“The Company has not applied for any scheme of arrangement during the year nor any such scheme is pending for approval with the competent Authority in terms of sections 230 to 237 of the companies Act, 2013.”

Rights attached to Equity Shares :

The Company has one class of equity shares having a par value of H 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

1. Securities Premium is a premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

2. General Reserve is created by setting aside amount from the Retained Earnings and is freely available for distribution.

3. FVTOCI Equity Investments - The Company has elected to recognise changes in the fair value of certain investments in equity in Other Comprehensive Income. These changes are accumulated in Equity Instruments Through Other Comprehensive Income Reserve within equity. The Company transfers amounts from this reserve to Retained Earnings when the relevant equity investments are derecognised.

4. Share Based Payment Reserve is a result of recogination of cost included in Employee Related Expenses relating to Employee Stock Option Scheme 2019 introduced by the Company. Refer Note No. 28.

27: EMPLOYEE BENEFITS

i Defined Contribution Plans:

Amount of H 71.37 Million (Previous Year H 63.09 Million) is recognised as an expense and included in "Employees benefits expense" in Note 23 in the statement of Profit and Loss.

ii Defined Benefit Plans - Gratuity :

The Company operates gratuity plan wherein every employee is entitled to the benefit as per the scheme of the Company, for each completed year of service. The gratuity is payable on termination of service or retirement, whichever is earlier at the rate of 15 days salary for every completed year of service where service is less than 15 years and at one month salary for every completed year of service when the service of an employee exceeds 15 years subject to maximum of 25 to 28 months salary depending upon category of the employee ensuring in any case that the benefit provided is not less than stipulated by The Payment of Gratuity Act, 1972. The benefit vests only after five years of continuous service.

Basis used to determine the overall expected return:

The net interest approach effectively assumes an expected rate of return on plan assets equal to the beginning of the year discount rate. As such expected return of 7.40% has been used for the valuation purpose.

h) General descriptions of defined benefit plans:

i) The Company expects to fund approximately H 10 Million towards its gratuity plan in the year 2024-25.

l) Average Duration

Weighted average duration of the plan (based on discounted cash flows using mortality, withdrawal rate and interest rate) is 12.51 years (PY 12.72 years).

m) Risk Exposure And 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 Risk

a) 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 neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b) 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.

c) 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 uncertainties in estimating this increasing risk.

2) Asset Risk

All plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years.

The company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured and inflation risk are taken care of.

iii Defined Benefit Plan - Compensated Absences:

The company has valued the compensated absences, as specified in Ind AS 19 on actuarial basis. Under the scheme an employee is entitled to maximum of 30 days leave in a year depending upon number of days he works during that year. An employee can accumulate not exceeding 10 days of leave in a year subject to a maximum of 120 days during his tenure. The benefit is payable on termination of service, retirement or death whichever is earlier. The benefit equates to the salary in respect of balance of leave. There is no requirement for funding this liability and as such entire liability continues to remain unfunded.

g) Average Duration

Weighted average duration of the plan (based on discounted cash flows using mortality, withdrawal rate and availment rate) is 5.04 years (PY 5.12 years).

h) Risk Exposure And 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 Risk

a) 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 neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b) 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.

c ) Future Salary Escalation And inflation Risk-

Slnce 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 uncertainties in estimating this increasing risk.

2) 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.

28: EMPLOYEE STOCK OPTIONS SCHEME - IND AS 102

The Company, during the year 2019-20, introduced Employee Stock Options ( ESOS ) to its employees. This Scheme is referred as the “KPCL Employee Stock Option Scheme” (“KPCL ESOS - 2019” or “Scheme”).

The objective of the KPCL ESOS - 2019 is to reward the Employees of the Company for their performance and to motivate them to contribute to the growth and profitability of the Company. The Company also intends to use this Scheme to retain talent in the organisation. The Company views Employee Stock Options as instruments that would enable the Employees to share the value they create for the Company and align individual objectives of employees with objectives of the Company in the years to come.

