Kirloskar Oil Engines Ltd Management Discussions

Kirloskar Oil Engines Limited (KOEL) operates in a dynamic environment shaped by evolving energy needs, infrastructure growth, and rising focus on efficiency and sustainability.

Guided by its Made in Kirloskar philosophy, the Company continues to advance indigenous engineering, technology-led manufacturing, and in-house innovation to deliver reliable, high-performance solutions like internal combustion engines and generator sets. Its 2B2B vision further strengthens engagement across the value chain through closer partnerships with OEMs, EPC players, and institutional customers.

During the year, the Company restructured its business by transferring its B2C business to KOEL Fluid Dynamics Limited, sharpening focus on core B2B (Power & Energy) segments while enabling independent growth for the consumer business. It also incorporated a wholly owned subsidiary, Kirloskar Advanced Systems Pvt. Ltd., marking its strategic entry into high-growth sectors such as defence and railways.

These initiatives reflect a calibrated shift from a product-centric model to a focused, solutions-led structure, positioning KOEL on track to create sustainable value and secure long-term growth. This section outlines the key industry trends, business performance, strategic priorities, and risks and opportunities shaping the Companys outlook.

To strengthen its presence in Africa region, on 11 th February, 2026, the Company announced that its wholly owned subsidiary Kirloskar International ME FZE, UAE (KIME) will acquire 100% stake in Kirloskar Trading SA (PTY) Limited (KTSPL). Thus connecting with customers more closely and to enable market growth in Powergen segment through focus on data center and engineered products while enhancing its distribution network in the region.

Economic review

An overview of global economy

The world economy stayed resilient in CY 25, growing 3.4% even amid unabated geopolitical crises, scattered trade fragmentations, and challenging fiscal conditions.

3.4%

Global GDP growth rate

Growth trends remained uneven across regions. While advanced economies suffered a steeper slowdown because of policy tightening and structural headwinds, emerging markets and developing economies managed to pull off relatively stronger growth, fuelled by domestic demand and investment activity. The US economy was rather resilient on the back of a robust consumption and a strong labour market, accelerating 2.2% in CY 26. The Eurozone, on its part, made a gradual recovery amid continued weakness in manufacturing activities.

Downside risks dominate the global economic outlook. A_protracted conflict between Ukraine and Russia and extended US-Iran war, leading to greater trade fragmentation, a reassessment of expectations surrounding AI-driven productivity, or brewing trade disputes among major economies may significantly weaken the global growth and destabilise the financial market. Elevated public debt and eroded institutional credibility made the economy more vulnerable 1 .

With the economic growth likely to average below the pre-pandemic level, the world may skid into a prolonged lower-growth trajectory if policy coordination remains limited. Onfithe other hand, emerging economies, particularly those in Asia, are expected to remain the key contributors to global growth, with India continuing to stand out as one of the fastest-growing major economies.

A perspective on the Indian economy

India kept up a strong economic momentum since last fiscal, expanding 7.7% in FY 25-26, maintaining its position as the fastest-growing major economy 1 . The growth was supported by rising private consumption, steady agricultural output, improving urban and rural demand, and sustained public capital expenditure. Indias macroeconomic fundamentals remained stable, with investment activities supported by infrastructure spending and policy initiatives such as the Production Linked Incentive (PLI) scheme and Make-in-India mission. In sync with a robust domestic consumption, the countrys industrial activity stayed strong, with the Index of Industrial Production (IIP) rising 7.8% in December 2025 and infrastructure/construction goods growing 12.1%. Capital expenditure increased by 10.1% to _11.11 lakhs crores in the Union Budget 25–26, aiding construction and equipment demand. Power and infrastructure trends significantly shaped the demand in the end-market. While the peak power demand reached a record 242.49 GW in June 2025, persistent last-mile constraints continued to drive demand for backup power solutions, despite the overall shortages declining to 0.03%, according to power ministry data. Rapid expansion in renewable energy took the installed capacity to 178 GW. An additional 44.5_GW added in 2025 increased grid intermittency and ramping requirements, driving the adoption of hybrid and firming power solutions 2 . The power sector in India got a shot in the arm from a boom in data centers and demand rising from digital infrastructure. Demand from these two areas is likely to scale from 1.5 GW in 2025 to 6.5 GW by 2030 3 .

The rise of smaller cities and soaring sectoral growth in infrastructure, defence, railways, and agriculture kept the demand for engines, gensets, and related solutions at an accelerated pace.

Although the economic environment in India is expected to support this growth, there are looming threats of a potential global slowdown due to the continued geopolitical risks.

An evolving regulatory landscape

A stricter regulatory regime of CPCB IV+ was made mandatory in July 2024 as part of Indias pledge to go Net Zero on emissions by 2070. The full implementation of CPCB IV+ guidelines for gensets up to 800 kW mandates significant reduction in particulate matter and NOx emissions, accelerating the shift towards advanced technologies such as CRDI systems, after-treatment solutions, and dual-fuel configurations. The CEV Stage V guidelines for construction equipment laid out stricter emission standards and advanced filtration technologies, while deferring compliance timelines for TREM Stage V tractors to balance industry transition. Region-specific mandates, such as the 70% gas-based dual-fuel requirement in the NCR, eased the transition to cleaner fuels, according to the Commission for Air Quality Management (CAQM).

Government policy support in the infrastructure, energy, and industrial sectors firmed up long-term demand visibility. Investments in railways, defence, and large-scale infrastructure projects, along with initiatives such as the National Infrastructure Pipeline and manufacturing incentive schemes, supported demand for engines and power solutions. Clean energy initiatives, including allocations towards nuclear energy, the National Green Hydrogen Mission, and PM Surya Ghar Yojana, and Battery Energy Storage Systems (BESS), accelerated the shift towards hybrid and low-carbon energy ecosystems.

Rural and MSME-focused initiatives such as Jal Jeevan Mission, PM-KUSUM, and targeted credit programmes supported decentralised power demand while gradually reshaping the market towards cleaner alternatives.

On the global front, the strained trade ties between the US and China over tariff barriers created room for India to emerge as a manufacturing and export hub as part of the China+1 strategy of the West. Engineering exports, particularly IC engines and components, reaped the benefits with a 13% y-o-y growth 4 . At the same time, geopolitical uncertainties and energy transition imperatives accelerated investments in alternative fuels and hybrid technologies, reaffirming the strategic importance of compliant, efficient, and future-ready power solutions.

Industry overview

Powergen business

Global powergen scenario 1

In CY 25, the global power generation landscape was shaped by a surge in electricity demand, driven by the rapid growth of hyperscale data centers and AI workloads.

The global power generation industry scaled approximately $2,072.06 billion in the preceding year. Expansion of AI-driven computing is increasing the demand for high-density, uninterrupted power, while continued worldwide adoption of Electric Vehicles (EVs) is reshaping distribution requirements.

