kirloskar pneumatic company ltd share price Management discussions


Theme

Limitless

Kirloskar Pneumatic Company Limited ("KPCL" or "Company") has refreshed its business vision. The refreshed vision is aligned with the need to be future- ready in a constantly evolving world and stems from the desire to enhance the experience throughout the customer journey.

Not only do we manage pressure, we make it work for you.

Kirloskar Pneumatic Company Limited ("KPCL" or "Company") is a leading provider of compression systems and solutions in India, with a focus on customer satisfaction and in-house R&D efforts. Your Company has a long-standing reputation for delivering high-quality, reliable products and services to its customers.

At the heart of our business lies pressure management, whether its for gas stations or climate control systems in submarines. Handling pressure well is our business to create value for our clients, partners and stakeholders. Our commitment to delivering value is reflected in our performance this year and our dedication to continued growth.

We take pride in our ability to handle challenging media and have achieved tangible success in doing so. Our success is a testament to our unwavering commitment to providing innovative solutions that meet our customers unique needs.

At the core of KPCLs approach is a customer-centric focus. The Company understands that the needs and requirements of its customers are constantly evolving and works closely with them to develop customized solutions that meet their specific needs. KPCLs compression systems and solutions are designed to be versatile, efficient and cost-effective, ensuring that customers get the most value for their investment.

In addition to our focus on customer satisfaction, KPCL places a strong emphasis on in-house research and development. The Company has a dedicated R&D team that is responsible for developing new products, improving existing ones and staying up-to-date with the latest technological advancements in the industry. This commitment to innovation and continuous improvement ensures that KPCLs compression systems and solutions remain at the forefront of the industry.

KPCL has a vision to become a leading force in the industry while prioritizing our customers, employees, investors and the environment. The Companys ambitious growth plans are being supported by its ‘Limitless vision, which involves implementing new technology and making investments over the next two to three years to establish a strong foundation.

We understand that success is not only measured by profits but also by our impact on society. We believe that a customer-centric approach, employee well-being, investor communication and a focus on ESG (Environmental, Social, and Governance) factors are key to achieving our goals.

Economy & Economic Prospects

Global economic review

Economic uncertainty, geopolitical unrest, global financial stress and inflationary pressures all continued to have an adverse effect on the world economy in FY23, which resulted in a significant slowdown in growth. Amidst the Russia-Ukraine conflict and the lingering effect of the recurrent hikes in Central bank interest rates, global growth is expected to slow down to 2.8% in FY23 as compared to 3.4% in FY22. Additionally, the rapid spread of Covid-19 in China in FY22 slowed growth, but the recent reopening has paved the way for a quicker-than-anticipated recovery.

Notwithstanding challenges such as inflationary pressure and supply chain disruption, the global economy is being bolstered by higher household spending, inflows of global investment and Europes strong response to the energy crisis. A silver lining is that global inflation is predicted to decline from 8.8% in CY2022 to 6.6% in CY2023 and 4.3% in CY2024.

A stronger boost from pent-up demand in numerous economies or a stabilisation in inflation are expected in the course of CY2024. The emerging and developing economies of the world are likely to play a major role in accelerating global economic growth, going forward.

Global growth (%)

Indian economic review

A conducive domestic policy environment and the Governments sustained focus on structural reforms have kept Indias economic activity robust despite global headwinds. Indias economy will stay on course. The Indian economy is expected to grow in a range of 6.7-6.8% in FY2023-24.

India and China are anticipated to generate more than half of the global growth this year, with the rest of Asia contributing an extra quarter, according to the IMF. Indias economic recovery is still being supported by favourable policies, which have also increased public investment. Moreover, it is anticipated that monetary and fiscal tightening will be less pronounced than in the rest of the South Asian region.

Overview

KPCL caters to key industries such as industrial, oil and gas, infrastructure and food processing markets by offering a diverse range of products. The Companys large in-house capabilities enable it to engineer, design, produce, assemble, commission and service products and systems with an extensive presence in 30 countries. Its machine shop is equipped with advanced technology such as horizontal and vertical CNC machining centres, SPM, VTL, boring, grinding and general-purpose equipment to produce high-quality parts for centrifugal air ends, screws and pistons.