The Shareholders by way of special resolution dated July 20, 2019 authorized the Nomination and Remuneration Committee of the Board of Directors ( NRC ) to grant ESOS to the employees of the Company. NRC in its meeting held on October 22, 2019, April 29, 2021, October 19, 2022 and October 19, 2023 granted 684,000 (Six lakhs eighty four thousand only), 104,000 (One lakhs four thousand only), and 164,000 (One lakhs sixty four thousand only) and 114,000 (One lakhs fourteen thousand only) Options respectively to the Employees under the KPCL ESOS - 2019 exercisable in one or more tranches, with each such Option conferring a right upon the employee to apply for one equity share of the Company of face value of H 2 (Indian Rupees two) each fully paid-up, in accordance with the terms and conditions of the Scheme.

The fair value of the options Is determined using Blaok-Seholes-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 to be recognised in the financial statements:

The Company has recognised an amount of H 26.23 Million as employee compensation cost relating to share-based payment (Previous year H16.94 Million) in the Statement of Profit and Loss.

29: REVENUE FROM OPERATIONS

The disaggregation of revenue such as sales of products, sale of services, revenue from composite supply & leasing is given in Note No.18 - Revenue from Operations. Further disaggregation of revenue is given in operating segment in Note No. 30.

Most of the contracts are fixed price contracts and revenue is recognised at point in time. Most of payment terms are between 0 to 180 days. The terms of payment also varies in relation to class of customer with advance payments, milestone payments, customary credit terms with retention payment getting released as agreed in the contract.

The aggregate amount of remaining performance obligations and expected conversion of the same into revenue is H 360.59 Million (PY H NIL).

The Company provides to its customers warranties in the forms of repairs or replacement warranty under its standard terms and recognises it as warranty provision as per Ind AS 37 “Provision, Contingent Liabilities and Contingent Assets”.

C Other Disclosures

1 in terms of provisions of Ind-AS 108 - Operating Segments are reported in a manner consistent with the internal reporting to the Chief Operating Decision Maker (CODM) who evaluates the Company's performance comprising various business segments. Accordingly, segmental information has been reported under Compression Segment and Other Non-Reportable Segments which includes remaining non-qualifying segments.

The Board of Directors of the Company assess the financial performance and position of the Company and make strategic decisions. The Board of Directors, has identified Executive Committee comprising of Executive Chairman and Managing Director as CODM.

2 Composition of Operating Segment

Name of the Segment : Comprises of :

a) Compression Systems Air & Gas Compressors, Airconditioning & Refrigeration Compressors

and Systems etc.

b) Other non-reportable Segments Remaining non qualifying segments

3 The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

4 During the year there is no single customer (PY H NIL) who has contributed more than 10% of Revenue of the Company in any of the Segments whether in India or outside.

There are no entities or relatives of Key Management Personnel who are promoters holding more than 10% of share holding. Contribution to

Kirloskar Pneumatic Company Limited Employees Gratuity Fund - H 44.32 Million (Previous Year H 55.83 Million)

Kirloskar Pneumatic Company Limited Officers Superannuation Fund - H 23.73 Million (Previous Year H 21.17 Million)

Receiving of services includes Remuneration paid / payable to Key Managerial Personnel as per note no 32, and to Relatives of Key Managerial Personnel.

There are no loans and advances given in the nature of loans to above mentioned Related Parties.

There are no loans and advances given in the nature of loans to firms/companies in which directors are interested. Transactions entered into with Related Party's are made on terms equivalent to those that prevail in arms length transactions. Outstanding balances at the year end are unsecured and interest free and settlement occurs in cash.

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

The fair values of the investments in unquoted equity shares have been estimated using valuation technique unless they approximate to carrying value. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The fair values of the remaining FVTOCI & FVTPL financial assets are derived from quoted market prices in active markets.

Carrying values of trade payables, trade receivables, employee loans, cash and cash equivalents, other bank balances, other financial assets & other financial liabilities which are stated at Amortised Cost reasonably approximate their fair value due to the short-term maturities of these instruments.

Loans in the nature of security deposits wherever significant have been stated at amortised cost using market rate of interest.

Long-term fixed-rate and variable-rate receivables are evaluated by the company based on parameters such as interest rates, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables wherever applicable. As of reporting date, the fair value of such receivables, net of allowances, if any, are not materially different from their carrying values.

There are no borrowings as on the reporting date of the current and previous year. Borrowings are however obtained at market rates of interest available for debt on similar terms, credit risk and remaining maturities.

