of an option is very sensitive to this variable. Higher the volatility, higher is the fair value. The rationale being,

the more volatile a stock is, the more is its potential to go up (or come down), and the more is the probability to gain from the movement in the price. Accordingly, an option to buy a highly volatile stock is more valuable than the one to buy a less volatile stock, for the probability of gaining is lesser in the latter case.

c. Risk - free interest rate

The risk-free interest rate being considered for the calculation is the interest rate applicable for maturity equal to the expected life of the options based on the zero-coupon yield curve for government securities.

d. Exercise price

Exercise Price of each specific grant has been considered.

e. Time to maturity / expected life of options

The Company has estimated the expected life of the options on the basis of average of minimum and maximum life of the options. Historical data is not considered in expected life calculations.

f. According to IND AS 102, the expected life of an award of stock options shall take into account the following factors

The expected life of an award of stock options considers the following factors:

a) The expected life must at least include the vesting period.

b) The average lengths of time of similar grants have remained outstanding in the past. If the Company does not have sufficiently long history of stock option grants, the experience of an appropriately comparable peer group has been taken into consideration.

c) The expected life of stock options should not be less than half of the exercise period of the stock options issued until and unless the same is supported by historical evidences with respect to stock options issued by the Company earlier.

The fair value of each award has been determined based on different expected lives of the options that vest each year, as if the award were several separate awards, each with a different vesting date.

The time to maturity has been estimated as illustrated by the following example. In case of the options granted on 1 April 2017, the earliest date of exercise for the first vesting is one year from the date of grant that is 1 April 2018. Hence, the minimum life of the option is 1 year. The exercise period is three years from the date of vesting as per the KIL ESOP 2017; hence the maximum life is 4 years. The expected life is the average of minimum and maximum life, i.e. 2.5 years [(1 4) /2]. The time to maturity for the remaining vests has been calculated in a similar manner.

g. Expected dividend yield

The dividend yield for each year has been derived by dividing the dividend per share for that year by the average market price per share of the respective period. The expected dividend yield of the Company over the life of the option is estimated considering the Company’s past dividend policy.

VI Employee-benefit expenses recognised in the Standalone Financial Statements

The Company has recorded employee stock-based compensation of H 238 Lakhs (Previous Year: H 747 Lakhs) out of which H 64 Lakhs (Previous Year: H 263 Lakhs) has been recognised in the Statement of Profit and Loss after reversal of H 34 Lakhs and H 128 Lakhs (Previous Year : H 109 Lakhs) after reversal of H 12 Lakhs 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 2022.

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

i) The fair values of equity 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 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.

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

(iv) 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.

(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.

vi) The fair value of debt component of unsecured OCDs is computed by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

NOTE 49: 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 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.

(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 30 days from the date of invoice.

Ageing analysis of trade receivables / Unbilled receivables / Unbilled contract assets Refer Note No. 8

(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 2022 and 31 March 2021. The working capital of the Company is positive as at each reporting date.

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.

NOTE 51: 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 52: 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 53: 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 2022.

NOTE 54: DIVIDEND

The Board of Directors has proposed Final Dividend of H 10 per equity share for FY 2021-22. (Previous year Final dividend H 10 per equity share i.e. 100%).

NOTE 55:

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

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Mar 31, 2018

NOTE 1:

CORPORATE INFORMATION

Kirloskar Industries Limited (“the Company”) is a public company incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India, namely the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in wind-power generation. The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Mega Watt (MW). The windmills are located at Tirade Village, Tal- Akole, Dist. - Ahmednagar. The Company sells wind power units generated, to third party as per the approval from the Maharashtra State Electricity Distribution Company Limited (MSEDCL) and in the absence of such approval to MSEDCL.

The Company has investments in properties and securities. The Company owns some land parcels in Pune. During the year, Company has amended the Main Object Clause of the Company related to real estate activities.

The Board of Directors has approved to develop some land parcels owned by the Company at Kothrud, Pune. Accordingly, the Company has initiated the process of obtaining various permissions from the Government Authorities.

NOTE 2:

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared in conformity with Generally Accepted Accounting Principles in India (Indian GAAP) to comply in all material respects with the notified Accounting Standards as prescribed under Section 133 of the Companies Act, 2013, (the Act), read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Act and the guidelines issued by Securities and Exchange Board of India (SEBI). The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

* 31 (31) Equity Shares of Rs. 10 each aggregating to Rs. 310 to be issued to shareholders of erstwhile Shivaji Works Limited on amalgamation as per Scheme sanctioned by Board for Industrial and Financial Reconstruction, are kept in abeyance on the directions of Special Court.

# Out of these, 16,35,275 (16,35,275) equity shares are held in the individual capacity and 25 (25) equity shares held as a Trustee of C.S. Kirloskar Testamentary Trust.

# # Out of these, 16,21,459 (16,21,459) equity shares are held in the individual capacity and 229 (229) equity shares held as a Trustee of C.S. Kirloskar Testamentary Trust.

# # # Includes transmission on demise of Mr. Gautam Achyut Kulkarni.

(e) Each holder of equity share is entitled to one vote per share and to receive interim / final dividend as and when declared by the Board of Directors / at the Annual General Meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note:

* In earlier years, the Company had purchased 30,000 debentures of the Mysore Kirloskar Limited with an intention of holding the same for more than one year. Accordingly, the Company had classified the same as long term investment under Accounting Standard 13 - Accounting for Investments. Since the debentures have already matured on 1 September 1999, the Company has presented the same as current maturities of long term investments.

