Provision for Warranty

Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the
end of the reporting period. These obligations are expected to be settled over more than one financial year and the
provision has been discounted to reflect the time value of money. The provision is classified as current considering
the inability of the Company to unconditionally defer settlement beyond one year. Management estimates the
provision based on historical warranty claim information and any recent trends that may suggest future claims
could differ from historical amounts.

Provision for expected loss on financial guarantee

The Company had provided financial guarantee to finance providers of its subsidiaries. In accordance with the
expected credit loss model prescribed under Ind AS, the management has assessed the expected credit loss to be
insignificant considering the liquidity and solvency position of the subsidiaries.

26(a) Employee benefit obligations

(i) Compensated absences

The leave obligations cover the Company’s liability for earned leave and sick leave.

The total provision for compensated absences amounts to ' 154 million and ' 118 million as at March 31, 2026 and March
31, 2025, including provision towards sick leave amounting to ' 21 million and ' 20 million respectively.

The provision classified as current amounts to ' 52 million and ' 26 million as at March 31, 2026 and March 31, 2025
including provision towards sick leave amounting to ' 4 million and ' 4 million respectively. Given that there are
complexities in determining whether the Company has the right to defer the employee's leave unconditionally, the
amount of non-current and current portions of leave obligation has been determined by a qualified actuary and
presented accordingly. Further, based on past experience, the Company does not expect all employees to avail the full
amount of accrued leave or require payment for such leave within the next 12 months.

(ii) Defined contribution plans
Provident Fund:

The Company also has certain defined contribution plans. Contributions are made to provident fund in India for
employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident
fund administered by the government. The obligation of the Company is limited to the amount contributed and it has
no further contractual nor any constructive obligation.

Superannuation Fund:

The Company contributes a percentage of eligible employees salary towards superannuation fund administered by Elgi
Equipments Superannuation Fund and managed by Life Insurance Corporation of India.

The expense recognised during the period towards defined contribution plan is ' 148 million (March 31, 2025 - ' 94 million).

(iii) Post-employment benefit obligations - Gratuity

The Company provides for gratuity for employees in India as per the Code on Social Security, 2020. Employees who are
in continuous service for a period of 5 years are eligible for gratuity. The amount of Gratuity payable on retirement/
termination is the employees last drawn wages per month computed proportionately for 15 days wages multiplied for
the number of years of service. The gratuity is a funded plan and the Company makes contribution to recognised fund
in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a
period of time based on estimations of expected gratuity payments.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating
the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value
of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period)
has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the
prior period.

(vii) Risk exposure

The Company operates the Gratuity Plan through Elgi Equipments Gratuity Fund, which invests in Life Insurance
Corporation of India.

Asset Volatility: A large portion of the investment made by the LIC is in government bonds and securities and other
approved securities. Hence, the Company is not exposed to the risk of asset volatility as at the balance sheet date.

Changes in bond yield: A decrease in bond yield will increase plan liabilities, although this will be partially offset by an
increase in value of plan’s bond holdings.

Inflation Risk: The post employment benefit payments are not linked to inflation, so this is a less material risk.

(viii) Defined benefit liability and employer contributions

The weighted average duration of the defined benefit obligation is 7.7 years (March 31, 2025 - 7.6 years).

The following are the expected future payments (undiscounted) of defined benefit obligation in the future years.
Expected contribution to LIC for the next year is ' 127 Million.

Contract liabilities includes advance received from customers and income received in advance arising due to allocation
of transaction price towards freight on shipments not yet delivered to customer.

28 Revenue from operations

The accounting policy for revenue from operations is as follows:

(a) Sale of products

The Company manufactures and sells a range of air compressors and related parts. Sales are recognised when control
of the product has transferred, being when the products are delivered to the customers, and there is no unfulfilled
obligations that could effect the customer's acceptance of products. Delivery occurs when the product have been shipped
from the Company's warehouse to the specific location in case of domestic sales, and when a bill of lading is generated
in case of exports, the risk of obsolescence and loss have been transferred to the customer and either the customer
has accepted the product in accordance with the sales contract, the acceptance provision have lapsed, or the Company
has objective evidence that all criteria for acceptance have been satisfied. Where the Company sells goods and also has
transportation obligation, and where the control of the goods is transferred first, the sale of goods and transportation

28 Revenue from operations (Continued...)

revenue are treated as a separate performance obligations. The Company's obligation to repair/replace faulty product
under the standard warranty terms is recognised as a provision (refer Note 26). A receivable is recognised when the
goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time
is required before the payment is due. The credit facility is as per standard industry terms, thus there is no significant
financing component.

(b) Sale of services

The performance obligation under service contract are installation, maintenance and other ancillary services set forth
in the contracts. Revenue from rendering of services are recognised over a period of time by reference to the stage of
completion as the customer simultaneously receives and consumes the benefit provided by the Company's performance
as the Company performs. In case of transportation revenue, the Company recovers cost of transportation from the
customers. The cost is either billed separately in the invoice or included in the total transaction price. Where the
transaction price is inclusive of cost of transportation, the Company splits the transaction price into Sale of product
and Sale of services. Payment for the service rendered is made as per the credit terms in the agreements with the
customers. The credit period is generally short term, thus there is no significant financing component.

b) Revenue recognised for the year ended March 31, 2026 from opening balance of contract liabilities is ' 135 million
(March 31, 2025: ' 146 million).

c) In respect of remaining performance obligations, the disclosure towards allocation of transaction price do not arise
as the contracts that have an original expected duration of more than one year are not significant.

d) Revenue from no single external customer contributes to more than 10% of the total revenue.

e) The contract price is not significantly different from the revenue recognized and there are no material refund
liabilities with respect to variable consideration

^Excluding investments in subsidiaries and joint ventures, carried at cost less impairment losses aggregating to
' 1,706 million (March 31, 2025 - ' 1,706 million) which are outside scope of Ind AS 107.

The equity securities are not held for trading; the Company has made an irrevocable election at initial recognition
to recognise changes in fair value through OCI rather than profit or loss as these are strategic investments and the
Company considers this to be more relevant.