(b) Fair value hierarchy and valuation techniques used

The following table provides the fair value measurement hierarchy of company's assets and liabilities grouped into Level 1 to Level 3 as described in notes to accounts. Further table describes the valuation techniques used, key inputs to valuations and quantitative information about significant unobservable inputs for fair value measurements. There has been no change in the valuation technique from earlier years.

34: FINANCIAL RISK MANAGEMENT

Financial risk management policy and objectives

The Company's principal financial liabilities comprise of borrowings and trade & other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include trade and other receivables, Cash and Cash equivalents which are derived directly from its operations.

Company is exposed to market risk and credit risk.

The management of these risks is overseen by the senior management which is advised by a team of senior officials. The Risk Management team oversees the policies and systems, on a regular basis to reflect changes in market conditions and company's activities and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

The board of directors reviews and agrees policies for managing each of these risk is summarised below

1) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk namely foreign currency risk, interest rate risk, and other price risk such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTOCI investments.

a) Foreign currency risk

Foreign currency risk is the risk that fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. Company transacts business in local currency H and in different foreign currencies. Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated. Company's forex exposure is partly covered by natural hedge. For unhedged exposure refer note 35 - foreign currency sensitivity analysis.

b) Crypto Currency risk

The Company has not traded in any cryptocurrencies during the year. The Company does not hold any cryptocurrency or virtual currency as at 31 March 2024 and 31 March 2023. The Company has also not received any deposits or advances for the purpose of investing in cryptocurrencies or virtual currencies.

c) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has Nil borrowing as on 31^st March 2024, but has an exposure of H 1,855.11 Million in its current investments.To minimise this exposure Company spreads its investment portfolio into short term and medium term maturities.

d) Price risk Equity price risk

The Company's investment in quoted and unquoted equity investments are susceptible to market price risk arising from uncertainties about future values of the investment securities.

The Company's Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to quoted equity securities at fair value is H 1,273.01 Million. A decrease/ increase of 5% in the active market could have an impact of approximately H 63.65 Million on the OCI or equity attributable to the Company. These changes would not have a material effect on profit and loss.

2) Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Company has a large customer base and thus has no concentration of credit risks on a single customer.

a) Trade receivables

The management has established a credit policy under which each new customer is analysed individually for creditworthiness, before offering the payment and delivery terms and conditions.

- Company has different types of credit terms depending upon the type and credit worthiness of the customer. They are either on open terms or backed by Letter of Credit / Bank Guarantees.

- Based on analysis of individual cases, the management considers the impairment of receivables, if any.

Expected credit loss on receivables is provided on the basis of previous estimated trend which is 0.10%, 0.50%, 100% for outstanding between 1 to 365 days, 1 to 2 years and more than 2 years respectively.

b) Cash and cash equivalents and bank and other deposits

The cash and cash equivalents are held with Banks with an external short term rating of “A1 ”. Thus, the Company considers that its cash and cash equivalents have low credit risks.

c) Liquidity risk

The table summarises the maturity profile of company's financial liabilities based on contractual undiscounted payments except lease liabilities.

36: CAPITAL MANAGEMENT

The Company's capital includes issued equity capital, share premium and free reserves.

The Company's policy is to meet the financial covenants attached to the interest-bearing borrowings by maintaining a strong capital base. The company aims to sustain investor, creditor and market confidence so as to be able to leverage such confidence for future capital/debt requirements.

Management monitors the return on capital, the capital/debt requirements for various business plans under consideration and determines the level of dividends to equity shareholders.

No changes were made in the objectives, policies or processes for managing capital during the financial years ended on 31 March, 2024 and 31 March, 2023.

The Company has not been declared as a wilful defaulter by any lender who has powers to declare a company as a wilful defaulter at any time during the financial year or after the end of reporting period but before the date when financial statements are approved.