NOTE 3:

The Company amended its Memorandum of Association during the year to include in its Object Clause the business of acquiring, developing, leasing, selling and dealing in Real Estate. Consequently, the Board of Directors accorded its approval for development of some land parcels at Kothrud in its meeting held on March 6, 2018. The advances in respect of Consultancy and other expenditure aggregating to Rs. 17.50 Lakhs incurred in connection with this activity, have been included under ‘Other Non - Current Asset’ and also included as assets of Real Estate Segment identified by the Company during the quarter. The same would be reviewed and re-classified as ‘Capital Work in Progress’ or ‘Inventories’, depending on the nature of the Project and the Business Model which shall be determined by the Company in due course. In the meantime, the lease rental income from the properties let out has been continued to be disclosed under ‘Other Income’.

NOTE 4:

The Company participated in the buyback of fully paid equity shares of Swaraj Engines Limited (SEL), SEL has accepted buyback offer of 45,651 equity shares of Rs. 10 each at the rate of Rs. 2,400 per equity share. Other income includes Rs. 1,092.47 Lakhs profit on buyback of SEL shares.

NOTE 5: EMPLOYEE BENEFITS

(a) Defined Contribution Plans

The Company has contributed Rs. 44.71 Lakhs (Rs. 11.96 Lakhs for 31 March 2017) towards Defined Contribution Plans, i.e., Provident Fund Contribution and Superannuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years, full month’s basic salary is considered for the calculation of gratuity.

Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 “Employee Benefits”:

NOTE 6:

EMPLOYEE STOCK OPTION PLAN 2017

The Company has introduced Employee Stock Option Plan (ESOP). This employee equity-settled compensation plan is known as Kirloskar Industries Limited - Employee Stock Option Plan 2017 (the “Plan”). The ESOP is approved and authorised by the Nomination and Remuneration Committee at its meeting held on 1 November 2017 (as amended on 13 December 2017).

The vesting period shall be minimum one year from the date of grant which shall vest in the following manner:

Terms Explanation

Vesting period / schedule A. 95,000 options shall vest at the end of the year from the date of options granted.

B. 1,31,862 options shall vest as 1/3^rd options every year.

The options vested shall be exercised within one year from the vesting date. When exercisable, each option is convertible into one equity share. Any option granted shall be exercisable according to the terms and conditions as determined by Employee Stock Option Plan 2017.

Under the said plan the Nomination and Remuneration Committee of the Board of Directors has granted 2,26,862 options as on 1 November 2017 (as amended on 13 December 2017) to eligible employees of KIL.

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.

Rationale for the variables used

The variables used for calculating the fair values and their rationale are as follows:

A. Stock price

The latest available closing market price on the National Stock Exchange of India Limited (NSE) prior to date on which options are granted has been considered for the purpose of valuation.

Under the ESOP Scheme of the Company, one option entitles an employee to one equity share of the Company.

B. Volatility

Volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during a period. The measure of volatility used in the Black-Scholes-Merton option pricing model is the annualised standard deviation of the continuously compounded rates of return on the stock over a period of time.

The period to be considered for volatility must be adequate to represent a consistent trend in the price movements. It is also important that movements due to abnormal events get evened out. The guidance note on “Accounting for Employees Share-based Payments” issued by the Institute of Chartered Accountants of India recommends the historical volatility of the stock over the most recent period that is generally commensurate with the expected life of the option being valued. Accordingly, we have considered volatility over the expected life of the option.

The fair value is very sensitive to this variable. Higher the volatility, higher is the fair value.

The rationale being, the more volatile a stock is, the more is its potential to go up (or come down), and the more is the probability to gain from the movement in the price. Accordingly, an option to buy a highly volatile stock is more valuable than the one to buy a less volatile stock, for the probability of gaining is lesser in the later case.

C. Risk free interest rate

The risk-free interest rate being considered for the calculation is the interest rate applicable for maturity approximately equal to the expected life of the options based on the zero-coupon yield curve for government securities.

D. Exercise price

The Company considered the exercise price of the options granted to employees based on the Plan.

E. Time to maturity / expected life of options

Time to maturity / expected life of options is the period from the grant date to the date on which option is expected to be exercised. The minimum life of stock option is the minimum period before which the options cannot be exercised and maximum life is the period after which the options cannot be exercised.

The expected life of an award of stock options considers the following factors:

i. The expected life must at least include the vesting period.

ii. The average lengths of time of similar grants have remained outstanding in the past. If the Company does not have sufficiently long history of stock option grants, the experience of an appropriately comparable peer group has been taken into consideration.

iii. The expected life of stock options should not be less than half of the exercise period of the stock options issued until and unless the same is supported by historical evidences with respect to stock options issued by the Company earlier.

The fair value of each award has been determined based on different expected lives of the options that vest each year, as if the award were several separate awards, each with a different vesting date.

The time to maturity has been estimated as illustrated by the following example. In case of the options granted on 1 April 2017, the earliest date of exercise for the first vesting is one year from the date of grant that is 1 April 2018. Hence, the minimum life of the option is 1 year. The exercise period is one year from the date of vesting as per the ESOP scheme; hence the maximum life is 2 years. The expected life is the average of minimum and maximum life, i.e. 1.5 years [(1 2) / 2]. The time to maturity for the remaining vests has been calculated in a similar manner.

F. Expected dividend yield:

Expected dividend yield is dividend per share divided by market price per share.

The Expected dividend yield of the Company over the life of the option is estimated considering the Company’s past dividend policy.

Employee-benefit expenses to be recognised in the Standalone Financial Statements

The Company has recorded employee stock-based compensation expense of Rs. 490.18 Lakhs in the Statement of Profit and Loss relating to the options granted to the employees of the Company for the year ended 31 March 2018.