Evenasthetransitiontorenewableenergyaccelerates,conventional generation remains critical for ensuring energy security and providing baseline stability for intermittent sources. This dual-track energy mix underscores increasing reliance on fuel-agnostic and hybrid systems to balance sustainability with reliability. Accordingly, the global power generation market is expected to grow at 5.2% in CY 26, as countries address the need to upgrade ageing energy infrastructure to support a digital-first, electrified economy.

Indian Powergen scenario 2,3

India remains a global frontrunner in the energy transition, supported by strong industrial growth and a record government infrastructure allocation of _11.21 lakhs crores in the latest budget estimates.

Domestic electricity demand rose above 245 GW in the previous cycle, reflecting 4.2% growth driven by rapid urbanisation and the Make-in-India initiative. A key contributor is the expansion and modernisation of the Indian Railways and Metro networks, requiring advanced standby and prime power solutions for critical signalling and operations.

Government initiatives such as PMAY-G and the push for a Self-Reliant India in defence and manufacturing are further increasing the need for reliable, decentralised energy. As India strengthens its position as a global manufacturing hub, aided by the China +1 strategy of the West, demand for high-performance, emission-compliant power systems has intensified, highlighting the need for localised engineering excellence to ensure long-term energy resilience.

Industrial business

Global industrial scenario

The global industrial B2B market is projected to reach $11.53 trillion by 2030 for physical distribution 2 . Industrial machinery alone is expected to exceed $847 billion by 2030, with the $206 billion industrial construction business growing in sync. Specialised logistics and safety segments are also expanding strongly, averaging 7–10% growth rates with Industry 4.0 implementation. The sector is undergoing a major transformation driven by automation, artificial intelligence (AI), and decarbonisation initiatives in North America and Europe. Asia-Pacific and ASEAN benefit from supply chain diversification and rising manufacturing, infrastructure and investment, while the Middle East gains from diversification and giga projects. South America and Africa are led by mining demand and agricultural modernisation. Asia-Pacific remains the largest market, while North America leads in technology integration and advanced industrial adoption.

Indian industrial scenario

The Indian industrial sector is being propelled by significant government-led capital expenditure and policy support across infrastructure, defence, manufacturing, energy, and agriculture. For FY 25-26, the infrastructure outlay was a record _11.21 lakhs crores, equivalent to around 3.1% of the GDP. Railways remain a key driver of Indias infrastructure development, with a capital outlay of _2.93 lakhs crores in the Union Budget. Together with PM Gati Shakti initiative, this is expected to create significant opportunities for the industrial, manufacturing, and engineering sectors. Defence allocation for FY 26-27 stands at _7.85 lakhs crores, including a capex of _2.19 lakhs crores. Around 75% of the modernisation budget is earmarked for domestic procurement. Industrial development is further supported by _8,658 crores already invested in Defence Industrial Corridors, alongside a _53,439 crores potential pipeline.

The Production Linked Incentive (PLI) scheme, with a total outlay of _1.91 lakhs crores across 14 sectors, as proposed in the Union Budget for FY 26-27, remains a key catalyst for private investment into manufacturing. Additional momentum comes from _20,000 crores earmarked for the Nuclear Energy Mission, _19,327 crores for petroleum and natural gas, _3.86 lakhs crores for the National Monetisation Pipeline, and _1.40 lakhs crores allocated to farm sector modernisation in FY 26-27.

The Indian market unleashed strong opportunities across core industrial segments in 2026. At $790 billion, construction was the primary growth engine, while major ports handled a record 915 million tonnes of cargo in FY 25-26, and defence exports reached a record _38,424 crores. India also remains the worlds third-largest oil consumer, with the sector looking at an investment of $25 billion in exploration and production. The countrys nuclear capacity of 8.8 GW stays the course to reach 100 GW by 2047, when the government hopes to transform India into a developed economy.

Fluid Dynamics (FD)

Fluid management is critical to sustainable growth. The statement is validated by a 5% y-o-y growth in the international pump market to $64.3 billion. On the home front, the market surged over 6% to $2 billion, driven by advanced technology, use of AI-powered systems, industrial expansion, and subsidies in agriculture, urbanisation, and infrastructure development. While the Indian market remains 70% agricultural and residential, there is a significant shift towards high-margin industrial segments, solar adoption, and IoT integration.

Performance overview

Kirloskar Oil Engines Limited (KOEL) is a leader in the manufacturing of internal combustion engines and generator sets, commanding a strong presence in both the domestic as well as international markets. The Company also offers solutions across farm mechanisation and water management.

We manufacture air-cooled and liquid-cooled engines for generator sets, ranging from 1 kW to 10 MW and supply engines for construction, earth-moving, marine, mining, railways, fluid handling and agricultural applications. We also offer alternative fuel solutions such as biodiesel, natural gas, Hydrogen Fuel Enhanced Combustion (HFEC), ethanol, methanol, Hydrotreated Vegetable Oil (HVO), hythane, hydrogen-diesel blend, pure hydrogen, isobutanol and biogas-based engines. KOEL ranks among the top global genset brands, operating the largest fleet of IoT-enabled gensets.

Our advanced research and engineering facility enables complete in-house development and compliance with the stringent emission and noise regulations.

Our portfolio spans powergen, industrial engines, firefighting systems, farm equipment, electric motors and fluid solutions and we cater to a diverse set of sectors, including residential, telecom, infrastructure, defence, hospitality, data centers, manufacturing, mining, agriculture and fisheries. With a strong focus on customer- centric innovation and value creation, we continue to evolve while embedding sustainability across our operations and offerings.

Key Highlights for FY 25-26

y Successfully launched the Optiprime series, worlds most space-efficient gensets and delivered the worlds smallest 1,000 kVA gensets for MENA and North American markets. y Secured IP and patents for Indias first hydrogen-engine-based gensets, positioning KOEL for entry into European and North American green energy markets. y Transferred our B2C business to its 100% subsidiary KOEL Fluid Dynamics Pvt.Ltd., by way of slump sale, sharpening focus on core B2B (Power & Energy) segments. y Incorporated Kirloskar Advanced Systems Pvt. Ltd., a wholly owned subsidiary, marking strategic entry into the defence and railways sectors. y Announced 100% acquisition of KTSPL for strengthening its market position with more customer focused solutions in Powergen and Industrial Engines Business. y Advanced the data center solutions portfolio with the launch of Optiprime with certified DCCP ratings up to 2,400 kW, delivering reliable, high-performance power solutions for mission-critical data center applications.

Growth strategy

KOELs strategic focus for FY 25-26 centred on high-margin segments, energy transition, and global expansion, hitting major milestones in its long-term roadmap. For the upcoming fiscal year, KOEL is pivoting towards high-value engineering, digital manufacturing, and a fuel-agnostic product portfolio to capture emerging demand at home and beyond.