Well-planned investments ensure that cutting-edge manufacturing technology is readily available at KPCLs sites in Hadapsar, Saswad and Nashik. The Company has highly skilled and trained service employees throughout India, thanks to sales and service networks established in key regions. With the supervision of an expert team, products are assembled in a lean assembly shop to the highest quality standard. The NABL-approved laboratory and heat treatment facilities provide flexibility to address unique customer needs in the oil and gas, nuclear and defence industries.

KPCL is a market leader in some of its business sectors and aims to increase its geographic presence.

The Company is divided into two segments - compression products and non-reportable segments and is exploring opportunities to export to the Middle East, South East Asia, Indo China and South and West Africa using both products and projects to increase export revenue.

Industry Structure and Developments, Segment Analysis, Risks and Concerns, Opportunities & Threats and Outlook:

1. Compression Products

Under the compression segment, we have three primary product lines: air compressors, refrigeration compressors and compression systems and gas compressors and compression systems. With over 60 years of experience, the Company has established itself as a leading manufacturer in its industry.

All of these businesses are poised for growth as it caters to the strong demand from multiple industrial sectors, both domestically and internationally. We have a reputation for developing a diverse range of innovative products that are tailored to meet the specific needs of the Indian market. Moreover, we consistently upgrade our products to ensure that they meet the highest quality and reliability standards.

The Companys growth is further supported by a shift in the global energy landscape. This shift is driven by a combination of environmental concerns and political factors, leading to an increase in demand for the Companys products. With these favourable trends in place, the company is well-positioned to expand its activities and continue its successful trajectory.

Air compressor business

Air Compressors are used to compress air for diverse purposes such as instrument air to control complex plants as well as service air, power tools, pneumatic, machinery and convening. They are utilized in the industrial sector for air motors, feed air for gas plants and driving pneumatic cylinders during machining process.

From 2021 to 2026, the worldwide air compressor market is predicted to increase at a CAGR of roughly 4%, driven by rising demand for energy-efficient compressors and a growing industrial sector.

Due to increased demand for compressors in the industrial and automotive industries, the Asia-Pacific region is likely to be the fastest-growing market. Air compressors have the highest market size of about approximately USD 30 billion.

There are three types of Air compressors:

a) Screw compressors

b) Reciprocating compressors

c) Centrifugal compressors

KPCL has long enjoyed a strong position in the market for reciprocating compressors. Air Compressor Systems offers a wide range of compressors from 15 distinct product categories. KPCL, a relatively new competitor in the screw compressor market, has a long-term competitive advantage in this industry since it controls the full value chain, with the ability to design, manufacture, sell and repair these machines in India.

Screw compressors with built-in dryers offer your Company opportunities for expansion. The investment in the production of high-speed gearboxes again gives KPCL the advantage to provide superior and affordable centrifugal compressors. KPCL provides air compressors with a range of 30 to 10000 CFM.

KPCL has incorporated state-of-the-art machinery to meet the production requirements and maintain high levels of precision and quality for various products such as screws, centrifugal, gear and pinion. Additionally, the Company utilises heat treatment methods to ensure that accuracy is achieved in compliance with the drawing specifications.

In addition, the capabilities of the centrifugal compressor have been improved by optimizing the in-house manufacturing processes and reducing lead time. Additionally, the Company has achieved indigenization of its screw rotors and centrifugal impeller.

The Air Compressor business continued to grow strongly in delivering superior solutions to various niche applications. In the previous year, your Company predominantly had Screw Compressor as a volume Compressor. During the year, it was more of high value Reciprocating Compressor Packages as well as a scale-up of a Centrifugal Compressor. Indeed, your Company has achieved a milestone of standardization and scaling-up of the Tezcatlipoca range of Centrifugal Compressors during the year. Your Company had record sales of Reciprocating Compressor Packages for various critical applications in metal, in air separation etc. and this continues to grow. Standard Screw Compressor sales were albeit much lower compared to the previous year.