NOTE 7:

SEGMENT REPORTING

Segment information based on Standalone Financial Statements, as required by the Accounting Standard 17 “Segment Reporting” as prescribed under Section 133 of the Companies Act, 2013, is as follows:

NOTE 8:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) “Related Party Disclosures” prescribed under Section 133 of the Companies Act, 2013, 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:

NOTE 9:

PROPERTY LICENSING FEES

a. The Property licensing fees (Other Income) recognised in the Statement of Profit and Loss during the year amounts to Rs. 3,238.51 Lakhs (Rs. 3,235.27 Lakhs for FY 2016-17). The details of future minimum license fees receivable are as under:

b. The rent expenses charged in the Statement of Profit and Loss during the year amounts to Rs. 27.55 Lakhs ( Rs. 5.18 Lakhs for FY 2016-17) and the details of future minimum rent payable are as under:

NOTE 10:

The Board of Directors have proposed Final Dividend of Rs. 21 for the Financial Year 2017-18 (i.e., 210%) (Rs. 20 per equity share for FY 2016-17)

NOTE 11:

On the basis of information available with the Company regarding the status of suppliers as defined under the “Micro Small and Medium Enterprises Development Act, 2006”, there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

NOTE 12: DEFERRED TAX LIABILITIES / ASSETS (NET):

As required by Accounting Standard (AS 22) “Accounting for Taxes on Income” prescribed under Section 133 of Companies Act, 2013, the Company has recognised deferred taxes on timing differences excluding the timing difference which reverse fully during the tax holiday period in view of Accounting Standards Interpretation (ASI) - 3 (Revised) “Accounting for Taxes on Income in the situations of Tax Holiday under Sections 80-IA and 80-IB of the Income Tax Act, 1961”.

NOTE 13: EXPENDITURE ON CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES (CSR ACTIVITIES)

a. As per Section 135 of the Companies Act, 2013, the Company was required to spend Rs. 61.06 Lakhs as expenditure on CSR Activities during the FY 2017-18 (Rs. 59.72 Lakhs in the FY 2016-17).

b. Details of amount spent during the year on:

NOTE 14:

PROVISIONS

The disclosure required by Accounting Standard 29, Provisions, Contingent Liabilities and Contingent Assets prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, is as follows:

* Nature of Obligation: Provision for possible obligation towards outflow related to decommissioning and restoration of windmills.

Expected timing of resulting outflow: Substantial costs will be incurred at the end of useful life of windmills.

NOTE 15:

DISCLOSURES REQUIRED AS PER REGULATIONS 34(3) AND 53(F) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015.

There are no loans and advances in the nature of loans to firms / companies in which Directors are interested.

NOTE 16:

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

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Mar 31, 2017

NOTE 1:

SALE OF INVESTMENTS

During the year shares of Kirloskar Kenya Limited were sold for Rs. 33.78 Lakhs (Original cost Rs. 8.56 Lakhs) resulting into a profit of Rs. 25.22 Lakhs included in Other Income.

NOTE 2:

DECOMMISSIONING AND RESTORATION LIABILITY

Ministry of Corporate Affairs vide notification dated March 30, 2016, notified the Companies (Accounting Standards) Amendment Rules, 2016 and vide this, the earlier Accounting Standard 10 - Fixed Assets has been substituted with Accounting Standard 10 - Property, Plant and Equipment. In pursuance of the Accounting Standard-10, the Company has, based on technical evaluation estimated and accounted for the decommissioning and restoration liability pertaining to the wind power generators to the extent of Rs. 138.67 Lakhs by increasing the Property, Plant and Equipment and creating a corresponding provision. As a consequence of this, profit for the year is on a lower side by Rs. 24.66 Lakhs (12.89 Lakhs on account of depreciation and Rs. 11.77 Lakhs on account of periodic unwinding of discount recognized in the Statement of Profit and Loss).

Provision for decommissioning and restoration aggregating to Rs. 150.44 Lakhs represent initial estimation of Rs. 138.67 Lakhs towards decommissioning and restoration liability and the effect of periodic unwinding of discount of Rs. 11.77 Lakhs for the year under review.

NOTE 3: EMPLOYEE BENEFITS

4. Defined Contribution Plans

The Company has contributed Rs. 11.96 Lakhs (Rs. 10.40 Lakhs for 31 March 2016) towards Defined Contribution Plans i.e. Provident Fund Contribution and Superannuation Scheme.

5. Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years, full month''s basic salary is considered for the calculation of gratuity.

Disclosure pursuant to Accounting Standard (AS 15)-Revised 2005 “Employee Benefits”:

NOTE 6:

DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)

During the year, the Company had specified bank notes or other denomination notes as defined in the Ministry of Corporate Affairs notification G.S.R. 308(E) dated March 30, 2017. Disclosure on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below:

NOTE 7:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) “Related Party Disclosures” prescribed under Section 133 of the Companies Act, 2013, 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:

NOTE 8:

The Board of Directors have proposed Final dividend of f 20 per equity share (i.e. 200%) of f 10 each for the Financial Year2016-17. (f Nil for FY2015-16)

NOTE 9:

On the basis of information available with the Company regarding the status of suppliers as defined under the “Micro Small and Medium Enterprises Development Act, 2006”, there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

NOTE 10:

DEFERRED TAX LIABILITIES I (ASSETS) (NET)

As required by Accounting Standard (AS 22) “Accounting for Taxes on Income” prescribed under Section 133 of Companies Act, 2013, the Company has recognized deferred taxes on timing differences excluding the timing difference which reverse fully during the tax holiday period in view of Accounting Standards Interpretation (ASI) - 3 (Revised) “Accounting for Taxes on Income in the situations of Tax Holiday under Sections 80-IAand 80-IB of the Income Tax Act, 1961”.