FY 25-26 \u2013 Core	FY 26-27 - Develop
4 Execution of manufacturing strategy	4 Complete execution of the technology roadmap
4 Capacity utilisation of fluid dynamics	4 Increase the share of business of Arka Retail
FY 28-29 \u2013 Novel	FY 27-28 \u2013 Expand
4 Improve share of business in defence and retail	4 Inorganic growth opportunities in line with
4 Expand to non-ICE programmes but in line with	core strategies
the core business	4 Increase international market share
4 Complete fluid dynamics product portfolio	4 Market share improvement of fluid
	dynamics segment
FY 29-30 \u2013 $2 billion (consolidated revenue) \u2013 2B2B strategy
4 Final year of mission of $2 billion (consolidated _16,000 crores)

Business segments

Segments and product lines:

Power and Energy segment y Powergen: Engine and gensets y Industrial: a) Industrial engines; b) Power solutions for large/institutional project clients (marine, defence, nuclear, etc.) y Distribution and aftermarket: a) spares, services and after sales support; b) Finished products y New Energy and Electric & Electronics: Solar, BESS, microgrid, electrolysers, fuel cells, controllers, power electronics, electric motors, HV/MV motors y International

Fluid Dynamics segment y Engine based pumps y Electric pumps y Industrial pumps y International

Arka Group y Financial services

Power and Energy segment

Our Power and Energy segment operates in the field of power solutions, offering internal combustion engines, fuel-agnostic gensets, and customised power systems across sectors such as infrastructure, healthcare, hospitality, data centers, defence, and industrial applications in Indian and overseas markets.

Backed by strong R&D, we focus on environmentally responsible, emission-compliant technologies, with innovations such as IoT-enabled gensets and the hybrid Optiprime series enhancing efficiency and sustainability. This is complemented by a robust service network of over 500 outlets and more than 3,000 professionals, further strengthened by digital platforms like Kirloskar Remote Monitoring (KRM) for proactive maintenance and faster service response.

Powergen business

KOEL is among the worlds largest manufacturers of power generating sets. We specialise in air-cooled and liquid-cooled engines and diesel generator sets, covering a power range from 1 kW to 10 MW. KOELs engines and generator sets are also certified to meet stringent noise and exhaust emission standards prescribed by the Central Pollution Control Board (CPCB), India.

Key product offerings:

y Fuel agnostic gensets y Energy storage solutions y Dual fuel solutions y Modular energy solutions y Microgrids

_ 2,598 cr

Sales in FY 25-26

28 %

Market share

We strengthened our market leadership by commencing the 4X5Y journey with strong performance in FY 25–26. Our strategic focus remains on defending our dominant LHP share while expanding in the MHP and HHP segments.

Key achievements include: y Penetration into data centers, real estate, manufacturing segments with our Optiprime portfolio y Deployment of CPCB IV+ compliant solutions for Indian Railways and metro networks y Product expansion through the space-efficient Optiprime and Sentinel series led to the delivery of the worlds smallest 1,000 kVA gensets, strengthening our presence in the MENA and North American markets y Introduced the next-generation hybrid Optiprime Power Systems with certified DCCP ratings from 600 kW to 2,400 kW, strengthening the Companys data centers power solutions portfolio Despite challenges such as geopolitical volatility in the Middle East, fluctuating commodity costs, and forex pressures, our commitment to 100% in-house R&D ensures high indigenous value.

Business outlook

The outlook remains positive, supported by expanding opportunities in data centers, infrastructure projects, and increased penetration in railways and metro segments. Growing demand from these sectors, coupled with a strong export focus, is expected to drive sustained growth and strengthen market presence across domestic and international markets.

Furthermore, investments across four technology tracks, including fuel cells and energy storage, position us to lead the next phase of smart, sustainable energy solutions.

Industrial business

KOELs industrial engines business segment offers a comprehensive range of engines from 20 hp to 13,500 hp, catering to diverse customer requirements. We manufacture engines for a wide spectrum of industrial applications, serving the key sectors of the economy.

The Company offers a diverse range of products designed to meet applicable emission requirements across different segments and power ranges. These products comply with relevant government-mandated emission norms, including CEV Bharat Stage V where applicable, reflecting the Companys commitment to regulatory adherence and environmental responsibility and demonstrating its strong R&D capabilities.

Engines for equipments:

y Earth moving y Construction y Material handling y Agriculture y Marine y Defence y Rail y Fluid handling

_ 1,444 cr

Sales in FY 25-26

The business unit achieved a significant y-o-y growth in FY 25-26, reasserting the Companys cohesive, cross-functional efforts. While this progress was broad-based, the railways, defence, and marine segments outperformed others, exceeding a 40% growth rate each.

The governments Aatmanirbhar Bharat initiative, which has acted as a catalyst for domestic procurement and reduced reliance on imports, has prompted a strategic push towards infrastructure modernisation and advanced defence capabilities.

Improvements in FY 25-26:

y Proactive market share acquisition: Our sales team was aggressive to secure market share from our competitors by positioning KOEL as a strategic growth partner, rather than a traditional vendor. We succeeded in grabbing a larger market pie in both high-volume and specialised high-margin segments.

y Sales & Operations Planning (S&OP) framework: We were able to plan better due to a clearly laid down S&OP, which enabled us to be more disciplined in deliveries.

y Expanding wallet share through lifecycle innovation: We ventured into new avenues for each segment like repowering, and composite orders with service and spares. This fetched us additional revenue and helped raise the wallet share from existing customers.

y Fluid handling business: This segment also achieved a key milestone with the launch of high-speed engines for firefighting pumps.

Segment specific growth drivers:

y Defence and non-ICE portfolio: Our growth is anchored by a robust order book for high-reliability power backup systems for the Indian Army. A pivotal achievement in our non-ICE portfolio was the successful test-firing of Pralay Missile warhead casings, positioning Kirloskar for nomination-based supply opportunities.

y Marine: We continue to see a consistent flow of orders from the Indian Navy and Coast Guard, focused on the operational readiness of the national fleet. We have also reached critical milestones in the Navys Make-1 Project Daksha and are on track to deliver the project on time. y Railways: The success in this sector is headlined by the exceptional execution of our Power Car business, which surged 47% in the fiscal year under review.

y Nuclear power: We are on track to deliver indigenous 6.3 MW engines for the prestigious NPCIL Kudankulam Project. Our open-licence agreement for the localised production of SEMT Pielstick engines strengthens our foothold in Emergency DG sets for future nuclear power plant projects in India.

Business outlook

The outlook for the business unit remains positive, supported by strong tailwinds from infrastructure expansion and digital hubs. Massive public investment in transport, construction, AI-powered data centers, and high-tech manufacturing is driving the demand globally, while India continues its infrastructure push with planned spending of 3.1% of its GDP. The energy transition is creating demand for grid modernisation, backup power storage, and Small Modular Reactors (SMRs). Industrial automation is also rebounding, with companies upgrading their plants through AI and predictive maintenance to reduce downtime, while manufacturers adopt an AI-based supply chain planning to meet global standards.