Refrigeration business

The global industrial refrigeration industry is projected to be worth USD 10 billion. The global refrigeration compressor market is expected to grow at a CAGR of around 4.5% from 2021 to 2026, driven by the increasing demand for refrigeration systems in developing countries and the growing demand for energy-efficient and eco-friendly refrigeration compressors. The Asia-Pacific region is expected to be the largest and fastest-growing market due to the increasing demand for refrigeration systems in the food and beverage industry.

In Hydrocarbon refrigeration, the business specialized and is dominated by players who have exhibited a ‘Proven Track Record (PTR) in the market. Your Company is a dominant player in the Hydrocarbon refrigeration market as it has a very strong PTR in handling Hydrocarbons. These refrigeration systems employ a range of refrigerants, including hydrocarbons such as propane and propylene and Butane as well as mixture of these and other hydrocarbons.

The Company benefits from its ‘Concept to Commissioning methodology, which is used to stay ahead of the industrys increasingly stringent environmental, quality and safety regulations. Refrigeration industry is currently expanding and is expected to quickly replace other choices as the preferred option for its various market segments.

The Company holds a significant market share of approximately 60% in the field of ammonia refrigeration compressors. As part of its efforts to accelerate the development of new products, the Company has made investments in an in-house performance testing facility dedicated to refrigeration compressors.

During the year, the Company has supplied three large packages of Screw Compressors using hydrocarbon refrigerant for Oil and Gas Industry. The Company has witnessed continuous growth in the after market sale.

Process Gas Business

Process gas compressors are utilised in a variety of sectors such as oil and gas, chemical and petrochemical. These compressors are used to compress gases such as hydrogen, natural gases, nitrogen and carbon dioxide for use in a variety of industrial applications.

The worldwide process gas compressor market is estimated to increase at a CAGR of 3% from 2022 to 2029, reaching USD 8.42 billion by 2029, driven by rising natural gas consumption and the expanding petrochemical industry. The Asia-Pacific region is expected to be the largest and fastest-growing market due to the increasing demand for natural gas in developing countries and the growing chemical and petrochemical industries.

The market for gas compressors is around USD 4.7 billion, while the market for gas compression systems is approximately USD 24 billion. This industry is regarded as a worldwide enterprise because of our capacity to make these plants and packages anywhere, sell them anywhere and install them everywhere. This business is dominated by the phrase ‘Proven Track Record (PTR). Gasification of the energy basket and environmental activities are worldwide trends that are supporting this growth. The Company is able to capture this market by using their strong design and engineering capabilities. The Company has a significant market share in the oil and gas industry in India.

During the year, your Company has supplied and completed the installation of 3 large packages in the Middle East region which resulted into a growth in sales. The CNG business was sluggish as compared to previous year. Your Company commenced shipment of Calana range of booster compressors. There is a continuous growth in the O&M business.

The Compression Segment contributes 93% of total revenue and is the only reportable segment.

2. Other Businesses

KPCLsTransmissionDivisionwasIndiasfirstmanufacturer of railway transmission products. This division specializes in customized power transmission systems. When it comes to various gear and gearbox types with capacities ranging from less than one megawatt to fifty megawatt, the Transmission Division has a competitive edge.

Outlook

Despite a global economy that is experiencing high inflation and modest to negative growth, the current slowdown has resulted in a delay in the technological transmission in the energy sector. As a result, there is a continued strong demand for our compression packages, both in the gas and refrigeration space. Furthermore, the installation of CNG stations has accelerated and we hope to meet all the announced plans. This acceleration would likely lead to significant growth in both CNG and booster compressor sales in FY 24.

Your Company has received strong inquiries for various packages, both in India and from the Middle East, indicating a promising future. Additionally, we are excited to introduce our new range of products, i.e. Khione, Calana and Tezcatlipoca compressors, which were brought into the market during the reporting year.

Overall, your Company is confident that it can maintain its growth momentum and remain committed to its aspirational goal of becoming a H 2,000 Crore plus Company within the next two years.