EXPENDITURE ON CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES (CSR ACTIVITIES)

11. As per Section 135 of the Companies Act, 2013, the Company was required to spend Rs. 59.72 Lakhs as expenditure on CSR Activities during the FY2016-17. (Rs. 55.81 Lakhs in the FY2015-16).

12. Details of amount spent during the year on:

NOTE 13:

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

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Mar 31, 2016

NOTE 1: EMPLOYEE BENEFITS: (a) Defined Contribution Plans:

The Company has contributed Rs. 10.40 Lakhs (Rs. 10.34 Lakhs for 31 March 2015) towards Defined Contribution Plans i.e., Provident Fund Contribution and Superannuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years, full month''s basic salary is considered for the calculation of gratuity.

Disclosure pursuant to Accounting Standard (AS 15)- Revised 2005 “Employee Benefits”:

The Company is satisfying all the conditions of Section 115-0(1A)ofthe Income TaxAct, 1961; for claiming reduction of the dividend, if any, declared by the subsidiary viz. Kirloskar Ferrous Industries Limited from the dividend, if any, declared by the Company.

For the current year, accounting for Dividend Distribution Tax (DDT) made is arrived at after considering the Company''s share in Dividend Distribution Tax on dividend declared by the subsidiary.

NOTE 2:

On the basis of information available with the Company regarding the status of suppliers as defined under the “Micro Small and Medium Enterprises Development Act, 2006”, there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

NOTE 3:

DEFERRED TAX LIABILITIES /(ASSETS) (NET)

As required by Accounting Standard (AS 22) “Accounting for Taxes on Income” prescribed under Section 133 of the Companies Act, 2013, the Company has recognized deferred taxes on timing differences excluding the timing difference which reverse fully during the tax holiday period in view of Accounting Standards Interpretation (ASI) - 3 (Revised) “Accounting for Taxes on Income in the situations of Tax Holiday under Sections 80-IAand 80-IB of the Income Tax Act, 1961”.

Investment in Kothrud Power Equipment Limited of Rs. 99.21 Lakhs has been written off and provision for diminution in value of the said investment of Rs. 99.21 Lakhs has been written back as no longer required.

NOTE 4:

EXPENDITURE ON CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES (CSR ACTIVITIES)

a. As per Section 135 of the Companies Act, 2013, the Company was required to spend Rs. 55.81 Lakhs as expenditure on CSR Activities during the FY2015-16.

NOTE 5:

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

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Mar 31, 2015

CORPORATE INFORMATION

Kirloskar Industries Limited (''the Company'') is a public company incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two Stock Exchanges in India, namely the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in wind-power generation. The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Mega Watt (MW). The windmills are located at Tirade Village, Tal- Akole, Dist. - Ahmednagar. The Company sells wind power units generated, to third party as per the approval from the Maharashtra State Electricity Distribution Company Limited (MSEDCL) and in the absence of such approval to MSEDCL.

The Company has investments in properties and securities.

NOTE 2:

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared in conformity with Generally Accepted Accounting Principles in India (Indian GAAP) to comply in all material respects with the notified Accounting Standards as prescribed under section 133 of the Companies Act, 2013, (the Act), read with Rule 7 of Companies (Accounts) Rules, 2014, the relevant provisions of the Act and the guidelines issued by Securities and Exchange Board of India (SEBI). The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

Each holder of equity share is entitled to one vote per share and to receive interim / final dividend as and when declared by the Board of Directors / at the Annual General Meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

NOTE 3:

DE-CLASSIFICATION AS NON - BANKING FINANCIAL COMPANY

The Company was entitled to be declassified as Non - Banking Financial Company (NBFC) during the year 2013-14. However, pending confirmation by the Reserve Bank of India (RBI), the Company had created Reserve Fund under Section 45-IC of the Reserve Bank of India Act, 1934 (RBI Act) and continued to disclose the income from bank deposits as ''Revenue from Operations''.

During the year, the Reserve Bank of India, clarified that since the Company is an exempted CIC, none of the RBI Regulations, including creation of Reserve Fund under section 45-IC of the RBI Act, would be applicable to the Company. Consequently, the said Reserve Fund of Rs. 3,004.73 Lakhs has been transferred from Reserve Fund to ''Surplus in the Statement of Profit and Loss'' and no Reserve Fund under Section 45-IC of the RBI Act is created during the year 2014-15.

Further, in view of its de-classification as NBFC, income from bank deposits has been disclosed as ''Other Income'' during the year 2014-15 and regrouping for the year 2013-14 has been carried out.

NOTE 4:

CONTINGENT LIABILITIES

(Rs. in Lakhs)

Sr. Particulars As at 31 As at 31 March 2014 No. March 2015

(a) Disputed service tax demands 157.86 2.90

(b) Disputed Income tax demand 241.04 206.34

Out of this, Rs. 238.68 Lakhs (Rs. 206.34 Lakhs) paid under protest

(c) Claims against the Company not acknowledged as debt

- Development charges demanded by PMC 141.21 141.21

- Enercon Counterclaim in respect of Windmill 293.21 293.21

(d) Conveyance Deed Charges in respect of property 21.51 21.51

During the year 2013-14, in view of uncertainties involved in purchase of unutilised units under the Open Access by MSEDCL, revenue in respect of such estimated unutilised units was not recognised.

