Your Directors (the "Board of Directors”/ "Board”) have pleasure in presenting the 9th Annual Report together with the Audited
Standalone and Consolidated Financial Statements of KRN Heat Exchanger and Refrigeration Limited ("KRN" or "the Company")

for the financial year ended 31st March, 2026 (the "Financial Year").

1. Financial Results

The Company has prepared the Standalone and Consolidated Financial Statements for the Financial Year 2025-26 in
accordance with the Companies (Indian Accounting Standards) Rules, 2015 prescribed under Section 133 of the Companies
Act, 2013 (the "Act”).

The consolidated and standalone financial performance of of the Company for the financial year ended 31st March, 2026 is
summarized below:

(Amount In '' Lakhs except Earnings Per Share Data)

STATE OF COMPANY''S AFFAIRS

KRN Heat Exchanger and Refrigeration Limited, incorporated in 2017 and situated in Neemrana, Rajasthan, is engaged in the
manufacturing of high-quality aluminium and copper fin-and-tube heat exchangers, including water coils, condenser coils, and
evaporator coils. These products are extensively supplied to original equipment manufacturers (OEMs) serving the heating,
ventilation, air conditioning, and refrigeration (HVAC&R) industry.

In addition to its comprehensive portfolio of heat exchangers, the Company manufactures a range of critical components,
including aluminium and copper fins, copper tubes, bar-and-plate assemblies, and other essential parts that support its integrated
manufacturing operations. With a strong emphasis on product quality, engineering excellence, and process efficiency, KRN is
committed to delivering reliable, high-performance thermal solutions that meet the evolving requirements of its customers and
end users.

FINANCIAL HIGHLIGHTS
STANDALONE LEVEL

During the Financial Year 2025-26, your Company clocked total revenue from operations of '' 67623.01Lakh as compared to
'' 43118.97Lakh in the Financial Year 2024-25 at Standalone level.

The profit after tax ("PAT”) of the Company for the Financial
Year 2025-26 was '' 7130.53 Lakh as compared to '' 5017.46
Lakh in the Financial Year 2024-25.

CONSOLIDATED LEVEL

During the Financial Year 2025-26, your Company clocked total
revenue from operations of '' 60005.77Lakh, as compared to
'' 42984.93Lakh in the Financial Year 2024-25 at Consolidated
level.

The profit after tax ("PAT”) of the Company for the Financial
Year 2025-26 was '' 7646.74 Lakh as compared to '' 5287.54
Lakh in the Financial Year 2024-25.

CHANGE IN THE NATURE OF BUSINESS

The Company continued to operate within its established
business segments, with no change in the nature of business
of your Company during the year under review.

INFORMATION ABOUT SUBSIDIARY, JOINT VENTURE
AND ASSOCIATE COMPANY AND THEIR FINANCIAL
PERFORMANCES

At the end of the financial year on 31st March 2026, the
Company had 2 unlisted subsidiary companies [including 1
material Wholly Owned Subsidiary]

No company became or ceased to be a subsidiary, joint
venture, or associate of the Company during the financial year
under review.

As mandated by Section 129(3) of the Companies Act, 2013
("the Act”), A statement containing the salient features of
the financial statements of the Subsidiaries, Joint Ventures
and Associates of the Company is attached in Form AOC-
1 as Annexure I as required under Rule 5 of the Companies
(Accounts) Rules, 2014.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES,
ASSOCIATES AND JOINT VENTURES

Your Company has two subsidiaries as on March 31, 2026. The
details are as follows:

a) KRN HVAC Products Private Limited

b) Thermotech Research Laboratory Private Limited

The performance highlights of the material subsidiary
company during the year are given below:

KRN HVAC Products Private Limited ("KRN HVAC")

KRN HVAC is a wholly owned subsidiary Company and is

engaged in the business of Manufacturing of the Heat
Exchnagers and other HVAC Products. KRN HVAC reported
turnover of 218,85.89 Lakhs for the year ended 31st March,
2026 (31st March, 2025: Rs. 1551.05 Lakhs) and reported a net
profit of Rs. 611.17 Lakhs during the Financial Year ended 31st
March, 2026 vis-a-vis net profit of Rs. 278.24 Lakhs during the
previous year ended 31st March, 2025.