At the same time, supply chains are being strategically realigned through supplier diversification and multimodal logistics to improve deployment speed, while Indias Aatmanirbhar momentum, backed by record defence production of _1.50 lakhs crores and the infrastructure outlay is expected to create multi-year opportunities for domestic industrial players.

Distribution and aftermarket business

KOELs distribution and aftermarket business is focused on delivering a seamless customer experience. A deep understanding of customer expectations remains central to this approach, helping it to align the offerings with evolving customer needs.

Key channels

y Service channel y Direct channel y Retail channel

_ 968 cr

Sales in FY 25-26

Our distribution and aftermarket business has grown significantly in the past year on the back of initiatives like improvement in service penetration, dealer consolidation, digital transformation, launch of whole goods, introduction and focused campaigns on products and Annual Maintenance Contracts (AMCs).

We have restructured our distribution and aftermarket business unit, to enhance focus on major accounts by building dedicated service teams for key Powergen and industrial customers. We are working on firming up our product management and operations as part of our restructuring initiative.

Service channel

Service and revenue organisations are responsible for the overall aftermarket support of KOEL gensets, engines and allied products. It is supported by the service dealership network.

The Kirloskar CARE brand continues to be a cornerstone of our value proposition in the service channel, providing dedicated after-sales support for our Powergen and industrial products. Our network of service touchpoints and service engineers is integrated through a unified digital platform to ensure seamless service delivery and service experience across the country.

~500

Service touchpoints all over India

11 %

y-o-y increase in service engineers

Initiatives undertaken to enhance the service channel capabilities: y To support our transition to CPCB IV+ and CEV BSV emission norms, we have focused on upgrading the technical skills of our service channel and technicians, ensuring the availability of specialised diagnostic tools across all regions and maintaining a robust supply chain for the specific spare parts required for these advanced engines. y To support our customer retention and revenue growth, we have improved service penetration through customer connect initiatives, focusing on Bandhan (AMC) and extended warranty (Anubandhan) programmes for enhanced customer retention, higher share of wallet with AMC customers through comprehensive service events and by allowing service dealers to enter into maintenance contracts directly with customers. y Introduction of finished products such as Nulife, remanufactured gensets and engines, mobile light towers, portable gensets and addressing repowering opportunities in the market were added to the existing portfolio to increase the ticket size of transactions and to attract new customers. y To ensure infrastructure and future readiness, we are investing in high-tech infrastructure to provide proactive support.

- The Rapid Response Centre: It allows us to remotely monitor the performance of CPCB IV+ gensets in the field and address issues before they cause any downtime.

- Dealer Response Team (DRT) and Command Centre: These initiatives help strengthen frontline technical capability through dedicated Dealer Rapid Response Teams. It was rolled out in September 2025 and we scheduled DRT trainings in FY 26-27 to improve customer experience. The Command Centre is expected to support real-time issue tracking and escalation. This programme is designed to create a responsive, technically strong dealer network for quicker resolution.

- HHP capability enhancement in channel initiatives:

Specialised training programmes were conducted for on-the-field service engineers. The initiative included hands-on sessions to build deeper technical competence on High Horse Power (HHP) engines. We aim for elevating field readiness, improving diagnostic accuracy, and strengthening service processes to provide an improved customer experience.

Dealer development initiatives:

In FY 25-26, KOEL stepped up focus on its service network, enhancing operational governance, and transitioning aftermarket dealers towards more robust corporate structures. Through revised organisational structures and implementation of real-time performance tracking, we have significantly improved our channel reach and service quality.

y Network expansion and reach: Our service footprint continues to expand, ensuring comprehensive coverage and customer accessibility. Our 44 aftermarket dealers manage regional operations with close to 500 service touchpoints, including resident engineers and service outlets.

y Commercial compliance and governance: We have prioritised the professionalisation of our dealer network through corporate conversions and meticulous financial strengthening. The transition from proprietary to corporate structures is ongoing, running in parallel with the finalisation of legacy accounts and move to 100% e-invoicing.

y Leadership and stakeholder engagement: Strategic leadership appointments and regular stakeholder dialogues have been key to maintaining alignment with the organisational goals. A future-ready service dealer organisation structure was successfully rolled out in FY 25-26. y Operational excellence and quality assurance: Rigorous performance measurement remains a cornerstone of our service strategy. A balanced scorecard system has been developed to monitor the performance. Various audits were completed in FY 25-26, while performance-based incentives were formally linked to audit scores to drive continuous improvement.

Direct channel

A dedicated direct channel team was set up in the previous year with an intent of providing differentiated support and service to key account customers from sectors like telecom and banks.

Expanding on this philosophy, we also strengthened a dedicated team to support key industrial accounts such as OEMs, railways and defence. This team engages with the user in a proactive manner and at regular intervals to maintain a healthy business relationship.

In FY 25-26, following measures helped us gain additional revenue from the Direct Channel while ensuring higher customer engagement and satisfaction. y Increase the business from customers in the railways segment. y Launched extended warranty for construction equipment.

Retail channel

The Retail Channel has evolved successfully from its origins in tractor parts and oil into a diversified distribution network. Today, it serves as a key sales vertical for agricultural and construction equipment spares, electric motors, and whole goods.

To increase our share of the wallet per customer, we introduced several product lines, such as filters, batteries, and high-demand consumables. Our growth was further supported by a targeted segmental approach, focusing specifically on: y Two-wheelers y Tractors y Off-highway equipment y On-highway vehicles y Electric Motors Our retail infrastructure comprises of more than 400 distributors in India, providing deep access to local retail outlets. In FY 25-26, we enhanced our competitive edge with the following:

y Specialised distribution: Developing a network of specialised distributors dedicated to driving KOEL sales against competing brands.

y Digitising the mechanic loyalty programme: We have moved its mechanic loyalty programme from a physical coupon-based system to a fully digital system. The digital process maintains transparency and ensures quicker reimbursements of incentives to the mechanics. It also offers insights into the sales of different products in the channel. We has enrolled over 6,000 mechanics in a loyalty initiative designed to strengthen the market pull and brand preference at the ground level. The Company has diversified the retail portfolio by introducing whole goods (finished products), moving beyond just spare parts.

Business outlook

y Newer emission norms like CPCB IV+ and CEV BSV have led to the introduction of more electronic engines and complex aftertreatment solutions which throw up the opportunity to add offerings such as remote monitoring services and diagnostic support. y Key account management is expected to help business growth through improvement in the share of the wallet of key customers. We are also working on a remanufacturing strategy with regional outfits to offer Nulife products with faster turnaround. y We will also continue the drive of product introduction in the retail channel. y Additionally, there are plans to diversify our channels in weaker markets such as eastern and southern India by implementing digitalisation solutions for retail sales visibility and launch of loyalty programmes to boost sales.