During the current year, commercial circular issued by MSEDCL, permits purchase by MSEDCL, unutilised wind energy units for the FY 2013-14. Consequently, revenue in respect of these unadjusted units has been recognised in the current year at the rate specified in the circular..

MSEDCL, in response to the application made for NOC for open access, informed the Company, that the approval for sale of wind power under Open Access shall be granted with effect from the date of certain compliances by the Open Access Consumer. Pending such compliances, the revenue from sale of wind power for the year 2014-15, has been accounted for at an estimated rate at which MSEDCL shall purchase the wind power from the open access generators. Accordingly, the Transmission and Wheeling charges are not payable in case of sale of wind power units to MSEDCL. As such no expenditure has been recognised

Note 5:

EMPLOYEE BENEFITS:

(a) Defined Contribution Plans:

The Company has contributed Rs. 10.34 Lakhs (Rs. 9.98 Lakhs for 31 March 2014) towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years full months basic salary is considered for the calculation of gratuity.

Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 ''Employee Benefits'':

NOTE 6:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures” prescribed under Section 133 of Companies Act, 2013, 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:

Out of the total advances of Rs. 1,072.76 Lakhs (fully provided for as at March 31,2014), recovery of Rs. 200.00 Lakhs has been made and an amount of Rs. 486.89 Lakhs has been written off during the year. Consequently provision of Rs. 686.89 Lakhs for doubtful advances has been written back during the year and advance of Rs. 385.87 Lakhs as on March 31,2015 continues to be provided for fully.

NOTE 7:

The Company is satisfying all the conditions of Section 115-O (1A) of the Income Tax Act, 1961; for claiming reduction of the dividend, if any, declared by the subsidiary viz. Kirloskar Ferrous Industries Limited from the dividend, if any, declared by the Company.

For the current year, provision for Dividend Distribution Tax (DDT) made is arrived at after considering the Company''s share in Dividend Distribution Tax on divided declared by the Subsidiary.

NOTE 8:

On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro Small and Medium Enterprises Development Act, 2006”, there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

Note 9:

In accordance with the requirements of Schedule II to the Companies Act, 2013, the Company has reassessed the useful lives of the fixed assets during the year. In case of fixed assets other than Wind power generators, the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013, have been considered and in case of Wind power generators, the useful life is considered as 20 years as against 22 years as prescribed in Schedule II, based on independent technical evaluation. Accordingly Rs. 35.22 Lakhs, being written down value of assets having no useful life as at 1st April 2014, have been adjusted against the retained earnings. As a consequence of such a revision, the depreciation for the year is lower by Rs. 211.56 Lakhs as compared to the depreciation which was hitherto being accounted for under the Companies Act, 1956.

NOTE 10:

DEFERRED TAX LIABILITIES / (ASSETS) (NET)

As required by Accounting Standard (AS 22) “Accounting for Taxes on Income” prescribed under Section 133 of Companies Act, 2013, the Company has recognised deferred taxes on timing differences excluding the timing difference which reverse fully during the tax holiday period in view of Accounting Standards Interpretation (ASI) - 3 (Revised) Accounting for Taxes on Income in the situations of Tax Holiday under Sections 80-IA and 80-IB of the Income Tax Act, 1961.

NOTE 11:

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

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Mar 31, 2014

NOTE 1:

NON- BANKING FINANCIAL COMPANY

As per the audited Financial Statements for the Financial Year 2012-13, the financial assets of the Company are more than 50% of its total assets but its income from the financial assets is less than 50% of its total income. Consequently, the Company is declassified as Non-Banking Financial Company (NBFC) – Core Investment Company (CIC) with effect from 1 April 2013. The Company has communicated the same to the Reserve Bank of India (RBI) vide its letter dated 8 October 2013. Since no communication in this regard has been received by the Company from the RBI, the Company has created Reserve Fund under Section 45 IC of the Reserve Bank of India Act, 1934, and continues to show income from bank deposits as Operating Income.

NOTE 2:

The order dated 3 January 2013 of Maharashtra Electricity Regulatory Commission (MERC) does not permit carry forward and sale of unutilised units beyond the financial year but requires Maharashtra State Electricity Distribution Company Limited (MSEDCL) to pay to the generator at a fixed rate. However, MSEDCL has filed an appeal against this order which still remains undecided. Consequently, no revenue on approximately 11.72 lakh units has been recognised during the year ended 31 March 2014. The admissibility of the Company''s claim against MSEDCL for such units is contingent on the outcome of the appeal.

NOTE 3:

EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has contributed Rs. 9.98 Lakhs (Rs. 10.28 Lakhs for 31 March 2013) towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service. Where service is in excess of 15 years full months basic salary is considered for the calculation of gratuity.

Disclosure pursuant to Accounting Standard (AS 15) – Revised 2005 ''Employee Benefits'' prescribed by Companies Accounting Standard Rules, 2006:

i. Statement of Profit and Loss:

Included in employee cost

NOTE 4:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, 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) Name of the related party and nature of relationship (as per AS - 18):

1. Subsidiary

- Kirloskar Ferrous Industries Limited (with effect from 31 May 2013)

2. Associate Companies

- Kothrud Power Equipment Limited

- Kirloskar Ferrous Industries Limited (upto 30 May 2013)

3. Key Management Personnel and their relatives

NOTE 5:

DEFERRED TAX LIABILITIES / (ASSETS) (NET)

Deferred Tax has not been recognised in view of Accounting Standards Interpretation (ASI) - 3 (Revised) "Accounting for Taxes on Income in the situations of Tax Holiday under Sections 80-IA and 80-IB of the Income Tax Act, 1961", since the timing differences reverse fully during the tax holiday period.