(i) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments
that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are
disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining
fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting
standard. An explanation of each level follows underneath the table.

Quoted prices in an active market (Level 1): Level 1 hierarchy includes financial instruments measured using quoted
prices in the active market. This category consists quoted equity shares. The fair value of all equity instruments which
are traded in stock exchanges is valued using closing price as at the reporting period. Mutual funds are valued using
closing NAV. Since mutual funds invested by the Company are not quoted/traded on a recognized stock exchange, those
have been disclosed as 'unquoted'. However, mutual funds are valued using closing NAV which is directly observable.

Valuation techniques with observable inputs (Level 2): The fair value of financial instruments that are not traded in an
active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise
the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2. This level of hierarchy includes
Company’s foreign exchange forward contracts.

Valuation techniques with significant unobservable inputs (Level 3): If one or more of the significant inputs is not
based on observable market data, the instrument is included in level 3. Investment in unquoted equity instrument (First
Energy TN1 Pvt Ltd and First Energy 5 Pvt Ltd), pursuant to power purchase arrangement, is determined to have cost as
an appropriate measure of fair value due to restriction to sell at face value.

There are no transfers between level 1, level 2 and level 3 during the year.

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the
reporting period.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

• the use of quoted market prices or dealer quotes for similar instruments

• the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance
sheet date

• the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

The carrying amounts of trade receivables, trade payables, dealer deposits, cash and bank balances, deposits with financial
institutions (with remaining maturities less than 12 months), other financial liabilities and financial assets are considered
to be the same as their fair values, due to their short-term nature.

In respect of deposits with financial institutions having remaining maturities more than 12 months, the carrying amount
approximates fair value as these carry interest rates that are reflective of prevailing market rates for similar instruments
as at March 31, 2026.

The fair values for loan to subsidiaries, loans to employees were calculated based on cash flows discounted using a current
lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs
including counterparty credit risk.

38 Fair value measurements (Continued...)

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

For equity instruments measured at FVOCI whose fair value measurement was performed using unobservable inputs
(Level 3), the reconciliation from opening balance to closing balance and relationship between such unobservable inputs
and fair value has not been disclosed considering that the carrying amount of such instruments is not significant.

39 Financial risk management

The Company’s activities expose 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 and the impact
of hedge accounting in the financial statements.

The Company’s risk management is carried out by treasury department under policies approved by the board of
directors. Company's treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s
operating units. The board provides written principles for overall risk management, as well as policies covering specific
areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non¬
derivative financial instruments, and investment of excess liquidity.

(A) Credit risk

Credit risk arises from cash and cash equivalents, favourable derivative financial instruments and deposits with banks and
financial institutions and debt mutual funds, as well as credit exposures to customers including outstanding receivables.

(i) Credit risk management

For banks and Asset Management Companies (AMC's), only high rated banks/institutions are accepted.

The Company assesses the credit quality of the customer, taking into account its financial position, past experience
and other factors. Individual risk limits are set based on internal and external ratings in accordance with the limits set
by the Company. The finance function consists of a separate team who assess and maintain an internal credit rating
system. The compliance with the credit limits by customers is regularly monitored by the finance function.

(ii) Security

For some trade receivables, the Company may obtain security in form of guarantees, deeds of undertaking or letter of
credit, which can be called upon if counter party is in default under the terms of the agreement.

(iii) Impairment of financial assets

The Company assigns the following internal credit ratings to each class of financial assets based on the assumptions,
inputs and factors specific to the class of the financial asset. The Company provides for expected credit loss based on
the following:

For the years ended March 31, 2026 and March 31, 2025

(a) Expected credit loss for loans, security deposits and investments

The entity's investments and deposits at amortized cost are considered to have low credit risk since they have a low risk
of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.

For loans to related parties and employees, the Company considers the probability of default upon initial recognition
of loan and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting
period. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default
occurring on the loan as at the reporting date with the risk of default as at the date of initial recognition. It considers
available reasonable and supportive forwarding-looking information. The following indicators are considered:

• internal credit rating

• actual or expected significant adverse changes in business, financial or economic conditions that are expected to
cause a significant change to the borrower’s ability to meet its obligations

• actual or expected significant changes in the operating results of the borrower

• significant increases in credit risk on other financial instruments of the same borrower

• macroeconomic information (such as market interest rates or growth rates)

The resultant internal credit rating for loans, deposits and investments is C1. The entity estimates that the 12-month
expected credit loss in this scenario and the estimated gross carrying amount at default to be immaterial and hence
there is no expected credit loss recognised for the year ended March 31, 2026 and March 31, 2025.

The Company also has provided guarantee for loans availed by subsidiaries (Refer note 51), for which the Company
assesses credit risk by considering the risk of default occurring on the loan to which the guarantee relates i.e., the risk
that the specified debtor will default on the contract.

The entity carries out a review of the liquidity and solvency of the subsidiaries to which the guarantee has been
provided as part of its strategic business reviews. The entity also corroborates its assessment with the repayments of
receivables and loans by the subsidiaries to the entity. Based on the assessment performed, no expected credit loss
provision has been made in respect of financial guarantee provided to subsidiaries for the year ended March 31, 2026
and March 31, 2025, as in the management's assessment the amount was immaterial.

(b) Expected credit loss for trade receivables and contract assets under simplified approach

Customer credit risk is managed by the Company based on the Company's established policy, procedures and control
relating to customer credit risk management. The credit quality of a customer is assessed based on an internal credit
rating system. Outstanding customer receivables are regularly monitored and assessed for the recoverability.

An impairment analysis is performed at each reporting date, where receivables are grouped into homogeneous credit
groups and assessed for impairment. The maximum exposure to credit risk at the reporting date is the carrying value of
each class of financial assets disclosed in Note 12 and 17. The Company evaluates the concentration of risk with respect
to trade receivables and contract assets as low, as its customers have sufficient capacity to meet the obligations and
the risk of default is negligible.

The expected loss rates are based on the payment profiles of sales over a period of 24 months before the reporting
date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted
to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to
settle the receivables, if any.

Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a
repayment plan with the Company, and a failure to make contractual payments for a period of greater than 720 days
past due and the same may be considered as credit impaired.Impairment losses on trade receivables and contract
assets are presented as loss allowances under other expenses. Subsequent recoveries of amounts previously written
off are credited against the same line item.

The Company has computed the expected credit loss allowance for trade receivables and contract assets based on a
provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward
looking information.

(B) 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. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility
in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the
Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on
the basis of expected cash flows.

The credit facility sanctioned by the banks are subject to renewal every year.

Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR and
can be renewed for further period of 1 year.

(ii) Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual
maturities for:

a) all non-derivative financial liabilities, and

b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an
understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal
their carrying balances as the impact of discounting is not significant.

(ii) Price risk

The Company has invested largely in overnight and liquid mutual funds which is low risk and not subject to significant
variation. The Company’s exposure to equity securities price risk arises from investments held by the Company and
classified in the balance sheet as fair value through OCI.

To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio.
Diversification of the portfolio is done in accordance with the limits set by the Company.

The majority of the Company's equity instruments are publicly traded and are included in the Bombay Stock Exchange
(BSE) index.

Sensitivity

The table below summarises the impact of increases/decreases of the index on the Company’s equity and total
comprehensive income for the period. The analysis is based on the assumption that the equity index had increased by
5% or decreased by 5% with all other variables held constant, and that all the Company’s equity instruments moved in
line with the index.

*Divested during the year ended March 31, 2026.

Details of Joint Ventures

The Company has 26% interest in Joint venture called Elgi Sauer Compressors Limited which was set up as Company
together with JP Sauer & Sohn Maschinenbau GMBH in India, to sell compressors and their parts along with rendering
engineering services.

The Company has 50% share in Industrial Air Solutions LLP which was set up as Limited liability partnership in India
with Mr. Rajeev Sharma, for distribution of products of Elgi Equipments Limited.

The Company through its wholly owned subsidiary Elgi Compressors USA Inc., has established a joint venture, Evergreen
Compressed Air and Vacuum LLC, with Mr. Michael Keim, each holding a 50% share. The joint venture's registered office
is in Seattle, USA, and it is distributor of products of Elgi Equipments Limited.

The Company through its wholly owned subsidiary Elgi Compressors USA Inc., has established a joint venture, Compressed
Air Solutions of Texas, LLC, with Mr. Bryan Becker, with each party holding a 50% share. This joint venture distributes
products for compressed air systems primarily in the state of Texas. It is divested during the year.

The Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called PLA
Holding Company, LLC, with Mr. Jeffery Brandon Todd for a share of 50% each. The joint venture was formed in the state
of North Carolina. PLA Holding Company, LLC, wholly owns Pattons of California, LLC, a California Company which is a
distributor of products for compressed air systems mainly in the state of California.

The Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called Gentex
Air Solutions, LLC, with Mr. James Gery Naico and Mr.Diego Hernandez for a share of one third for each. The joint
venture is a distributor of products for compressed air systems mainly in the states of North Carolina.

Details of Joint Operations

The Company has 98% interest in a joint arrangement called L.G. Balakrishnan & Bros (Firm) which was set up as
partnership firm in India together with Elgi Ultra Private Limited to earn rental income from Investment Property.

The Company has 80% interest in a Joint arrangement called Elgi Services which was set up as partnership firm in India
together with Elgi Ultra Private Limited.

*The above Key management personnel compensation does not include gratuity since the same is computed actuarially
for all the employees and amount attributable to key management personnel cannot be ascertained separately and does
not include unvested share based payments.

The remuneration paid to the Managing Director amounting to ' 30 million and to the Executive Director amounting to
' 25 million is in accordance with the provisions of Section 197 read with schedule V to the Companies Act, 2013.

42 Share based payments

Employee Stock Option Plan

The establishment of Elgi Equipments Limited Employee Stock Options Plan, 2019 (Elgi ESOP 2019) was approved by the
Board of Directors at its meeting held on December 16, 2019 and by the shareholders by way of postal ballot on January 31,
2020. The plan shall be administered through a Trust via the acquisition of the equity shares from the secondary market.

The Elgi ESOP 2019 plan is designed to provide benefits to the eligible employees of the Company and its subsidiaries.
Under the plan, the participants are granted options that vest upon completion of service that is not more than three
years from the grant date. Participation in the plan is at the board's discretion, and no individual has a contractual right
to participate in the plan or to receive any guaranteed benefits.

Once vested, the options remain exercisable for a period of three months.

Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each
option is convertible into one equity share.

Contingent liabilities

Claims against the Company not acknowledged as debts

(i) The Company has disputed demands for excise duty,

service tax and sales tax and other matters amounting
to ' 13 million and ' 14 million as on March 31, 2026
and March 31, 2025, respectively. The Company has
deposited ' 3 million and ' 3 million against the
above-mentioned disputes as on March 31, 2026 and
March 31, 2025, respectively.

The Company has filed appeals with appropriate
authorities of Central Excise and Sales Tax
Department against their claims.

(ii) The Company had deposited a sum of ' 19 million
with the Railways department of the Government of
India regarding a Road Under Bridge (RUB) project
undertaken by the Railways near the Company’s
factory at Kodangipalayam village. As Railways had
planned for a limited-use subway and as the RUB
project undertaken would benefit the public at large,
the deposit was made as directed by the Madras
High Court as an interim measure, pending finality as
to whether the Company has to bear the full cost or
only the differential cost. The Company received an
unfavourable order on June 03, 2020, from the single
judge of the Madras High Court holding that neither
party is required to make any payment to the other.
The Company filed an appeal against this order
before the division bench and was able to get a stay
of the single judge's order. The Company appealed
to the division bench, and the matter was referred
to arbitration.