International business

KOELs international presence reached a fresh milestone in FY 25-26, marked by a strategic pivot towards High Horsepower (HHP) solutions and a stronger focus on high-growth markets in the Middle East and North Africa. The Company sharpened its focus on the global power and energy segment through its 3C framework of Capability, Capacity, and Coverage, while accelerating its transition into a global power solutions provider.

The international power and energy division delivered a robust performance with a 21% y-o-y growth, despite market uncertainties that impacted the closing months of the fiscal year.

Regional and segment highlights

KOEL intensified its engagement across key global regions by localising teams and enhancing service infrastructure through the following:

Powergen hubs:

A significant portion of overseas revenue continued to flow from the MENA, Sub-Saharan Africa, and American regions.

Marine and industrial:

The Company strengthened its marine footprint by enhancing channel partners in the UAE, South Africa, and Bangladesh.

Mining:

Building on the development of products for coal mining in the African region, KOEL expanded its service offerings to support these high-demand industrial applications.

Fluid Dynamics (FD) segment

KOELs Fluid Dynamics segment encompasses diesel pumps, electric pumps, and industrial pump sets, operating under the KOEL Fluid Dynamics Pvt. Ltd. (KFD) umbrella, which was earlier known as La-Gajjar Machineries Pvt. Ltd. (LGM).

The segments value proposition rests on affordability, reliability, and strong after-sales support, enabling sustained customer retention across domestic and international markets.

_ 1,122 cr

Consolidated sales

Key product offerings:

y Diesel engines y Industrial pumps y Electric pumps y Engine-based pump sets

FY 25-26 under the SWOT view

Strengths y HHP leadership: Rapid scaling in the complex HHP segment, where service quality and reliability are more critical than cost. y R&D legacy: Development of application-specific engines (mining, construction, firefighting). Continued evolution through a digitally connected manufacturing ecosystem that ensures superior, compact, and efficient products. y Growing global dealer ecosystem: Strong dealer and distributor base across the world. KOEL products were sold in almost 60 countries in FY 25-26, with focus on localised solutions and aftermarket support.

Opportunities y Data center expansion: Massive global demand for backup power in the tech sector provides a long runway for the new 2500 kVA range.

y Energy transition: Growing global hunger for engines compatible with alternative fuels like biodiesel, natural gas, Hydrogen Fuel Enhanced Combustion (HFEC), ethanol, methanol, Hydrotreated Vegetable Oil (HVO), hythane, hydrogen-diesel blend, pure hydrogen, isobutanol etc.

Risks and threats y Emission compliance: Constant pressure to meet evolving global standards (such as EPA Tier 4 or Euro Stage V) requires continuous high-cost R&D. y Supply chain stability: Volatility in the procurement of specialised components remains a risk to maintaining international delivery schedules. y Competitive landscape: Aggressive pricing from low-cost new entrants and protectionist trade policies, such as carbon taxes, may impact the price competitiveness of Indian exports.

Business segment overview and performance

FY 25-26 was a year of structural consolidation. Our Sanand plant capacity was raised from 3 pumps a minute in Q1 to 10 a minute by Q4. The Rajkot plant achieved a fulfilment rate of over 20,000 engines per quarter from Q3 onwards, reinforcing the diesel segments supply reliability. In Q2, the business executed a systems consolidation initiative that unified LGM and KOEL WMS accounting, inventory, and operational platforms into a single integrated architecture. KOEL also executed a slump sale to LGM during the year, officially renamed KOEL Fluid Dynamics Pvt. Ltd. further streamlining the entity structure operating under the Varuna Electric and KOEL Electric brands.

Market segment performance y Electric pump segment: Remained the largest topline contributor. Future focus will be on a renewed product portfolio and expanded channel outreach. y Diesel segment: Performance was strong in FY 25-26 with over 70,000 engines supplied from Rajkot and higher acceptance in the aftermarket.

y Industrial segment: We launched specialty pumps (end suction, sewage, and mud) to offset seasonality in other segments. KOEL EMS recorded approximately _6 crores in sales during the year.

y International segment: We successfully expanded the KFD footprint to 46 countries across four continents.

Strategic developments and leadership

The year under review saw the formalisation of KFDs long-term strategic direction under the new leadership, anchored by the Vision 2030 framework targeting a _4,000 crores topline, focused on the 4X5Y objectives. To support this, the business set up dedicated product planning and project execution teams to accelerate product launches and align organisational structure with growth objectives.

The segment was formally rebranded from LGM to KOEL Fluid Dynamics Pvt. Ltd. in Q3, reflecting a move towards a unified brand identity. Digital initiatives rolled out during the year include PULSE (for sales and service management), KFD Beat (for field force efficiency), and the forthcoming KFD Buddy platform for customer engagement. A project management office and a product planning vertical were also built to manage raw material volatility and geopolitical uncertainty more systematically.

International business

KOELsinternationalfluiddynamicsbusinessisfocusedondelivering reliable, energy-efficient, and application-driven solutions, serving agriculture, irrigation, water supply, and industrial needs.

Our business continued its strong growth momentum in FY 25-26, driven by increasing demand across MENA, Europe and emerging markets and grew by 33% over FY 25-26.

Analysis of FY 25-26 overseas business under SWOT view

Strengths y Product reliability and performance in diverse conditions, backed by KOELs engineering and manufacturing expertise. y Development of application-specific irrigation and water supply products. y Growing global distribution network, after-sales service and support. y Focus on customised solutions for local market needs.

Weaknesses y Dependence on monsoon and agricultural cycles in key markets. y Supply chain and logistics challenges in export markets. y Currency fluctuations impacting margins. y Stricter emission and regulatory norms in different markets.

Opportunities y Rising demand for efficient irrigation and water management systems. y Growth in agriculture and rural infrastructure globally. y Increasing focus on energy efficiency and sustainability. y Expansion potential in dry and developing regions. y Opportunity to scale aftermarket and service business.

Threats y Competition from low-cost regional players. y Price sensitivity in developing markets. y Trade barriers and import regulations. y Rapid shift towards alternative technologies and solutions.

Ensuring an efficient supply chain

At KOEL, we recognise that a resilient and agile supply chain underpins our competitive advantage. In a landscape defined by rapid technological shifts and stringent emission norms, our focus remains on building a future-ready, digitally cohesive ecosystem aligned to our core mandates of agility, responsiveness, technology, quality, delivery, and cost.

We emphasise on digital integration, flexibility, and responsiveness for quality, delivery, and costs. In FY 25-26, to meet evolving business needs and strengthen our HHP portfolio, we brought in suppliers as part of our development process to deliver optimal-cost, high-technology products. Onboarding of new suppliers for defence projects is also underway, enabling KOEL to meet product development requirements of up to 10 MW.