Technology

KPCL has the in-house expertise to develop products requiring sufficient customisation, boosting the Companys design and development activities. Many cutting-edge technological solutions have been implemented by the Company. With over a 100 engineers in Design, Engineering and Research we continue to develop new Products and solutions for our customers.

In the reporting year, your Company filed 15 IPs and had 8 international publications and participated in several International paper presentations. The details are as follows:

Particulars Filed in FY 2022-23 Granted in FY 2022-23
Patents 2 2
Trademark 12 5
Design 1 1
Research Publications in International Forum (Out of this two Research Papers recognised and appreciated) 8 NA

The new products that your Company launched include:

• Khione screw compressors for the refrigeration applications in Dairies, Food processing and Pharma industry.

• Calana booster compressor for off-line gas dispensation.

• 2100 / 3500 / 7000 CFM Tezcatlipoca Centrifugal compressors.

As a part of our Digitalisation initiatives, your Company have the ‘connected machines project implemented at Saswad and Hadapsar. This ensures smooth work flow with the least amount of WIP. IoT has been implemented on most of our Compressor package giving real time feedback on conditions. We are implementing the Dassult – Product Lifecycle Management solution which will allow us to have a common database and design repository to manage our products and parts on a reliable, long term basis.

Value Chain Advantage

At KPCL, we have established a range of in-house capabilities that provide us with a significant advantage in the value chain. Our capabilities include a foundry that produces cast iron, SG iron and aluminum alloys. Additionally, we have a comprehensive fabrication facility that allows us to produce base frames, pressure vessels and other structures.

Our high-precision multi-axis CNC machining capability is another crucial asset. This capability allows us to manufacture high-precision parts such as housings, impellers, rotors, screws and more. Our design and engineering department includes over 100 engineers who use advanced software support, including a PLM, to create innovative solutions tailored to our customers needs.

Moreover, our Company has over 1200 associates working across 15 states of India managing the operation and maintenance of all CNG stations.

By leveraging our diverse in-house capabilities, we can offer a wide range of high-quality products and services to our customers. We take pride in our ability to provide end-to-end solutions that encompass everything from design and engineering to manufacturing, fabrication and installation.

Internal Control Systems and their Adequacy

The Company has an Internal Control System, proportionate to the size, scale and complexity of its operations. All internal controls are well aligned with the evolving business needs, objectives and overall strategic direction.

The Audit Committee and the Board decide the scope of the internal audit. To maintain its objectivity and independence, the Board has appointed an external auditor, who reports to the Audit Committee of the Board at regular intervals.

The auditor monitors and evaluates the efficiency and adequacy of internal control systems in the Company, and ensures its compliance with operating systems, accounting procedures and policies for various functions of the Company. Based on this report, process owners undertake corrective actions in their respective areas and thus, strengthen the controls further. The observations, along with the corrective measures are then periodically presented to the Audit Committee of the Board.

In FY2023, Internal Financial Controls laid down by the Board were tested for adequacy and effectiveness and no reportable weakness was observed. The Company has effectively implemented policies and procedures, which ensure proper and efficient conduct of its business.

These further certify the safeguarding of assets, prevention and detection of frauds and errors, accuracy and completion of accounting records and prompt preparation of reliable financial information. Statutory auditors have also attested to the adequacy of internal financial control systems with reference to financial statements.

Operating Performance

During the year under review, your Company achieved highest sales ever of _ 12,393.37 Million as compared to _ 10,211.73 Million in the previous year, a growth over 21%. The growth in sales was mainly driven by exports of Gas & Refrigeration packages to the Middle East region. While demand of compressors for Oxygen packages was muted during the year as Covid was under control, rising prices in domestic gas impacted the demand for CNG packages, despite these domestic sales grew by over 12% made up by reciprocating and centrifugal compressors packages and gear business. The profit before tax grew from _ 1,141.24 Million to _ 1,432.76 Million, a growth over 25%. All businesses, air, refrigeration & gas compressors and compression systems did very well thereby your Company had all round growth during the year.