On September 5, 2024, the arbitrator issued an
award in favor of the Company, upholding its claim
of ' 11 million, after deducting ' 8 million as the
incremental cost of RUB which is already accounted
for in the Company’s books, to be paid along with
interest at 9% per annum, accruing from October 29,
2014. Additionally, litigation expenses and ' 1 million
towards arbitrator fees have been awarded by the
arbitrator. All claims and counterclaims by the
Railways were rejected by the arbitrator. After the
arbitral award, the Company received notice from
Railways’ lawyers that the Railways have applied to

Section 34 of the Arbitration and Conciliation Act,
1996, to set aside the award. The Company has filed
a Caveat and has also filed an execution petition
before the Hon'ble High Court of Madras for the
enforcement of the arbitrator’s award.

(iii) The Company has evaluated the impact of the
Supreme Court Judgment in case of "Vivekananda
Vidyamandir And Others Vs The Regional Provident
Fund Commissioner (II) West Bengal" and the related
circular (Circular No. C-I/1(33)2019/Vivekananda
Vidya Mandir/284) dated March 20, 2019 issued by the
Employees’ Provident Fund Organisation in relation
to non-exclusion of certain allowances from the
definition of "basic wages" of the relevant employees
for the purposes of determining contribution to
provident fund under the Employees' Provident
Funds & Miscellaneous Provisions Act, 1952. In the
assessment of the management, the aforesaid
matter is not likely to have a significant impact and
accordingly, no provision has been made in these
Financial Statements.

(iv) The Company received summons’ in the previous
years, from a statutory authority, i.e, under the
Foreign Exchange Management Act, 1999 ('FEMA'),
seeking information primarily relating to imports,
exports including sales to subsidiaries and
subsidiaries to their customers and overseas direct
investments, including transactions of earlier years.

The Company has submitted all the relevant
information sought for by the authority from time to
time to address the queries raised in the summons’
and hearings. In the management's assessment,
this is not likely to have a significant impact on the
financial statements as of and for the year ended
March 31, 2026 and March 31, 2025.

43A Whistle blower

The Company has received whistle-blower complaints during the year and for certain matters which were open as at
March 31, 2026. Based on preliminary findings these are not considered to have any significant impact on the financial
statements of the Company. For the matters closed, the entity has assessed that there is no impact on the financial
statements or internal controls as of and for the year ended March 31, 2026.

*The amount includes payables contractually not due of ' 574 million (March 31, 2025: ' 479 million) and unbilled of
' 24 million (March 31, 2025: ' 18 million) . Refer to Note 24 for the ageing of trade payables.

The information has been given in respect of vendors to the extent they could be identified as "Micro and Small
enterprises" on the basis of information available with the Company.

45A Supplier finance arrangements

Supplier finance arrangements are characterised by one or more finance providers offering to pay amounts that an
entity owes its suppliers and the entity agreeing to pay according to the terms and conditions of the arrangements at
the same date as, or a date later than, when suppliers are paid. These arrangements provide the entity with extended
payment terms, or the entity’s suppliers with early payment terms, compared to the related invoice payment due date.

The Company has entered into a purchase bill discounting arrangement with a private bank (the “Bank”) in respect of
certain of its trade payables to suppliers. For this purpose, the Company, as “buyer”, has availed a sanctioned credit
facility from the Bank. Under the arrangement, the Bank discounts bills drawn by participating suppliers on the Company
and pays the suppliers against such bills, with the Company subsequently settling the invoice amount with the Bank on
the original invoice due date. The primary objective of the facility is to enable suppliers to obtain early liquidity against
their receivables from the Company, while preserving the Company's contractual payment terms with such suppliers.

Key terms and conditions of the arrangement:

(a) Suppliers, at their election, present bills drawn on the Company to the Bank for discounting; the Company is not
obliged to direct or initiate any specific bill for discounting.

(b) The Bank pays the supplier upon discounting of the bill, and the Company pays the Bank on the original invoice
maturity date, within a tenor of up to 90 days from the date of the invoice.

(c) The supplier bears the interest charges in relation to the bills discounted by the supplier.

(d) The payment terms with suppliers participating in the arrangement are the same as those applicable to comparable
suppliers not covered by the arrangement, and accordingly, the Company does not obtain any extension of credit
period under the arrangement.

*The Company has not disclosed comparative information (including those as of April 01,2024), in respect of the amendments
to Ind AS 7 and Ind AS 107 relating to supplier finance arrangements, as it has applied the transitional relief available on
initial adoption of these amendments, which allows entities not to present comparative disclosures for prior periods.

Presentation of supplier finance arrangement as trade payables

As disclosed above, from the Company’s perspective, the arrangement does not materially extend payment terms
beyond those agreed with non-participating suppliers. It simply offers participating suppliers the benefit of early
payment. Accordingly, the Company presents the amounts subject to the arrangement as trade payables, because
their nature and function are consistent with other trade payables.

Presentation of supplier finance arrangement in Statement of Cash Flows

Judgement might be needed to determine how to present the cash flows that occur under supplier finance arrangements in the
statement of cash flows. Considering that the payables related to supplier finance arrangements are not de-recognized from
trade payables, the Company presents cash outflows to settle the liability as arising from operating activities in its statement
of cash flows.

(ii) Utilisation of borrowed funds and share premium

The Company has not advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:

a) 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

b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

The Company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) 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

b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(iii) Registration of charges or satisfaction with Registrar of Companies

There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the
statutory period.

(iv) The ESOP trust established for administering a share-based payment plan for employees is considered an extension of
the Company and therefore, included in the Standalone Financial Statements. The ESOP trust has investments in Elgi
Shares amounting to ' 860 million, which has been deducted from equity (being treasury shares) in the Standalone
Financial Statements and cash and cash equivalents amounting to ' 1 million, other current assets amounting to
' 1 million and current liabilities amounting to ' 860 million, which have been adjusted against the relevant line items
in the Standalone Financial Statements.

The trust's income for the year ended March 31, 2026, is ' 3 million (including dividend received from Elgi
Equipments Limited).

50 Other Accounting Policies

(a) Property, Plant and Equipment

Historical cost includes expenditure that is directly
attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Company and
the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other
repairs and maintenance are charged to profit or loss
during the reporting period in which they are incurred.

An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount. Gains
and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in
profit or loss within other income/(expense).

Refer Note 3(a) for entity specific accounting policies on
Property, plant and equipment.