Continued Value Analysis/ Value Engineering (VA/VE) initiatives led to the execution of multiple projects, delivering the highest-ever cost savings thus, positively impacting the margins. Our cross-functional teams (CFTs) executed projects across existing portfolios and new platforms while development of the new GK series platform addressed market demand for high-performance, cost-effective products with best-in-class fuel economy.

Supply chain disturbance management

The Company succeeded in managing the business through the global supply chain disruptions continuing for the last few years. Shortages, particularly disruptions with the global chip shortages, had triggered major anxiety, but we survived this through strategic stocking and strong supplier relationships. The last quarter saw disruptions due to petroleum product availability and rising copper and aluminium prices. Despite this, long-term supplier engagement ensured no loss in production.

Digital transformation and industry 4.0

We are transitioning towards total horizontal integration of our value stream. Central to this sits our Two-Way Digital Connect, a web portal linking our entire supply base, enabling robust data repositories and streamlined stakeholder communication. Further advancing digital maturity, we launched the data cluster programme, which enabled suppliers to monitor multiple KPIs and leverage predictive analytics, fostering a data-driven culture. These initiatives align with our strategy to transition the supplier base towards industry 4.0, or the fourth industrial revolution, characterised by smart manufacturing, real-time decision-making, enhanced productivity, flexibility and agility.

Operational excellence, quality and partnership

Our commitment to quality is driven by the Journey to Zero Defects. Through deployment of the zero-defect approach using VDA 6.3 along with a DMAIC methodology, we have institutionalised structured issue resolution. This training approach, combining theory with shop-floor practices, has improved quality indices and enhanced process stability.

Manufacturing efficiency improvement stewardship

KOEL continues to lead green initiatives across the manufacturing supply chain by encouraging foundry partners to eliminate non-value-added activities. A key initiative is the Zero Fettling programme, which optimises casting processes at the source, reducing manual fettling. This improves product aesthetics to international standards, enhances shop-floor safety, and reduces worker fatigue by fostering a sustainable, human-centric environment.

Partnering for a sustainable future: Supplier ESG integration

We recognise that sustainability requires a unified value chain, with suppliers as strategic partners in our ESG journey. Our approach is built on four pillars: Educate, Assess, Co-create, and Source. We support partners in navigating legal compliance and ESG expectations, implement structured assessments to identify gaps, and co-create improvement plans using KOELs tools and expertise. By prioritising responsible sourcing, we align our ecosystem with environmental and social stewardship goals. We source approximately 96% of raw materials from local suppliers that provides us with insulation from global uncertainties while improving control over quality, cost, and delivery.

Human resources

Human capital is the biggest treasure at KOEL. We envision leadership, encourage independence, and empower lives by cultivating our biggest resources relentlessly.

This year, our HR initiatives focused on strengthening our ethical foundation, identifying future leaders, and fostering a culture of continuous, community-driven learning.

Ethics and compliance

We continue to uphold the highest standards of corporate governance and professional integrity. y Code of Conduct (CoC): Following updates at the Group level, we launched a comprehensive sensitisation programme. Our Code of Conduct contains topics related to diversity and inclusion, human rights, laws related to substance abuse, insider trading, data protection rights, workplace ethics, POSH, and non-retaliation.

91 %

Percentage of employees who have completed training

y Tech hour: We introduced Tech Hour as a monthly forum where senior leaders share expertise on specific products, emerging technologies, or internal processes covering around 300 employees in every session.

9

Completed tech hour sessions

Talent development and succession planning

To ensure business continuity and leadership depth, we have sharpened our focus on the talent pipeline. y Potential assessment: We concluded an assessment to identify High-Potential (HiPo) talent, ensuring that those with the drive and ability to lead are recognised and nurtured. y Succession pipeline: We successfully mapped successors for the first two layers of leadership. This exercise included an evaluation of readiness levels for each identified successor, allowing us to create targeted development plans to bridge any competency gaps.

Fostering a learning ecosystem

This year marked a shift towards social learning and leadership-led knowledge sharing. y Digital learning expansion: We launched LinkedIn Learning across the organisation, providing our employees with world-class content at their fingertips. y Learning communities: To move beyond passive consumption, we built specialised learning communities within each BU.

62 %

Activation rate across the organisation as a result of the learning communities

To ensure we are building a workplace that listens and evolves, we conducted a comprehensive employee engagement survey this year. This data-driven exercise serves as a diagnostic tool to check the pulse of the organisation and identify areas of strength and opportunity. y Data-led insights: The survey results have been granulated at the BU level to ensure localised relevance. y Action planning: Action planning has started at respective BU levels depending on the voices and feedback received.

Ensuring a better life

This year, we hosted our biennial Family Day, a flagship event that brings the Kirloskar Parivaar together. Recognising that the support of the family makes the backbone of success for our employees, this celebration allowed families to experience the organisations culture firsthand. The event serves as a vital touchpoint for building long-term loyalty and strengthening the emotional bond between the Company and its extended family.

Sports and physical wellness

To promote a culture of fitness, teamwork, and healthy competition, we organised a series of inter-departmental sports tournaments. These events encourage collaborations outside the formal office environment and contribute to the overall mental and physical wellness of our workforce.

Executive Health Checkup

The Executive Health Check-up programme was launched on 1 st September, 2025, as a key initiative to support employee well-being. The primary benefits of the check-ups are identifying health risks at an early stage and enabling pre-emptive intervention. The Company-paid health check-up is offered annually to all employees of the rank of a senior general manager and above, and once every two years for all executives up to the general manager rank who are 40 and above. The programme is facilitated by a wellness partner, TruWorth, with services available at leading hospitals and diagnostic centres, featuring convenient app-based booking and post-test consultation.

Compensation

In FY 25-26, we significantly strengthened our commitment to our shop floor workforce by upgrading the comprehensive insurance coverage for over 850 employees.

Recognising the evolving healthcare needs of our team, we introduced two additional benefits like Voluntary OPD, advanced treatments and Mental Health benefits with our insurance partners. The Company has successfully signed a three-year wage agreement with the union in our Nashik Plant effective from 1 st April, 2026. This wage agreement is a strong testament to KOELs established tradition of maintaining peaceful, healthy, and harmonious industrial relations. Building on these continuous efforts—which included completing our 11 th wage settlement ahead of schedule in March, 2025—this latest agreement further underscores our commitment to a cooperative labor environment. This collaborative approach directly ensures zero disruption to our plant operations and is critical to the long-term success and stability of our Nashik manufacturing. This win-win agreement balances fiscal discipline with employee growth which in turn positively enhances the growth potential of our Nashik manufacturing facility, catering to our HHP engine segment with a focus on nuclear, defence and marine markets.

