We have audited the accompanying standalone financial
statements of Kirloskar Brothers Limited (hereinafter referred
as “the Company”), which comprise the balance sheet as at
31 March 2026, the statement of profit and loss (including
other comprehensive income), the cash flow statement and
the statement of changes in equity for the year ended on
that date and notes to the standalone financial statements,
including a summary of material accounting policies , other
accounting policies, and other explanatory information.

In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
standalone financial statements give the information required
by the Companies Act, 2013 (hereinafter referred as “the Act”)
in the manner so required and give a true and fair view in
conformity with the Indian Accounting Standards prescribed
under section 133 of the Act read with the Companies (Indian
Accounting Standards) Rules, 2015 as amended (hereinafter
referred as “Ind AS”) and other accounting principles
generally accepted in India, of the state of affairs (financial
position) of the Company as at 31 March 2026, and its
profit (financial performance including other comprehensive
income), its cash flows and the changes in equity for the year
ended on that date.

Basis for opinion

We conducted our audit in accordance with the Standards
on Auditing (hereinafter referred as “SAs”) specified under
section 143(10) of the Act. Our responsibilities under
those Standards are further described in the Auditor's
responsibilities for the audit of the standalone financial
statements section of our report. We are independent of the
Company in accordance with the Code of Ethics issued by
the Institute of Chartered Accountants of India together with
the ethical requirements that are relevant to our audit of the
standalone financial statements under the provisions of the
Act and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements
and the Code of Ethics.

We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion
on the standalone financial statements.

Key audit matters

Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
standalone financial statements of the current period. These
matters were addressed in the context of our audit of the
standalone financial statements taken as a whole, in forming
our opinion thereon and we do not provide a separate opinion

on these matters. We have determined the key audit matter
as described below:

Accounting treatment for customer contracts where
performance obligations are satisfied over time

Description of key audit matter:

Revenue amounting to ' 686 million reported in the Company's
standalone financial statements pertains to customer specific
long-term contracts and the same are required to satisfy the
recognition and measurement criteria as enunciated in IND
AS 115, ‘Revenue from Contracts with Customers'. In case
of these contracts the revenue is recognised over time and is
based on a percentage completion method (POC) for each of
such contracts. The stage of project completion is determined
based on a ratio of project costs actually incurred till the period
/ year end to the planned / estimated total cost to complete the
said project. This necessarily involves estimations and certain
assumptions to be made by the management in determining
the total planned costs and an appropriate allocation of costs
actually incurred on each project. This inherently creates
certain uncertainties and results in complexities in accounting
treatment wherein incorrect assumptions and estimates can
lead to revenue being recognised in incorrect accounting
periods thereby impacting the results. In addition, in POC
method revenue recognition and respective collections do
not follow a linear trend irrespective of stage completion
determined by the company. Collections do depend on
satisfaction of certain other performance obligations as laid
down in the respective project agreements. Consequently,
those amounts that remain as receivables whose due dates
for payments depend on other conditions give rise to certain
receivables that are due and others not due for payment,
requiring the Company to adopt a differential accounting
classification and treatment. While assessing the contractual
obligations as at any period close, change orders and / or
cancellations are required to be considered by the Company
to adopt an appropriate accounting treatment for revenues
already recognised, valuation of work in progress and
respective receivables. Considering these factors, in the
context of our audit this matter was of significance and hence
a key audit matter (Refer note 20 A to the standalone financial
statements).

Description of Auditor’s response:

With a view to verify the alignment of the Company's project
accounting system with the actual progress of the project
and its status at any period close, we designed our audit
procedures related to this area to obtain an understanding
of project acceptance and execution process and the related
accounting controls including verification of compliance with
IND AS 115 - ‘Revenue from contracts with customers'. These
included inter-alia, reading through the material contracts
and formation of a standard checklist to note the terms and
conditions and considerations required to be taken note of
for appropriate financial accounting till a project is finally

executed and closed. We discussed with the management
the risks associated with the project execution to understand
requirement of any specific recognition of financial accounting
considerations and developed requisite key controls requiring
audit attention and review. The Company has automated
through its accounting software the method of calculating the
percentage of completion method which we have verified on
test basis. We reviewed planned costs, their latest estimates,
rationale for revision in estimates based on information shared
by the management in our discussions, approvals to such
revisions in the estimates and compared them with latest
costs to complete, related mathematical accuracy and, on a
sample, basis validated resulting recognition of revenue. We
discussed with management the status of amount receivable
and have verified the evidence supporting the recoverability in
sample cases. We verified the calculations of expected credit
loss provisions and corroborated with specific management
discussions on major projects.