(b) Leases

As a lessee

Leases are recognised as a right of use asset and a
corresponding liability at the date at which the leased
asset is available for the use by the Company.

Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the following lease
payments:

• fixed payments (including in-substance fixed
payments), less any lease incentives receivable

• variable lease payment that are based on an index
or a rate, initially measured using the index or rate
as at the commencement date

• amounts expected to be payable by the Company
under residual value guarantees

• the exercise price of a purchase option if the Company
is reasonably certain to exercise that option, and

• payments of penalties for terminating the lease, if
the lease term reflects the Company exercising that
option.

Lease payments to be made under reasonably certain
extension options are also included in the measurement
of the liability. The lease payments are discounted using
the interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for leases
in the Company, the lessee’s incremental borrowing rate
is used, being the rate that the individual lessee would
have to pay to borrow the funds necessary to obtain an
asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and
conditions.

To determine the incremental borrowing rate,
the Company:

• where possible, uses recent third-party financing
received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions
since third party financing was received

• uses a build-up approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by
Elgi equipments limited, which does not have recent
third party financing, and

• makes adjustments specific to the lease, such as
term, country, currency and security.

Right-of-use assets are measured at cost comprising the
following:

• the amount of the initial measurement of lease
liability

• any lease payments made at or before the
commencement date less any lease incentives
received

• any initial direct costs and

• restoration costs

Right-of-use assets are generally depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis. If the Company is reasonably certain
to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.

Payments associated with short-term leases are
recognised on a straight-line basis as an expense in profit
or loss. Short-term leases are leases with a lease term of 12
months or less.

4s a lessor

Lease income from operating leases where the Company
is a lessor is recognised in income on a straight-line basis
over the lease term unless the receipts are structured
to increase in line with expected general inflation to
compensate for the expected inflationary cost increases.
The respective leased assets are included in the balance
sheet based on their nature.

Refer Note 3(b) for entity specific accounting policies on
Right of use assets.

(c) Investment properties

Property that is held for long-term rental yields or for
capital appreciation or both and that is not occupied
by the Company, is classified as investment property.
Investment property is measured initially at its cost,
including related transaction costs. Subsequent
expenditure is capitalised to the asset’s carrying amount
only when it is probable that future economic benefits
associated with the expenditure will flow to the Company
and the cost of the item can be measured reliably. All
other repairs and maintenance costs are expensed
when incurred. When part of an investment property
is replaced, the carrying amount of the replaced part is
derecognised.

Refer Note 4 for entity specific accounting policies on
investment properties.

(d) Intangible assets

(i) Goodwill

Goodwill on acquisition of business is included in
intangible assets. Goodwill is not amortised but tested
for impairment annually, or more frequently if events
or changes in the circumstances indicate that it might
be impaired and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal
of a business include the carrying amount of goodwill
relating to the business sold.

Goodwill is allocated to cash generating units for the
purpose of impairment testing. The allocation is made to
cash generating unit which is expected to benefit from
business combination in which the goodwill arose.

(ii) Other intangible assets

Development costs that are directly attributable to the
design and testing of identifiable and unique products
controlled by the Company are recognised as intangible
assets when the following criteria are met:

a) It is technically feasible to complete the asset so that
it will be available for use

b) management intends to complete the asset and use
or sell it

c) there is an ability to use or sell the product

d) it can be demonstrated how the asset will generate
probable future economic benefits

e) adequate technical, financial and other resources
to complete the development and to use or sell the
asset are available and

f) the expenditure attributable to the asset during its
development can be reliably measured.

Directly attributable costs that are capitalised as part of
the products include employee costs and an appropriate
portion of relevant overheads. Capitalised development
costs are recorded as intangible assets and amortised
from the point at which the asset is available for use.
Research and development expenditure that do not
meet the criteria for recognition as intangible assets
are recognised as an expense as incurred. Development
costs previously recognised as an expense are not
recognised as an asset in the subsequent period.

Refer Note 5 for entity specific accounting policies on
Goodwill and other intangible assets.

(e) Investments and other financial assets

(i) Classification

The Company classifies its financial assets in the
following measurement categories:

a) those to be measured subsequently at fair value
(either through other comprehensive income, or
through profit or loss), and

b) those measured at amortised cost.

The classification depends on the Company's business
model for managing the financial assets and the
contractual terms of the cash flows. For assets
measured at fair value, gains and losses will either
be recorded in profit or loss or other comprehensive
income. For investments in debt instruments, this will
depend on the business model in which the investment
is held. For investments in equity instruments, this
will depend on whether the Company has made an
irrevocable election at the time of initial recognition to
account for the equity investment at fair value through
other comprehensive income.

The Company reclassifies debt investments when
and only when its business model for managing those
assets changes.

(ii) Measurement

At initial recognition, the Company measures a financial
asset (excluding trade receivables which do not contain
significant financing component) at its fair value plus,
in the case of a financial asset not at fair value through
profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends
on the Company's business model for managing the
asset and the cash flow characteristics of the asset.
There are three measurement categories into which the
Company classifies its debt instruments:

a) Amortised cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest are

measured at amortised cost. Interest income from these
financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising
on derecognition is recognised direct in profit or loss and
presented in other income/(expense). Impairment losses
are presented as separate line item in the statement of
profit or loss.

b) Fair value through other comprehensive income
(FVOCI): Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the
assets' cash flows represent solely payments of principal
and interest, are measured at fair value through other
comprehensive income (FVOCI). Movements in the
carrying amount are taken through OCI, except for
the recognition of impairment gains or losses, interest
revenue and foreign exchange gains and losses which are
recognised in profit and loss. When the financial asset
is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit or
loss and recognised in other income/(expense). Interest
income from these financial assets is included in other
income using the effective interest rate method.

c) Fair value through profit or loss (FVPL): Assets that
do not meet the criteria for amortised cost or FVOCI are
measured at fair value through profit or loss. A gain or loss
on a debt investment that is subsequently measured at
fair value through profit or loss and is not part of a hedging
relationship is recognised in profit or loss and presented
net in the statement of profit and loss within other income/
(expense) in the period in which it arises. Interest income
from these financial assets is included in other income.