NOTE 6:

The disposal of the investment in F. H. Schule GMBH, Germany, having a carrying value of Rs. 1/- has been approved by Reserve Bank of India vide letter dated 25 April 2014.Consequently, investment of Rs. 120.19 Lakhs has been written off and provision for diminution in value of the said investment of Rs. 120.19 Lakhs has been written back.

NOTE 7:

Provision for Dividend Distribution Tax of Rs. 63 Lakhs made in Financial Year 2012-13 has been reversed during the year as the Company is satisfying all the conditions of Section 115-O (1A) of the Income Tax Act, 1961, for claiming reduction of the dividend amount declared by the subsidiary namely, Kirloskar Ferrous Industries Limited from the dividend amount declared by the holding company.

For the current year, amount of the proposed dividend from subsidiary is more than that proposed by the Company and hence provision of Dividend Distribution Tax is not required.

NOTE 8:

On the basis of information available with the Company regarding the status of suppliers as defined under the ''Micro Small and Medium Enterprises Development Act, 2006'', there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

There are no loans and advances in the nature of loans to firms / companies in which Directors are interested.

NOTE 9 :

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

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Mar 31, 2013

NOTE 1:

CORPORATE INFORMATION

Kirloskar Industries Limited ("the Company”) is a public company incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two Stock Exchanges in India, namely the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in wind-power generation. The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Mega Watt (MW). The windmills are located at Tirade Village, Tal- Akole, Dist. - Ahmednagar. The Company sells Windpower units generated, to third party as per the approval from the Maharashtra State Electricity Distribution Company Limited (MSEDCL).

The Company is a Non Banking Financing Company (NBFC) and has investments in properties and securities.

NOTE 2:

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared in conformity with Generally Accepted Accounting Principles to comply in all material respects with the notified Accounting Standards (''AS'') under Companies Accounting Standard Rules, 2006, (as amended), the relevant provisions of the Companies Act, 1956, (''the Act'')and the guidelines issued by The Securities and Exchange Board of India (SEBI). The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

NOTE 3:

NON- BANKING FINANCIAL COMPANY

As on 31 March 2012, the Company''s financial assets continue to be more than 50% of the total assets and its income from financial assets continues to exceed 50% of its gross income. As a result the Company satisfies the determinant tests given in the Press Release 1998-99/1269, dated 08 April 1999 issued by the Reserve Bank of India (RBI) for determination of "Principal business” of the Company as a Non-Banking Finance Company (NBFC). The Company therefore is a NBFC in terms of the Reserve Bank of India Act, 1934.

The Company''s investment pattern continues to comply with the parameters specified in the Reserve Bank of India Notification RBI/2010-11/354 DNBS (PD) CC. No. 206/03.10.001/2010-2011, dated 05 January 2011 for Core Investment Companies (CIC - NBFC). Accordingly, on the basis of the submissions made to the Reserve Bank of India, the Company is classified as a Core Investment Company (CIC - NBFC) vide letter dated 15th October 2012 received from the RBI. As a result, the Company is exempt from obtaining Certificate of Registration as NBFC, under Section 45 - IA of the Reserve Bank of India Act, 1934.

NOTE 4:

CONTINGENT LIABILITIES NOT PROVIDED FOR

(Rs.in Lakhs)

Sr. Particulars As at As at No. 31 March 2013 31 March 2012

(a) Disputed service tax demands 2.90 2.90

(b) Claims against the Company not acknowledged as debt

Development charges demanded by PMC 141.21 141.21

Enercon Counterclaim in respect of Wind mill 293.21 293.21

(c) Disputed Income Tax demand 206.34*

(d) Conveyance Deed Charges in respect of property 21.51

Total 665.17 437.32

* Paid under protest

NOTE 5:

EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has contributed Rs. 10.28 Lakhs (Rs. 14.42 Lakhs for 31 March 2012) towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annuation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits” prescribed by Companies Accounting Standard Rules, 2006:

NOTE 6:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures” prescribed by Companies (Accounting Standards) Amendment Rules, 2006, 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:

NOTE 7:

DEFERRED TAX LIABILITIES/ (ASSETS)(NET)

Deferred Tax has not been recognised in view of Accounting Standards Interpretation (ASI) - 3 (Revised) "Accounting for taxes on Income in the situations of Tax Holiday under Sections 80-IA and 80-IB of the Income Tax Act, 1961”, since the timing differences reverse fully during the tax holiday period.

NOTE 8:

On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro Small and Medium Enterprises Development Act, 2006”, there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

NOTE 9:

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

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Mar 31, 2012

NOTE 1:

CORPORATE INFORMATION

Kirloskar Industries Limited (the Company) is a public company incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India, namely the Bombay Stock Exchange and the National Stock Exchange of India Ltd. The Company is engaged in wind-power generation. The Company has seven windmills in Maharashtra with total installed capacity of 5.6 Mega Watt (MW). The windmills are located at Tirade Village, Tal- Akole, Dist. -Ahmednagar. The Company sells wind power units generated, to third party as per the approval from the Maharashtra State Electricity Distribution Company Limited.

The Company is a Non Banking Financing Company (NBFC) and has investments in properties and securities.

NOTE 2:

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared in conformity with Generally Accepted Accounting Principles to comply in all material respects with the notified Accounting Standards ('AS1) under Companies Accounting Standard Rules, 2006, (as amended), the relevant provisions of the Companies Act, 1956 ('the Act'). The Financial Statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

(a) After the demerger of Kirloskar Oil Engines Limited (now known as Kirloskar Industries Limited), the said bonus shares along with the pre-bonus shares have been reorganized by reduction and consolidation. The face value of the shares has been changed from Rs.2/-to Rs10/-.