Information other than the standalone
financial statements and auditor’s report
thereon

The Company's Management and Board of Directors are
responsible for the preparation of the other information.
The other information comprises the Board's report and
management discussion and analysis included in the
annual report but does not include the standalone financial
statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not
cover the other information and we do not express any form
of assurance conclusion thereon.

In connection with our audit of the standalone financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other
information is materially inconsistent with the standalone
financial statements or our knowledge obtained during the
course of our audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report in this regard.

Management’s and Board of Director’s
responsibilities for the standalone financial
statements

The Company's Management and Board of Directors are
responsible for the matters stated in section 134(5) of the Act
with respect to the preparation of these standalone financial
statements that give a true and fair view of the financial
position, financial performance, cash flows and changes in
equity of the Company in accordance with the accounting
principles generally accepted in India, including the Ind AS.
This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of
the Act for safeguarding of the assets of the Company and
for preventing and detecting frauds and other irregularities;

selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of
adequate internal financial controls, that were operating
effectively for ensuring the accuracy and completeness of
the accounting records, relevant to the preparation and
presentation of the standalone financial statements that give
a true and fair view and are free from material misstatement,
whether due to fraud or error.

In preparing the standalone financial statements, Company's
Management and Board of Directors are responsible for
assessing the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless management either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to
do so.

The Board of Directors are responsible for overseeing the
Company's financial reporting process.

Auditor’s responsibilities for the audit of
the standalone financial statements

Our objectives are to obtain reasonable assurance about
whether the standalone financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these standalone
financial statements.

As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:

A. Identify and assess the risks of material misstatement
of the standalone financial statements, whether due to
fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.

B. Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances. Under section 143(3)
(i) of the Act, we are also responsible for expressing our
opinion on whether the Company has adequate internal
financial controls system in place and the operating
effectiveness of such controls.

C. Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management.

D. Conclude on the appropriateness of management's use
of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that
may cast significant doubt on the Company's ability
to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures
in the standalone financial statements or, if such
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future
events or conditions may cause the Company to cease
to continue as a going concern.

E. Evaluate the overall presentation, structure and content
of the standalone financial statements, including the
disclosures, and whether the standalone financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone
financial statements that, individually or in aggregate, makes
it probable that the economic decisions of a reasonably
knowledgeable user of the standalone financial statements
may be influenced. We consider quantitative materiality and
qualitative factors in (i) planning the scope of our audit work
and in evaluating the results of our work; and (ii) to evaluate
the effect of any identified misstatements in the standalone
financial statements.

We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.

We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.

From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the standalone financial statements
of the current period and are therefore the key audit matter.
We describe these matters in our auditor's report unless law
or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because
the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.

Report on other legal and regulatory
requirements

1. As required by the Companies (Auditor's Report) Order,
2020 (“the Order”), issued by the central government of
India in terms of sub-section (11) of section 143 of the
Act, we give in the “Annexure A”, a statement on the
matters specified in paragraphs 3 and 4 of the Order, to
the extent applicable.