For the first time, your Companys export sales at _ 1,777.07 Million, which was nearly 7 times more than what we had done in the previous year.

In terms of working capital management, net working capital as a percentage to sales rose to about 26% as compared to 22% of the previous year due to higher receivables and lower advances. Your Company had a net cash position of about _ 1,900 Million as on 31st March, 2023, after paying final dividend of the previous year and interim dividend declared in the reporting year apart from the capex.

During the year, there were no significant variations in the key financial ratios such as Debtors Turnover, Inventory Turnover, Current Ratio, Interest Coverage Ratio, Operating Profit Margin and Net Profit Margin as compared to previous financial year. As on the Balance Sheet date, your Company does not have any debt. As such Debt Equity Ratio is zero and variance to previous period is not applicable. As on 31st March, 2023, your Companys return on net worth improved to 17.25% as compared to 15.10% in the previous financial year resulting from increase in profit for the year.

Risks and Concerns

Risk management is an inherent part of the Companys business and Management is proactive in terms of managing risks in an organised manner. By virtue of the nature of its business, the Company is susceptible to various risks that might arise due to economic, legal, sectoral, ESG, people and operational factors. Your Company is very conscious of the risks involved in supply of products and execution of projects and a very elaborate Risk Management Process is in place for the Company and the company-wide overall Risk Management Matrix is derived from Divisional Risk Management Process. A dedicated Risk Management Committee oversees the possible risks and derives a framework to mitigate the same.

During the year, your Company has conducted material assessment and identified material responsible business conduct issues. The key material issues of the business have been provided in the Business Responsibility and Sustainability Report, which forms part of this Annual Report.

The risk management approach is mentioned on page 24 of the annual report.

Safety, Health and Environment

Your Company is one of the few IMS (Integrated Management System - ISO 9001, ISO 14001 and ISO 45001) Certified Companies. Your Company received a certificate certifying that Company has established and applies an Integrated Management System - ISO 9001, ISO 14001 and ISO 45001, which is valid up to 27th August, 2024. During the year, an external agency has conducted IMS surveillance audit of your Company and confirmed that the IMS certificate is sustained. Your Company is committed to comply with all statutory and regulatory requirements. Your Company has been making efforts in building awareness among employees, suppliers and service providers.

Your Company has given a lot of attention to improving greenery all around its manufacturing plants. Energy conservation initiatives, safety initiatives and quality initiatives are being taken on a regular basis to ensure sustainability. Your Company has been working on ESG initiatives for many years now. During the year, we had a diagnostic study done on Maturity of our ESG processes. We were rated as between ‘Progressive and ‘Proactive in most parameters. We have taken a clear road map to become a ‘Transformative Company in the next 3 years.

The Company has a well-equipped Occupational Health Centre that delivers qualitative preventive health services not only to its employees but also to their families and to the society at large. First-Aid preparedness and an equipped ambulance are available at all times in the factory premises. Medical surveillance that includes pre-employment, periodic medical examinations and occupational rehabilitation is ensured so that employee health and well-being are maintained. Hospitalized employees are given meaningful help and reassurance. Annual Wellness Planner ensures that all employees and their families are covered under preventive health checks (which are age based and are enhanced with test relevant in post covid situation), risk assessment and counselling (focused on health and lifestyle risk assessment and address post covid concerns as well).

Corporate Social Responsibility (CSR)

Inspired by our founder Late Shri S L Kirloskar all our CSR initiatives are focused in the areas of Education, Environment and Health. CSR initiatives in your Company are planned, budgeted, implemented and reviewed regularly.

Your Company has contributed an amount of H 12.0 Million by way of donation to Kirloskar Institute of Advanced Management Studies for promoting education.

Socio-economically challenged girl students from 5th to 10th Std. from a school in the vicinity of Saswad Plant are supported for development through Bharari Initiative. The initiative that benefits 200 girls was enhanced by adding a book library and organizing life skills workshops in addition to activities related to academic and extracurricular skill development.