Equity instruments

The Company measures all equity investments at fair
value, except for investments forming part of interest in
subsidiaries and joint ventures, which are measured at
cost. Where the Company's management has elected to
present fair value gains and losses on equity investments
in other comprehensive income, there is no subsequent
reclassification of fair value gains and losses to profit or
loss. Dividends from such investments are recognised in
profit or loss as other income when the Company's right
to receive payments is established.

All investments in equity instruments and contracts
on those instruments are measured at fair value.

However, in limited circumstances, cost may be an
appropriate estimate of fair value. That may be the case
if insufficient more recent information is available to
measure fair value, or if there is a wide range of possible
fair value measurements and cost represents the best
estimate of fair value within that range.

The entity accounts for its investment in power purchase
agreements at cost as the change in performance of the
investee or market or economic environment will not
impact the ultimate cash flows of the equity instrument.

Changes in the fair value of financial assets at fair value
through profit or loss are recognised in other income/
(expense) in the statement of profit and loss. Impairment
losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported
separately from other changes in fair value.

Impairment of financial assets

The Company assesses on a forward looking basis the
expected credit losses associated with its assets carried
at amortised cost and FVOCI debt instruments. The
impairment methodology applied depends on whether
there has been a significant increase in credit risk. Note
39 details how the Company determines whether there
has been a significant increase in credit risk.

For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime losses to
be recognised from initial recognition of the receivables.

Derecognition of financial assets

A financial asset is derecognised only when

a) The Company has transferred the rights to receive
cash flows from the financial asset or

b) The Company retains the contractual rights to receive
the cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one or
more recipients.

Where the Company has transferred an asset, it
evaluates whether it has transferred substantially all
risks and rewards of ownership of the financial asset. In
such cases, the financial asset is derecognised. Where
the Company has not transferred substantially all risks
and rewards of ownership of the financial asset, the
financial asset is not derecognised.

Where the Company has neither transferred a financial
asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is
derecognised if the Company has not retained control
of the financial asset. Where the Company retains
control of the financial asset, the asset is continued to
be recognised to the extent of continuing involvement in
the financial asset.

Income recognition

a) Interest income

Interest income on financial assets at amortised cost is
calculated using the effective interest rate method is
recognised in the statement of profit and loss as part of
other income.

Interest income is calculated by applying the effective
interest rate to the gross carrying amount of a financial
assets except for financial assets that subsequently
become credit impaired. For credit-impaired financial
assets the effective interest rate is applied to the net
carrying amount of the financial asset (after deduction
of loss allowance).

b) Dividends

Dividends are recognised in profit or loss only when the
right to receive payment is established, it is probable
that the economic benefits associated with the dividend
will flow to the Company and the amount of the dividend
can be measured reliably.

Refer Note 6 for entity-specific accounting policies
pertaining to investments and financial assets.

(f) Inventories

Raw materials and stores, work in progress, traded and
finished goods

Raw materials and stores, work in progress, traded and
finished goods are stated at the lower of cost and net
realisable value. Cost of raw materials and traded goods
comprises cost of purchases. Cost of work-in-progress
and finished goods comprises direct materials, direct
labour and an appropriate proportion of variable and
fixed overhead expenditure, the latter being allocated

on the basis of normal operating capacity. Cost of
inventories also include all other costs incurred in
bringing the inventories to their present location and
condition. Costs of purchased inventory are determined
after deducting rebates and discounts. Net realisable
value is the estimated selling price in the ordinary course
of business less the estimated costs of completion and
the estimated costs necessary to make the sale.

Refer Note 11 for entity-specific accounting policies
relating to inventories.

(g) Cash and cash equivalents

For the purpose of presentation in the statement of
cash flows, cash and cash equivalents include cash on
hand, other short-term highly liquid investments with
original maturities of three months or less that are
readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.

(h) Contributed Equity

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.

(i) Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the period in
which the employees render the related service are
recognised in respect of employees’ services up to the
end of the reporting period and are measured at the
amounts expected to be paid when the liabilities are
settled. The liabilities are presented as other financial
liabilities in the balance sheet.

(ii) Other long-term employee benefit obligations

The liabilities for earned leave that are not expected to
be settled wholly within 12 months after the end of the
period in which the employees render the related service
are measured as the present value of expected future
payments to be made in respect of services provided
by employees up to the end of the reporting period

using the projected unit credit method. The benefits
are discounted using the market yields at the end of
the reporting period that have terms approximating to
the terms of the related obligation. Remeasurements
as a result of experience adjustments and changes in
actuarial assumptions are recognised in profit or loss.

The amount of non-current and current portions of
leave obligation is normally determined by a qualified
Actuary and presented accordingly.

(iii) Post-employment obligations

The Company operates the following post-employment
schemes:

(a) defined benefit plans such as gratuity and

(b) defined contribution plans such as provident fund
and Superannuation fund.

Gratuity obligations

The liability or asset recognised in the balance sheet in
respect of defined benefit gratuity plans is the present
value of the defined benefit obligation at the end of
the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by
actuaries using the projected unit credit method.

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 net interest cost is calculated by applying the
discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is
included in employee benefit expense 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 in other comprehensive income. They
are included in retained earnings in the statement of
changes in equity and in the balance sheet.

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.

Defined contribution plans

The Company pays provident fund and superannuation
fund contributions to Employee Provident Fund
Account as per Employees Provident Fund Act, 1952
and a Life Insurance Corporation of India respectively.
The Company has no further payment obligations once
the contributions have been paid. The contributions
are accounted for as defined contribution plans and
the contributions are recognised as employee benefit
expense when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund
or a reduction in the future payments is available.

(iv) Bonus plans

The Company recognises a liability and an expense for
bonuses. The Company recognises a provision where
contractually obliged or where there is a past practice
that has created a constructive obligation.