(b) Each holder of equity share is entitled to one vote per share and to receive interim/ final dividend as and when declared by the Board of Directors/ at the Annual General Meeting. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Notes:

* Buildings include a property having written down value (WDV) of Rs 321.72 Lakhs as at 31 March 2012 (Rs 328 Lakhs as at 31 March 2011) which is jointly owned by the Company with Kirloskar Brothers Limited. The Company's share in such joint holding is 45% as at 31 March 2012 (45% as at 31 March 2011).

# At carrying cost of Rs.36.96

## As at 31 March 2011 at carrying cost ofRs 100/- ** Offered on exercise of Rights Option, Convertible into Equity shares at the option of shareholders of the Company or upon call by Kirloskar Ferrous Industries Limited, at a price of Rs 35/- per warrant during the warrant exercise period from 13 March 2007 to 13 March 2010, which has been further extended up to 13 March 2013.

NOTE 3:

NON- BANKING FINANCIAL COMPANY

As on 31 March 2012, the Company's financial assets continue to be more than 50% of the total assets and its income from financial assets continues to exceed 50% of its gross income. As a result the Company satisfies the determinant tests given in the Press Release 1998-99/1269, dated 08 April 1999 issued by the Reserve Bank of India for determination of "Principal business" of the Company as a Non-Banking Finance Company (NBFC). The Company therefore is a NBFC in terms of the Reserve Bank of India Act, 1934.

The Company's investment pattern continues to comply with the parameters specified in the Reserve Bank of India notification RBI/2010-11/354 DNBS (PD) CC. No. 206/03.10.001/2010-2011, dated 05 January 2011 for Core Investment Companies (CIC - NBFC). As a result, the Company is exempt from obtaining Certificate of Registration as NBFC, under Section 45- IA of the Reserve Bank of India Act, 1934 and submissions to this effect are made to the RBI and the same is under process.

NOTE 4:

EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has contributed Rs.14.42 Lakhs towards Defined Contribution plans i.e. Provident Fund Contribution and Super Annotation Scheme.

(b) Gratuity

The Company has an unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for a gratuity on separation at 15 days basic salary (last drawn salary) for each completed year of service.

Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits" prescribed by Companies Accounting Standard Rules, 2006:

RELATED PARTY DISCLOSURE

Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, 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:

NOTE 5:

On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro Small and Medium Enterprises Development Act 2006", there are no suppliers covered under the above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

NOTE 6:

Till the year ended 31st March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956,for preparation and presentation of its financial statements. During the year ended 31st March 2012, the Revised Schedule VI notified under the Companies Act 1956,has become applicable to the Company. The Company has reclassified previous year figures to confirm to this year's classification. However, it significantly impacts presentation and disclosures made in the Financial Statements, particularly presentation of Balance Sheet. The following is a summary of significant effects of that Revised Schedule VI had on presentation of Balance Sheet of the Company for the year ended 31 st March 2011:

NOTE 7:

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

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Mar 31, 2010

The Company was, until 31 March 2009, engaged in the business of manufacture, trading and / or dealing in engines, engine spares, pumps, generating sets and oils used therein, bimetal bearings, bushes and bimetal strips (referred to as "the Engines and Auto Components Business" or "the Demerged Undertaking") and the Wind Mill and Investment operations ("the Remaining Undertaking").

Under a Scheme of Arrangement, sanctioned by the Honble High Court of Judicature at Bombay, between the Company and Kirloskar Engines India Limited (referred to as the "Resulting Company") and their respective shareholders and creditors under Section 391 to 394 of the Companies Act, 1956, the Engines and Auto Components Business of the Company was demerged to the later Company. The said Scheme became effective from 31 March 2010, but operative with retrospective effect from 1 April 2009, being the Appointed Date. Upon the Scheme becoming effective,

a. The name of the Company changed to Kirloskar Industries Limited.

b. The business and operations of the demerged undertaking were deemed to be vested with the Resulting Company with effect from 1 April 2009. Consequently,

i. The related assets and liabilities of the Demerged Undertaking, including those specifically identified in the scheme, at the close of business on 31 March 2009 were deemed to have been transferred to the Resulting Company on 1 April 2009.

ii. The Company carried on the business of the Demerged Undertaking, in trust for the Resulting Company, from 1 April 2009 to 31 March 2010, pending the Scheme becoming effective.

c. The said transfer and vesting of the assets of the undertaking was deemed to be on a going concern basis.

d. The accounting treatment of assets and liabilities is to be effected, as specified in Part V of the Scheme.

e. The investment of the Company, in shares of Kirloskar Engines India Limited stands cancelled.

As the Scheme became effective only on 31 March 2010 the titles to the Assets vested and those resulting from the conduct of business thereafter, could not, where necessary, be transferred, as at 31 March 2010. Hence the company held the same, in trust, for the resulting company.

* Includes share of Kirloskar Proprietary Limited, cost Rs 100/-.

(B) Reorganisation of Share Capital

i. Authorised Share Capital

250,000,000 Equity Shares of Rs 21- each altered to 50,000,000 Equity Shares of Rs 10/- each.

ii. Issued Share Capital

195,353,480 Equity Shares of Rs 21- each altered to 9,708,650 Equity Shares of Rs 10/- each.

iii. Subscribed Share Capital

194,173,000 Equity Shares of Rs 21- each altered to 9,708,650 Equity Shares of Rs 10/- each.

iv. Called up and Paid up Capital

194,172,380 Equity Shares of Rs 21- each are reduced to 48,543,095 Equity Shares of Rs 21- each (by cancellation of 145,629,285 equity shares of Rs 21- each) and the same is further consolidated into 9,708,619 Equity Shares of Rs 10/-each.

v. Share Capital Suspense Account

620 Equity Shares of Rs 21- each, being shares in abeyance, are reduced to 155 Equity Shares of Rs 21- each (by cancellation of 465 equity shares of Rs 2/-each) and the same is further consolidated into 31 Equity Shares of Rs 10/-each.