37: LEASES - IND AS 116

A The Company as a Lessee :

has entered into agreements in the nature of Lease / Leave and License agreement with different Lessors / Licensors for the purpose of establishment of office premises / residential accommodations and assets. These are generally in nature of operating Lease / Leave and License and disclosure required as per Ind AS 116 with regard to the above is as under.

i) Where the Lease arrangements are not recognised as 'Right-of-Use Asset' and covered under paragraph 6 of Ind AS 116

a. Payment under Lease / Leave and License for period :

1) Not later than 1 year H12.10 Million (Previous Year H 7.94 Million)

2) Later than 1 year but not later than 5 years H11.03 Million (Previous year H 9.09 Million)

b. There are no transaction in the nature of Sub Lease.

c. Payments recognised as Rent in the Statement of Profit and Loss for the year ended 31^st March, 2024 amounts to H 14.91 Million (Previous year H 14.27 Million)

d. Period of Agreement is generally for Eleven Months, in some cases extending up to five years and renewable at the

option of Lessee. The lease agreements do not have any variable lease payments nor there is any residual value

guarantee. There are no leases to which the company has committed and are yet to commence.

ii) Where the Lease arrangements are recognised as 'Right-of-Use Asset' under Ind AS 116

a. Depreciation charge for right-of-use assets amounts to H 3.53 Million (Previous Year H 3.53 Million) Refer Note No.1 - Property, Plant & Equipment.

b. Interest Expenses on Lease Liability H 0.57 Million (Previous Year H 0.78 Million) is the non-cash movement in (leases) financing liability Refer Note No.24 - Finance Cost and Statement of Cashflow.

c. The expense relating to leases accounted by applying paragraph 6 are given in Note 37 A above.

d. The Company has not entered into any transaction in the nature of Sub Lease or sale & lease back.

e. The aggregate amount of cash outflow on account of leases covered including that of Note 37 A is H 17.91 Million (Previous Year H17.27 Million)

f. The carrying amount of right-of-use assets at the end of the reporting period amount to H10 Million (Previous Year H 13.53 Million) Refer Note No.1 - Property, Plant & Equipment.

g. For maturity profile of lease liability Refer Note No.34 (2) (C)

B The Company as a Lessor :

has entered into agreements with various customers for providing Compression Facility on Operating Lease basis. It recognises its income generally on a straight line basis unless differential payment terms are applicable. The Company has disclosed these details in Note No. 1 - Property, Plant & Equipment. The corresponding lease income has been disclosed in Note No. 18 - Revenue From Operations. The Company has not entered into any agreements on variable lease payments.

a. The Company has not given any assets on Financial Lease basis.

b. The Company has examined its expected future revenue from existing leasing contracts and does not foresee any requirement for impairment as per Ind AS 36 for the underlying leased assets.

B. Claim for US $ 10 million has been filed against the Company in the International Court of Arbitration.

The Arbitration proceedings have been stayed by the Honourable High Court of Delhi. The Special Leave Petition filed by the plaintiff against the Order of High Court has been dismissed by the Honourable Supreme Court. Further the Honourable High Court of Delhi has transferred the matter to District Courts, Tis Hazari, Delhi on the grounds of pecuniary jurisdiction. Company has obtained an opinion from Senior Counsel stating that claim made by the plaintiff is not tenable and therefore management does not anticipate any financial impact on this account.

49: ASSETS CLASSIFIED AS HELD FOR SALE

During the year, the Company has identified certain assets from property, plant & equipments of the business which are available for sale in its present condition. The Company is committed to plan the sale of these assets and an active programme to complete the sale has been initiated. The Company expects to dispose off these assets in the due course. Accordingly, non-current assets amounting to H 97.49 Million (net fair value) have been classified as held for sale in the books of accounts. The fair value of these assets is determined on the basis of estimated realisable value.

50: EXCEPTIONAL ITEMS

The assets held for sale are measured at lower of the carrying value and fair value less cost to sale at the time of reclassification which resulted in recognition of impairment loss and has been disclosed as an exceptional item in the statement of profit and loss amounting to H 83.76 Million.

51: LONG TERM CONTRACTS

The Company has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts) has been made in the books of accounts. As on 31^st March 2024 there are no such contracts.

52: Working capital facilities (fund based & non fund based) are secured by way of first charge on book debts and other tangible assets (comprising of inventory etc.) and second charge on Property, Plant and Equipment in favour of consortium of banks.

The company does not have any charges or satisfaction which is yet to be registered with the ROC beyond the statutory period.

Quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.

53: Previous Years figures have been regrouped, rearranged or reclassified wherever necessary to correspond to Current Year's figures.

54: These financial statements were authorised for issue by the Board of Directors on 25^th April, 2024.