Your Company is supporting education of girls, by supporting daughters of workmen of Cold Storage Units from UP, Gujarat, Rajasthan and MP. This unique CSR Initiative, named KaShi (Kanya Shiksha), is implemented by employee Volunteers from Regional Offices of the Company in North and West in collaboration with respective State Cold Storage Associations. At present, 30 girl students benefit from this initiative.

Your Company is supporting the 1st batch of 3 year diploma program in Mechatronics and Smart Factory comprising of 38 socio-economically challenged students at NTTF. The selection criteria have ensured that deserving and needy candidates are selected. Twelve (30% +) of these students are girls demonstrating focus on gender diversity, inclusion and equity as a guiding principles for the initiative.

To create awareness about HIV AIDS amongst different sections of the society, your Companys DISHA initiative reached out to 11,000 + members of the general community including secondary school and college students during this year. Additionally, the initiative also provided supports in the form of medical camps, counselling, matrimonial melava etc. to PLHIV (People Living with HIV).

This year, your Company ensured that 10,000 + students from 9 school locations in the nearby vicinity have access to clean and safe drinking water by installing water filtration and purification plants in their premises.

Your Company is supporting various activities in 12 schools associated with Ram Nadi Restoration Mission through its RRM School Initiative in addition to participating in an online Ram Nadi Festival and other Kirloskar Vasundhara Initiative related activities. This year river restoration message reached out to 3,600 + students and teachers by way of wall paintings, awareness workshops and competitions like elocution, drawings, essays etc.

Overall CSR initiatives of your Company have benefitted 25,000 + community members in this year.

People, Processes and Systems: Its Customer first, always!

KPCL once again (4th Consecutive year) won the CII National HR excellence award with a score of over 600+. This is a testimony to the robust HR practices that the Company has. While we were settling down after the Pandemic outbreak, it was time to rebuild, rejig and recalibrate our teams for the newer growth aspirations. Our goals for the FY-23 were clear and communicated to all employees through multiple communication platforms. During the year, we imparted 2500+ man-days of training covering more than 90% of our workforce through 145 learning initiatives. L&D programs supporting the strategic objectives were designed and implemented during the year. This included Future leaders grooming, Leadership & Managerial Effectiveness, Effective selling, Project Management etc. There were strategic structural changes made during the year to synergize the operations and business teams across the Organization. 3000+ rewards were given during the year through various reward schemes. Your Company has ensured 100% legal compliance to all applicable labour and factory statutory requirements. Your Company has ensured cordial Industrial relations all the time and has zero man hour loss during the fiscal year.

The IMS audits and certification were done remotely and the Company continued to invest on its participative culture through Theme based virtual Round Table sessions, Reward and Recognition Sessions, Sudnyan Knowledge sharing, 5S, Kaizen & CFTs etc. We participated in National Competition and won several awards.

Values

As a part of the Kirloskar Group, KPCL is known for its Values and Ethics in all its dealings. With the pandemic induced uncertainty, a revisiting of the Values was thought of as appropriate and timely. The six Values that will help us in our Strategy and Decision making are

Human Resources and Industrial Relations

The Human Resources (HR) department at KPCL is driven by the mission ‘To be an employer of choice. We look at the employees entire work life cycle, to ensure timely interventions that help build a long- lasting and fruitful career.

Recruitment & Staffing: With the growth of business, we continued to focus on having the most befitting managers with the most relevant job-experience to fill in the vacancies. As such, we do have a robust recruitment and Human Resources Management Process. Changes are made in the process based on employee feedback. Selection of new employees is done through a rigorous process to ensure the right candidate is selected. With the projected growth of the business, more number of engineers are getting trained to manage higher level of operational efficiencies.

The annualized attrition rate for FY-23 stands at 15.9%, which is in line with the similar industries. However, it has improved during last two quarters compared to other segments. We continue to work on simplifying internal processes. HR process owners collaborate with various teams in the Organization to ensure that employees are able to work at their productive best.