(v) Termination benefits

Termination benefits are payable when employment
is terminated by the Company before the normal
retirement date, or when an employee accepts
voluntary redundancy in exchange for these benefits.
The Company recognises termination benefits at the
earlier of the following dates: (a) when the Company can
no longer withdraw the offer of those benefits; and (b)
when the Company recognises costs for a restructuring
that is within the scope of Ind AS 37 and involves the
payment of termination benefits. In the case of an
offer made to encourage voluntary redundancy, the
termination benefits are measured based on the number
of employees expected to accept the offer. Benefits
falling due more than 12 months after the end of the
reporting period are discounted to present value.

(vi) Share based payments

Share based compensation benefits are provided to the
employees via Elgi Equipments Limited Employees Stock
Option Plan, 2019, an employee stock option scheme.

The fair value of options granted under the Elgi
Equipments Limited Employee Stock Option Plan, 2019
is recognised as an employee benefit expense with a
corresponding increase in the equity. The total amount
to be expensed is determined by reference to the fair
value of the options granted,

- including any market performance conditions
(e.g., the entity's share price)

- excluding the impact of any service and non-market
performance vesting conditions (e.g. profitability,
sales growth targets and remaining of an employee of
the entity over a specified time period) and

- i ncluding the impact of any non-vesting conditions
(e.g. the requirement for employees to hold the shares
for a specific period of time).

The total expense is recognised over the vesting period,
which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period,
the entity revises its estimates of the number of options
that are expected to vest based on the non-market
vesting and service conditions. It recognises the impact
of the revision to original estimates, if any, in profit or
loss, with a corresponding adjustment to equity.

(j) Trade and other payables

These amounts represent liabilities for goods and
services provided to the Company prior to the end
of financial year which are unpaid. Trade and other
payables are presented as current liabilities unless
payment is not due within 12 months after the reporting
period.The financial liabilities are recognised initially at
their fair value and subsequently measured at amortised
cost using the effective interest method (except for
derivative financial liabilities measured through FVTPL).

We recognise a financial liability on the date when the
Company becomes party to the contractual provisions
of the instrument. A financial liability is derecognised
on the settlement date - that is, the date on which
the obligation is discharged or cancelled or it expires.
All financial liabilities are subsequently measured at
amortized cost using the effective interest method.

A financial liability (or part of it) is extinguished when
the debtor either:

(a) discharges the liability (or part of it) by paying the
creditor, normally with cash, other financial assets,
goods or services; or

(b) is legally released from primary responsibility for
the liability (or part of it) either by process of law or by
the creditor. (If the debtor has given a guarantee this
condition may still be met.

(k) Provisions and contingent liabilities:

Provisions for legal claims, service warranties, volume
discounts and returns are recognised when the Company
has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources
will be required to settle the obligation and the amount
can be reliably estimated. Provisions are not recognised
for future operating losses.

Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as
a whole. A provision is recognised even if the likelihood
of an outflow with respect to any one item included in
the same class of obligations may be small.

Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the end of the
reporting period. The discount rate used to determine
the present value is a pre-tax rate that reflects current
market assessments of the time value of money and
the risks specific to the liability. The increase in the
provision due to the passage of time is recognised as
interest expense.

A contingent liability is:

(a) a possible obligation that arises from past events
and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more
uncertain future events not wholly within the
control of the entity; or

(b) a present obligation that arises from past events
but is not recognised because:

(i) it is not probable that an outflow of resources
embodying economic benefits will be required
to settle the obligation; or

(ii) the amount of the obligation cannot be
measured with sufficient reliability.

A contingent asset is a possible asset that arises from
past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of
the entity.

(l) Borrowings

Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings
using the effective interest method. Fees paid on
the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn
down. In this case, the fee is deferred until the draw
down occurs. To the extent there is no evidence that
it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the
facility to which it relates.

Borrowings are removed from the balance sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the
carrying amount of a financial liability that has been
extinguished or transferred to another party and the
consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in
profit or loss as other income/other expenses.

Borrowings are classified as current liabilities unless
the Company has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period. Where there is a breach of a
material provision of a long-term loan arrangement
on or before the end of the reporting period with the
effect that the liability becomes payable on demand
on the reporting date, the entity does not classify
the liability as current, if the lender agreed, after
the reporting period and before the approval of the

financial statements for issue, not to demand payment
as a consequence of the breach.

(m) Borrowing costs

General and specific borrowing costs that are directly
attributable to the acquisition, construction or
production of a qualifying asset are capitalised during
the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying
assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalisation.

Other borrowing costs are expensed in the period in
which they are incurred.

(n) Revenue from operations

Revenue is recognised when a customer obtains control
of a promised goods or service and thus has the ability
to direct the use and obtain the benefits from the goods
or service in an amount that reflects the consideration
(transaction price) to which the entity expects to be
entitled in exchange for those goods and services. For
each contract with a customer, the Company applies
the below five step process before revenue can be
recognised:

• identify contracts with customers

• identify the separate performance obligation

• determine the transaction price of the Contract

• allocate the transaction price to each of the separate
performance obligations, and

• recognise the revenue as each performance
obligation is satisfied

Duty Drawback: Income from duty drawback is
recognised on an accrual basis

Retention receivables arising from project contracts
have been classified as contract assets as per Ind AS 115
and regrouped accordingly.

Royalty: Royalty is recognised on accrual basis in
accordance with terms of respective agreements.

Refer Note 28 for entity-specific policies on revenue.

(o) Government grants

Grants from the government are recognised at their fair
value where there is a reasonable assurance that the
grant will be received and the Company will comply with
all the attached conditions.

Government grants relating to income are deferred and
recognised in the profit or loss over the period necessary
to match them with the costs that they are intended to
compensate. Government grant is recognised either as
other income or adjusted against expenses depending
upon the nature of the grant and the same is followed
consistently.

Government grants relating to purchase of property,
plant and equipment are presented by deducting the
grant from carrying amount of the asset.

(p) Income taxes

The income tax expense or credit for the period is the tax
payable on the current period's taxable income based
on the applicable income tax rate adjusted by changes
in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.