Environmental Health and Safety (EHS)

Environment

Sustainability sits at the core of corporate strategy at KOEL. Our adept resource management acts as the guiding principle in designing our blueprint for Environmental, Social and Governance (ESG) responsibilities. Our governance framework aligns with leading global standards, including GRI, BRSR, and the National Guidelines on Responsible Business Conduct, ensuring that ESG considerations are integrated into business decision-making. In FY 25-26, we complied with SEBIs BRSR Core framework for voluntary value chain disclosure. The Companys total Scope 1 GHG emissions stood at 9,269 tCO 2 e and Scope 2 reached 13,632 tCO 2 e. Our in-house process efficiencies and optimisation of our power mix helped us to limit the emission intensity to a modest level of 3.83 tCO 2 e/million rupees, despite a 25% growth in topline.

We have deployed a 100 LPH Electric Evaporator in the effluent treatment plant at our Nashik facility. It treats 2 kilolitres of wastewater a day, helping us lower the water intensity from 41.89 kL to 34.26 kL/million rupees. We are transitioning from solvent-based to water-based paints to lower VOC emissions and minimise paint waste toxicity, while lean manufacturing reduces raw material, water, and energy consumption at source. A high production volume in FY 25-26 resulted in an overall increase in waste generation but higher sales helped us to decrease the waste intensity from 1.16 MT/million rupees to 1.11MT/million rupees. We are committed to advancing the ESG agenda through continuous improvement in reporting transparency, deeper integration in strategic planning, and scaling up clean energy and low-carbon product solutions.

Health and safety

At KOEL, the health and safety of its employees, contractors and stakeholders remains central to its operational strategy. During the reporting year, the Company continued to firm up its safety culture across facilities through targeted initiatives, training programmes and employee engagement activities.

Its always safety first at the Kagal plant

It was another active year of safety engagement at the Kagal plant. National Safety Week was observed with rallies, stress management trainings, and safety campaigning to promote a safety-first culture. Employees participated in QCFI Safety competitions and won four gold medals, a testament to the plants commitment to safety excellence.

Comprehensive firefighting and first-aid training, including both theoretical and practical sessions, were conducted to strengthen emergency preparedness. A National Fire Service Week was observed through mock drills and firefighting competitions.

Critical installation safety audits and lockout-tagout (LOTO) implementation were carried out to reinforce workplace safety standards. Convex mirrors were installed on the shop floor and roadsides to improve visibility and reduce the risk of accidents. Road Safety Week was also observed during the year. Notably, the Kagal plant received recognitions like the FAME National Safety Award for Safety Excellence, the NSCI Safety Award 2025 in the Manufacturing Sector, and the NSC Maharashtra Safety Award.

Lens on guardrails at Khadki, without a lapse

At Khadki, quarterly safety committee meetings were held regularly to review audit observations, monitor the closure of unsafe acts and conditions, ensure PPE compliance, and track near-miss reporting. Periodic firefighting and first-aid training, including practical sessions conducted by the Khadki Fire Brigade, were supplemented by emergency evacuation drills conducted jointly at Khadki and Bhare locations.

An external safety audit was carried out during the year, with corrective actions implemented by individual departments in coordination with the Safety Committee. A Road Safety Week was observed through a defensive driving awareness session, forklift safety training, and an online safety quiz. National Safety Week activities included workplace yoga, ergonomics sessions, stress management workshops, and a PPE exhibition.

The plant also conducted a First Aid and CPR training programme through a DISH-approved agency for both permanent and contractual employees. Health awareness sessions addressed topics like thyroid disorders, arthritis, womens health, and industrial accidents, complemented by specialised health camps offering eye check-ups, bone density tests, dental screening, and cardiac screening. A voluntary blood donation

At Nashik, safety is a collective commitment

The Nashik plant conducted a wide array of safety initiatives during the year. National Safety Week was inaugurated with a safety oath ceremony and cultural activities to reinforce collective commitment to safety. A PPE exhibition was organised, providing 130 employees with hands-on interaction with safety equipment, including helmets, gloves, safety shoes, harnesses, and respiratory protection.

Fire Safety Week featured a hands-on firefighting training programme for 69 employees. A Road Safety Week was observed with team communications and awareness activities. Health camps covering eye check-ups for 122 employees, dental check-ups, and an on-site Pollution Under Control (PUC) camp for 110 employees were held. Webinars on yoga for the workplace, ergonomics, and a holistic approach to lifestyle disease management were live-streamed across KOELs plants.

Bhares on its toes to protect its people

The Bhare plant demonstrated a strong and dynamic safety culture during the reporting year. National Safety Week was inaugurated with a safety oath ceremony, flag hoisting, and a safety rally, reinforcing our commitment to a safe workplace. Webinars on stress management, yoga for workplace wellness, ergonomics, and holistic lifestyle disease reversal were organised and live-streamed across KOEL group companies. A firefighting training programme provided 30 employees with hands-on experience in fire suppression and evacuation protocols. First Aid and CPR training was conducted through a DISH-approved hospital, benefitting 13 employees at Bhare. A Safety Poster, Poem, Slogan, and Essay competition saw participation from 39 employees, reinforcing safety awareness in an engaging manner. Fire Safety Week was observed with banner displays, shopfloor awareness activities, offline examinations, and a plant cleanliness drive.

Mock drills simulating medical emergencies, fire scenarios, and LPG leakage were conducted during the year. A noise dosimeter survey was carried out to assess and manage occupational noise exposure. Defensive driving training was organised in collaboration with Honda to encourage safe commuting practices. A voluntary blood donation camp at the Bhare plant collected 33 units of blood. Water Day was commemorated on 22 nd March, 2026, with a message from the senior leadership reinforcing the importance of water conservation.

As part of our commitment to building a safer and more sustainable workplace, the Company plans to implement an AI-powered Video Analytics System across its manufacturing facilities. This initiative will leverage Artificial Intelligence (AI) and Computer Vision technologies to enable real-time monitoring, early hazard detection and proactive risk management to safeguard our operational continuity and mitigate risk-related liabilities.

Engineering

Key focus areas of Engineering y Diesel engines in the high horsepower range y Expansion of gas engines y Technology for dual fuel/fuel blends y Compact gensets with 3,000 rpm engines in the lower power segment y Executing our technology tracks - Internal combustion engines, energy storage solutions, electrification and fuel cells and electrolysers y Power uprates of existing diesel engine range y Gas engine development for global market y Optiprime series expansion for data centers market y Value engineering in existing product range

Our engineering division remains a key driver of growth and our vehicle to achieve technology leadership. Our Corporate Research and Engineering (CRE) and the Application Engineering (AE) segments focus on advancing research capabilities, engine design and development, as well as customised solutions. CRE is pivotal in shaping our product portfolio, aligning it with long-term growth objectives, evolving market demands, and emerging industry trends. These R&D initiatives led to an expansion in the range of gensets, development of microgrid solutions and introduction of advanced systems such as Optiprime controllers, electrolysers, fuel cells, and hybrid solutions. For FY 26-27, the division is focused on power uprating and value engineering to enhance the efficiency of the existing platform while expanding the alternative fuel portfolio, high-horsepower industrial range, and Optiprime gensets. Central to this evolution lies our unflinching commitment to Intellectual Property (IP), with 14 intellectual properties, including one patent and 12 designs, granted to our name. In addition to securing foundational patents and designs, KOEL directed its technological and intellectual capital towards pioneering alternative-fuel and green energy solutions to achieve critical regulatory milestones. Our focus remains on advanced engineering — integrating renewable energy, conventional fossil fuel generation, battery storage, and intelligent power management to maximise fuel utilisation and ensure an uninterrupted power supply. By prioritising robust patent filing and industrial design registrations throughout the product development lifecycle, we ensure our innovations remain protected and our competitive edge continues to sharpen.