Career Planning: Aspiring managers do need a career path to contribute better. Accordingly, the Critical Role Holders are identified as part of the succession process. A group of identified high-potential employees went through a customized future leaders program conducted by SLKCEE

- Passport to Leadership. These programs covered important topics like Personal Leadership, Team evolution, Art of delegation, People motivation theories, managing self and Team performance.

Learning & Development: L&D initiatives are at the foundation of KPCL. Competency Development continues to be a key area of strategic focus for us. During fiscal 2023, the total training provided for employees was over 2.5 days per employee which has improved by 50% compared to previous year. This year more than 90% of our employees have undergone at least one training program during the year. Some of our employees are internal trainers and shared their domain knowledge in the Company. Such an intervention not only fosters a climate of mutual learning, but also encourages others to be a part of the larger community of internal-trainers at KPCL. We introduced Online Learning Management system in 2021, thereby enabling and promoting a culture of self- learning and development in the Organization. Last year, 40% of our learning programs were through the KORE – Online Learning Management system. The Company is investing in our people in a big way as we make this journey together.

The Company undertook the Senior Management Development programme to develop and groom leaders who are truly "Limitless" who will lead from the front and take the organization to new heights, as a part of succession planning.

Rewards & Recognition: It is understood that employee- motivation is key to many success stories. Acknowledging ones value-addition and recognising them play an important key role. Recognition schemes are monetary as well as non-monetary. Achievers are recognized every quarter for outstanding achievements as Star of the Month, Spontaneous and Team Rewards by Senior Management. As always, we have continued to focus on the much needed performance differentiation to ensure that our high-potential (HiPo), high- performing employees are driven towards higher purpose and goals. They are being groomed as our Talent-Pipeline to succeed to key roles in future. This year we conducted Virtual Reward and Recognition programmes for our Achievers Felicitation.

Apart from the above, we do measure our performance, with intent to raise the bar of better performance; also to scale up the deliverables from HR team.

In addition to the above, we have mechanisms in place to foster a positive workplace environment, free from harassment of any nature. We have institutionalized the Prevention of Sexual Harassment Initiative (PoSH) framework, through which we address complaints of sexual harassment at the workplace. Our policy assures discretion and guarantees non-retaliation to complainants. The Kirloskar group companies have now adopted a common whistle blower policy and an ethics hotline has been created to provide an assuring platform to the employees to highlight discriminatory or violating acts or behaviours.

Communication: An attempt to encourage company-wide employee-communication is one of our pursuits. Dialogue is maintained with employees throughout the year through quarterly performance sessions, in-house magazine (Impeller) and intranet (Shashwat). The employees are aware of various developments in the Company. We have also done focussed internal and external communication through interactive campaigns such as revamped House Magazine, New Wall and Table calendars, monthly HBR articles, Quarterly Leadership address, Theme based Round tables sessions and Reward & Recognition sessions. The revamped Marcom approach has resulted into 100% rise in the social media followers of your Company. On an average we have 8 social media posts each month regarding various highlights about your Company.

Your Company has been selected by CII time and again to showcase Business Excellence, HR, Safety & EHS Policies and their implementation. Many companies regularly visit your Company to get a first-hand impression of these processes. This year we enhanced our reach to our employees through Virtual Round Table sessions (Google meet) across all Business Divisions every quarter. These sessions helped us in communicating Business strategies and gather ideas and suggestions from our employees supporting the theme. The relations with the employees at all levels continue to be cordial.

Cautionary Statement

This Report contains statements relating to future business developments and economic performance that could constitute ‘forward looking statements. While these forward looking statements represent the Companys judgements and future expectations, a number of factors could cause actual developments and results to differ materially from expectations. The Company undertakes no obligation to publicly revise any forward looking statements to reflect future events or circumstances. Further, investors are requested to exercise their own judgement in assessing various risks associated with the Company and also the effectiveness of the measures being taken by the Company in tackling them, as those enumerated in this Report are only as perceived by the Management.

For and on behalf of the Board of Directors

sd/-
Rahul C Kirloskar
Place : Pune Executive Chairman
Date : 27th April, 2023 DIN 00007319