1. Contingent Liabilities not provided for As at 31 March 2010

Rs in 000s

(a) Disputed Central Excise demands 128

(b) Claims against the Company not acknowledged as debts 43,321

(c) Guarantees given on behalf of third parties 50,000

93,449

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 9,553

2. On the basis of information available with the Company regarding the status of suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006", there are no suppliers covered underthe above mentioned Act and hence the question of provision or payment of interest and related disclosures under the said Act does not arise.

3. In case of long term Investments made by the Company, diminution in the value of quoted investments, if any, are not considered to be of a permanent nature. However provision of estimated diminution in the value wherever considered necessary by the Management has been made in the Financial Statements.

4. Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits" prescribed by Companies (Accounting Standards)Amendment Rules, 2006

a. Defined Contribution Plans:

Amount of Rs 1,713,855/- is recognised as expense and included in Schedule No. 16 "Employee Cost".

5. Segment information as required by Accounting Standard (AS 17) "Segment Reporting" prescribed by Companies (Accounting Standards) Amendment Rules, 2006 is set out in a separate statement annexed to the schedule.

6. Related parties, as defined under Clause 3 of Accounting Standard (AS 18) "Related Party Disclosures" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, have been identified on the basis of representation made by the Key Management Persons and taken on record by the Board. Disclosure of transactions with Related Parties are asunder.

(A) Name of the related party and nature of relationship where control exists:

1. Subsidiary Company Kirloskar Engines India Limited *

2. Associate Companies

Kirloskar Integrated Technologies Limited (Formerly Known as Kirloskar Kisan Equipment Ltd.) $ Kothrud Power Equipments Limited Kirloskar Ferrous Industries Limited

3. Joint Venture Companies

KirloskarToyoda Textile Machinery Private Limited # Denso Kirloskar Industries Private Limited # T. G. Kirloskar Automotive Private Limited # Toyota Tsusho India Private Limited # Toyota Kirloskar Auto Parts Private Limited # Toyota Kirloskar Motor Private Limited # Kirloskar Kenya Limited

4. Companies controlled by Key Management Personnel Cees Investments & Consultants Private Limited Navsai Investments Private Limited

Kirloskar Consultants Limited ,

Achyut & Neeta Holding & Finance Private Limited ** Alpak Investments Private Limited **

5. Key Management Personnel & their relatives

Key Management Personnel Relatives

Name Designation

Atul C. Kirloskar Chairman & Managing Director Arti A. Kirloskar, Gauri A. Kirloskar, Aditi A. Kirloskar, Sanjay C. Kirloskar, Rahul C. Kirloskar, Suman C. Kirloskar

Gautam A. Kulkarni** Joint Managing Director Jyotsna G. Kulkarni, Nihal G. Kulkami, Ambar G. Kulkarni, Ashwini H. Parulkar, NeetaA. Kulkarni

Rahul C. Kirloskar** Whole time Director Alpana R. Kirloskar, Aman R. Kirloskar, Alika R. Kirloskar, Atul C. Kirloskar, Sanjay C. Kirloskar, Suman C. Kirloskar

R. R. Desh pande** Whole time Director Veena R. Deshpande, Kaustubh R. Deshpande, Saurabh R. Deshpande, D. R. Deshpande, P. R. Deshpande, R. G. Deshpande, Leela R. Deshpande

*Upto 31 March 2010 $Upto 29 March 2010 # Upto 27 November 2009 **Upto 30 March 2010

7. Kirloskar Engines India Limited, a wholly owned subsidiary was promoted and incorporated by the Demerged Company on 12 January 2009 for the purpose of taking over the Engines and Auto Components business of Demerged Company on going concern basis.

As a result of the scheme becoming effective as detailed in Note No. 2, investment in equity shares of Kirloskar Engines India Limited stand cancelled and therefore it ceased to be a subsidiary of the Company. Hence as per the provisions of the Accounting Standard (AS 21) "Consolidated Financial Statements" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, the consolidated financial statements have not been prepared.

8. The Company has during the year, sold its investments in unlisted Joint Venture Companies (referenced in the Schedule 6 to the Accounts), to Kirloskar Systems Ltd, a Group Company. The sale was effected at a price higher than that determined by applying the erstwhile CCI Guidelines, and in terms of the Joint Venture Agreements, which is not lower than the carrying value in the books of accounts of the company and as resolved by the Board of Directors. Consequently, the resultant gain amounting to Rs. 52,256,230 has been recognized in the Financial Statements during the year.

9. Consequent to the Demerger disclosed in Note No 2 above, previous years comparatives in the profit and loss account and the profit and loss account schedules serve no meaningful purpose and hence have not been disclosed. However, previous years figures have been regrouped in the balance sheet to make them comparable with those of the current year.

10. Information given above is restricted to the extent the relevant income and expenditure has been recognized in Profit and Loss account of the Company. Income and expenses incurred by the Company, in the conduct of the business of Demerged Undertaking referred to in Note No 2(A) above, from 1 April 2009 in trust pending the scheme becoming effective, has been disclosed in the financial statements of the Resulting Company. Consequently there are no disclosures necessary for this financial year.

11. Information required in terms of Part IV of Schedule VI of the Companies Act, 1956 is attached.