Key initiatives in FY 25-26

Intellectual Property y Secured IP and patents for Indias first hydrogen-engine-based gensets. y Launched the KOEL IP Policy effective from 1 st February, 2026. y Launched the Inventor Rewards & Recognition Programme. y Achieved the highest annual patent (8) and design (14) filings. y Launched the hybrid Optiprime power system with patented transient load management technology for seamless AI and high-density computing environments. y Proposed consideration of raw biogas as an alternate fuel to CPCB for genset application in India. y Granted certification for Indias first CPCB IV+ 58.5kVA HCNG Genset. y Granted certification for Indias first CPCB IV+ 2.4 kW LPG Genset.

Product development y Expansion of our Optiprime range of products which have the highest power per square metre in market and are scalable to data center power requirements. y Development of alternate fuelled genset based on LPG for households and retailers and ethanol-based genset for telecom markets. y Development of better value products such as fuel efficient GK series from 10 kVA, 15 kVA, 20 kVA and 25 kVA. y Development of KOELs first alkaline electrolyser stack in-house. y Expanded our product range with 2,500 kVA and 3,000 kVA units to capture the global digital infrastructure boom.

Product upgrade y Scaling of our BS-V product portfolio, driven by a growing list of OEM partnerships and the exploration of new applications. y Developed a 1,250 kVA product range from a 16-cylinder engine for 50 Hz and 60 Hz and 1,000 hp industrial dump truck application. y Upgraded the CRE engine test cell to a 4 MW capacity.

Finance, legal and secretarial

KOELs finance, legal and secretarial department prioritise regulatory compliance and provide support for corporate planning and analysis. The year under review saw us adding more muscles to our online tool for legal compliance management. Devised to ensure compliance with all applicable laws, this robust digital system ensures continuous, real-time adherence to operations. We have also enhanced the dedicated Board portal/tool that empowers Directors with secure, on-demand access to corporate materials and fosters streamlined digital collaboration.

The finance department analyses financial and operational data to enable successful implementation of strategic decisions. The department helps manage capital allocation and ensures that resources are used effectively to achieve goals. It manages business performance through financial reporting, variance analyses and cost management, aiming to improve profitability and strategic planning. During the year under review, the team implemented digital projects to boost productivity.

Financial performance y-o-y

_in cr

Particulars	FY 25-26	FY 24-25
Revenue from operations	5,646.83	4,520.72
EBITDA	737.27	593.84
Profit before tax	593.91	523.66
Profit after tax	441.50	389.82
Net worth (Shareholders\u2019 funds)	3,354.50	2,975.63

Figures from Statement of Profit & Loss represent continuing operations only. Comparative figures have been restated to exclude discontinued operations.

Key financial ratios

Particulars	FY 25-26 #	FY 24-25
Debtors\u2019 turnover (in times)	7.82	8.32
Inventory turnover (in times)	6.70	6.56
Interest coverage ratio (in times)	67.84	41.81
Current ratio (in times)	1.67	1.68
Debt equity ratio (in times)	0.04	0.06
EBITDA margin^ (in %)	13.06%	12.77%
Net Profit margin (in %)	7.88%	8.51%
Return on net worth (in %)	13.95%	13.93%

# Ratios derived based on figures from Statement of Profit & Loss represent continuing operations only.

^ On revenue from operations

Key risks and internal controls

The Companys risk management framework is aligned with its strategic objectives and is designed to identify, assess, mitigate, and monitor risks across enterprise and business levels. Through a structured ERM approach, risks are evaluated based on the likelihood and the impact, with periodic reviews reflecting changes in the external environment.

Governance is reinforced through oversight by the Risk Management Committee and Audit Committee, supported by a comprehensive risk management policy, strong internal controls, and self-assessment mechanisms that enable continuous monitoring and accountability across the organisation.

Key risks

KOEL continues to follow a bifurcated market strategy, with both its segments facing unique headwinds ranging from regulatory shifts to climate-induced volatility.

Engineering and industrial excellence

The business remains KOELs primary revenue driver, encompassing powergen, industrial engines, and international business. It is defined by three critical pressure points: y Regulatory & emission compliance: The transition to stricter emission norms is a non-negotiable hurdle. Failure to align product portfolios with these evolving standards poses the triple threats of statutory penalties, direct revenue losses from barred sales, and a long-term erosion of KOELs premium brand equity. y Supply chain resilience: Supporting high-precision engineering requires a robust, stable supply chain. Any disruption in the procurement of critical raw materials or specialised components immediately jeopardises production timelines and operational efficiency. y Innovation & competitive differentiation: Operating in a high-stakes environment, KOEL faces intense pressure to innovate. With global and local players rapidly adopting hybrid and alternative fuel technologies, KOEL must sustain its differentiation edge to prevent market share dilution.

Fluid Dynamics (FD)

This segment is primarily represented by its water management solutions, and operates under a different set of market stressors: y Market fragmentation: The segment is characterised by the high density of unorganised players. This leads to aggressive price wars, putting constant pressure on KOELs margins despite its superior distribution network and brand heritage. y Climatic sensitivity: Revenue in the FD segment is intrinsically linked to rainfall patterns. An inconsistent monsoon leads to significant volatility in demand for pump sets and agricultural equipment, making y-o-y revenue forecasting a challenge. y Strategic realignment: To address these challenges, KOEL recently integrated its standalone FD business into its subsidiary, Pvt. Ltd. (formerly known as La-Gajjar Machineries Pvt. Ltd.) . This move is designed to unlock operational synergies and provide the dedicated focus needed to compete in the retail landscape.

Disclaimer

Some forward-looking statements about potential business and economic developments might be found in this report. Although the Companys assessments and expectations for the future are reflected in these forward-looking statements, several variables could cause actual events and results to materially diverge from expectations. The Company does not commit to updating any forward-looking statements in the public domain to reflect new information or events. Investors are also urged to use their discretion when evaluating the Companys various risks and the success of the Companys mitigation efforts, as the risks listed in this report are just those that the Management believes exist.