2. As required by section 143 (3) of the Act and based on
our audit, we report that:

a) We have sought and obtained all the information
and explanations which to the best of our knowledge
and belief were necessary for the purposes of our
audit;

b) In our opinion, proper books of account as required
by law have been kept by the Company so far as
it appears from our examination of those books,
except for the matters stated in the paragraph
2(i)(vi) below on reporting under rule 11(g) of the
Companies (Audit and Auditors) Rules, 2014.

c) The balance sheet, the statement of profit and loss
(including other comprehensive income), statement
of changes in equity and the statement of cash
flows dealt with by this report are in agreement with
the books of account;

d) In our opinion, the aforesaid standalone financial
statements comply with the Ind AS specified under
section 133 of the Act, read with rule 7 of the
Companies (Accounts) Rules, 2014;

e) On the basis of the written representations received
from the directors as on 31 March 2026 taken
on record by the Board of Directors, none of the
directors is disqualified as on 31 March 2026 from
being appointed as a director in terms of section
164 (2) of the Act;

f) With respect to the maintenance of accounts and
other matters connected therewith are as stated in
the paragraph 2 (b) above and refer to our comment
in paragraph 2(i)(vi) below on reporting under Rule
11(g) of the Companies (Audit and Auditors) Rules,
2014;

g) With respect to the adequacy of the internal financial
controls with reference to standalone financial
statements of the Company and the operating
effectiveness of such controls, refer to our separate
report in “Annexure B”; our report expresses an
unmodified opinion on the adequacy and operating
effectiveness of the Company's internal financial
controls with reference to standalone financial
statements;

h) With respect to the other matters to be included
in the auditor's report in accordance with the
requirements of section 197(16) of the Act, as

amended, we report that in our opinion and to
the best of our information and according to the
explanations given to us, the remuneration paid by
the Company to its directors during the year is in
accordance with the provisions of section 197 of
the Act; and

i) With respect to the other matters to be included in
the auditor's report in accordance with rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and
according to the explanations given to us:

i. The Company has disclosed the impact of
pending litigations as at 31 March 2026 on
its financial position in its standalone financial
statements - refer note 28 to the standalone
financial statements.

ii. The Company has made provision, as
required under the applicable law or Ind AS,
for material foreseeable loses, if any, on long
term contracts including derivative contracts
- refer note 17 B to the standalone financial
statements.

iii. There has been no delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund by the
Company.

iv. Reporting on rule 11(e):

(a) The Management has represented
that, to the best of its knowledge and
belief, as stated in note no. 43 (2),
no funds (which are material either
individually or in the aggregate) have
been advanced or loaned or invested
(either from borrowed funds or share
premium or any other sources or kind
of funds) by the Company to or in any
other person(s) or entity(ies), including
foreign entities (“Intermediaries”), with
the understanding, whether recorded in
writing or otherwise, that the Intermediary
shall, directly or indirectly lend or invest in
other persons or entities identified in any
manner whatsoever by or on behalf of the
Company (“Ultimate Beneficiaries”) or
provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries.

(b) The Management has represented,
that, to the best of its knowledge and
belief, as stated in note no. 43 (3),
no funds (which are material either
individually or in the aggregate) have
been received by the Company from
any person(s) or entity(ies), including
foreign entities (“Funding Parties”), with
the understanding, whether recorded in
writing or otherwise, that the Company
shall, directly or indirectly, lend or invest
in other persons or entities identified
in any manner whatsoever by or on
behalf of the Funding Party (“Ultimate
Beneficiaries”) or provide any guarantee,
security or the like on behalf of the
Ultimate Beneficiaries.

c) Based on the audit procedures that
has been considered reasonable and
appropriate in the circumstances, nothing
has come to our notice that has caused
us to believe that the representations
under sub-clause (i) and (ii) of rule 11(e),
as provided under (a) and (b) above,
contain any material misstatement.

v. The dividend for the previous year, declared
and paid by the Company during the year is
in accordance with section 123 of the Act, as
applicable.

vi. Based on our examination which included test
checks, the Company has used accounting
software for maintaining its books of account
which have a feature of recording audit trail
(Edit log) facility and the same have been
operated throughout the year for all relevant
transactions recorded in the software except
that the audit trail feature was not enabled at
the database level to capture direct changes.
Further during our audit, we did not come
across any instance of audit trial feature being
tampered with. Additionally, the audit trail has
been preserved by the Company as per the
statutory requirements for record retention

- Refer note 41 to the Standalone financial statements

For Sharp & Tannan Associates

Chartered Accountants
Firm's Registration no. 109983W
by the hand of

CA Pramod Bhise

Partner

Membership no.(F) 047751
UDIN: 26047751SRAHHM5793