Current tax liabilities (assets) for the current and prior
periods are measured at the amount expected to
be paid to (recovered from) the taxation authorities,
using the tax rates (and laws) that have been enacted
or substantively enacted by the end of the reporting
period. Management periodically evaluates positions
taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying
amounts in the standalone financial statements.
However, deferred tax liabilities are not recognised
if they arise from the initial recognition of goodwill.
Deferred income tax is also not accounted for if it

arises from initial recognition of an asset or liability in a
transaction other than a business combination that at
the time of the transaction affects neither accounting
profit nor taxable profit (tax loss). Deferred income
tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the end of
the reporting period and are expected to apply when
the related deferred income tax asset is realised or the
deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available
to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle
on a net basis, or to realise the asset and settle the
liability simultaneously.

Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.

(q) Business Combinations

A business combination is a transaction or other event
in which an acquirer obtains control of one or more
businesses and results in the consolidation of the
assets and liabilities acquired. Business combinations
are accounted for by applying the acquisition method.
The Company also elects to apply the optional test
(the concentration test) which permits a simplified
assessment of whether an acquired set of activities and
assets is not a business on each transaction basis.

The consideration transferred is the sum of the
acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by the
acquirer to former owners of the acquiree. Deferred
consideration payable is measured at its acquisition-date
fair value. Contingent consideration to be transferred
by the acquirer is recognised at the acquisition-date

fair value. At each reporting date subsequent to
the acquisition, contingent consideration payable is
measured at its fair value with any changes in the fair
value recognised in profit or loss unless the contingent
consideration is classified as equity, in which case the
contingent consideration is carried at its acquisition-
date fair value.

Goodwill is recognised initially at the excess of: (a) the
aggregate of the consideration transferred, over (b)
the net fair value of the identifiable assets acquired
and liabilities assumed. Acquisition related costs are
expensed as incurred.

(r) Impairment of assets

Goodwill and intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that they might
be impaired.

Other assets (including investments) are tested
for impairment whenever events or changes in
circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs of
disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows
which are largely independent of the cash inflows from
other assets or groups of assets (cash-generating units).

Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.

(s) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the
Company are measured using the currency of the primary
economic environment in which the Company operates
(‘the functional currency’). The standalone financial
statements are presented in Indian rupee (INR), which is
the Company's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the
functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange
rates are generally recognised in profit or loss.

Foreign exchange differences regarded as an adjustment
to borrowing costs are presented in the statement of
profit and loss, within finance costs. All other foreign
exchange gains and losses are presented in the
statement of profit and loss on a net basis within other
income.

Non-monetary items that are measured at fair value
in a foreign currency are translated using exchange
rates at the date when the fair value was determined.
Translation differences on assets and liabilities carried
at fair value are reported as a part of the fair value gain
or loss.

(t) Segment reporting

Operating segments are reported in a manner
consistent with the internal reporting provided to
the chief operating decision maker. The Managing
Director (MD) of the Company has been identified as
the chief operating decision maker of the Company.
He assesses the financial performance and position
of the Company and makes strategic decisions.
The business activities of the Company comprise of
manufacturing and sale of compressors. Accordingly,
there is no other reportable segment as per Ind AS 108
Operating Segments.

(u) Accounting for Joint Operations

The Company recognises its direct right to the assets,
liabilities, revenues and expenses of joint operations and
its share of any jointly held or incurred assets, liabilities,
revenues and expenses. These have been incorporated in
the financial statements under the appropriate headings.
Details of the joint operations are set out in note 49.

(v) Offsetting financial instruments

Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there
is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not
be contingent on future events and must be enforceable
in the normal course of business and in the event of
default, insolvency or bankruptcy of the Company or
the counterparty.

(w) Dividends

Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of
the reporting period but not distributed at the end of
the reporting period.

(x) Insurance Claims

Insurance claims are accounted for on the basis of claims
admitted/expected to be admitted and to the extent
that the amount recoverable can be measured reliably
and it is virtually certain to expect ultimate collection.

(y) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

a) the profit attributable to owners of the Company

b) by the weighted average number of equity shares
outstanding during the financial year, adjusted for
bonus elements in equity shares issued during the
year and excluding treasury shares (note 46).

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account:

a) the after income tax effect of interest and other
financing costs associated with dilutive potential
equity shares, and

b) the weighted average number of additional equity
shares that would have been outstanding assuming
the conversion of all dilutive potential equity shares.

(z) Exceptional items

Exceptional items are those which in the management's judgement are material items that derive from events or
transactions falling within the ordinary activities of the Company but are not expected to be recurring. Exceptional
items are those items which meet the test of ‘materiality’ (size and nature) and the test of ‘incidence’. The nature and
amount of exceptional items are relevant to the users of the financial statements in understanding the financial position
or performance of the Company.The same is presented separately in the statement of profit and loss (before tax) and
balance sheet as applicable.

(aa) Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest millions as per the
requirement of Schedule III, unless otherwise stated.

Nature & purpose of loans and guarantees:

(i) The Company has advanced loan and provided guarantee to its subsidiary - Elgi Compressors USA Inc. to fund the
business acquisitions and additional working capital requirements. The guarantees provided to Elgi Compressors
Europe S.R.L - Belgium and ATS Elgi Limited is for the purpose of meeting working capital requirements.

(ii) The loans carry interest rates which are at par with the prevailing market rates. These loans are repayable within
March 31, 2030.

52 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The Managing Director (MD) of the Company has been identified as the chief operating decision maker
of the Company. He assesses the financial performance and position of the Company and makes strategic decisions.
The business activities of the Company comprise of manufacturing and sale of compressors. Accordingly, there is no
other reportable segment as per Ind AS 108 Operating Segments.

54 Compliance with approved scheme(s) of arrangements:

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous
financial year.

55 Relationship with struck off companies

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

56 Exceptional items

On November 21, 2025, the Government of India notified four Labour Codes, replacing the existing 29 labour laws.
Implementation of these Codes resulted in a past service cost and incremental liability of ' 128 million and the same has
been presented as an exceptional item for the year ended March 31, 2026.

The Company continues to monitor the finalisation of Central and State Rules, as well as Government clarifications on
other aspects of the Labour Codes, and will incorporate appropriate accounting treatment based on these developments
as required.