During the financial year under review, the Board approved the
conversion of the outstanding unsecured inter-corporate loan
of '' 100 crore, along with applicable interest, if any, granted
by the Company to its wholly owned subsidiary, KRN HVAC
Products Private Limited, into equity shares of the subsidiary,

The Company converted an unsecured loan of '' 100 Crore
extended to KRN HVAC Products Private Limited, its wholly
owned subsidiary, into equity. Pursuant to the conversion, the
Company was allotted 50,00,000 (Fifty Lakh) Equity Shares of
'' 10 each issued at a price of '' 200 per share, comprising a
face value of '' 10 and a securities premium of '' 190 per share
pursuant to the approval of the members obtained at the
Extra-Ordinary General Meeting held on December 30, 2025.

After the close of the financial year, KRN HVAC Products Private
Limited, the Company''s wholly owned subsidiary, completed a
Rights Issue. Pursuant thereto, the Company subscribed to its
full entitlement and was allotted 78,41,917 (Seventy-Eight Lakh
Forty-One Thousand Nine Hundred Seventeen) Equity Shares
of '' 10 each at an issue price of '' 300 per share, comprising
a face value of '' 10 and a securities premium of '' 290 per
share. Accordingly, the Company continues to hold 100% of
the issued, subscribed and paid-up equity share capital of KRN
HVAC Products Private Limited.

Comprehensive audited financial statements and related
reports for each subsidiary are accessible on our website at
www.krnheatexchanger.com_.

During the financial year, the Company have one material
subsidiary i.e. KRN HVAC Products Private Limited ("KRN
HVAC”).

The policy for determining material subsidiary is available on
the website at https://krnheatexchanger.com/investors/.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the
Act, the Annual Return for the year ended on 31st March, 2026
in the prescribed Form MGT-7, has been made available on
the Company''s website at https://krnheatexchanger.com/
investors/.

DIRECTORS AND KEY MANAGERIAL PERSONNELS (KMPs)

The Company''s Board, consisting of highly qualified individuals,
maintains a balanced structure of Executive and Non-Executive
Directors, Women Independent Directors with a majority of
Independent Directors, in compliance with all regulations. This
composition ensures effective leadership and oversight. The
Board currently has 07 Directors (02 Executive Directors, 01
Non- Executive Director and 04 Independent Directors), one
of them is Women Independent Directors. Furthermore, the
Board engages in regular succession planning to maintain
alignment with the Company''s future needs.

• Re-appointment of the Directors

Pursuant to the provisions of Section 152(6) of the Act and
other applicable provisions, if any, of the Act, read with
the rules made thereunder and relevant clauses of the
Company''s Articles of Association, Mr. Manohar Lal (DIN
10040507), Non-executive, Non Independent Director,
is due to retire by rotation at the ensuing Annual General
Meeting (AGM) and being eligible, has offered himself
for re-appointment. The Board, at their meeting held on
August 12, 2026, has recommended his re-appointment
for approval by the Members at the ensuing AGM of the
Company.

The Notice of the ensuing Annual General Meeting
contains the resolution for the above-mentioned
proposed re-appointment.

Earlier, Mr. Santosh Kumar Yadav (DIN: 07789940),
Chairman and Managing Director of the Company,
retired by rotation at the 08th AGM of the Company,
held on September 16, 2025. The Members of the
Company, subsequently approved his re-appointment,
to continue his service with the Company. His continued
association underscores his significant contribution
to the achievement of the Company''s goals and his
commitment to upholding the highest standards of
corporate governance.

• Appointment / Resignation of the Directors and KMPs

During the financial year, The Board appointed Mrs.
Meenakshi Sharma (DIN: 11153602) as an Additional
Director, effective June 18, 2025. Subsequently, her
appointment as a Non-Executive Independent Director
was regularized by the shareholders at the Annual General
Meeting held on September 16, 2025, for a term of three
years commencing from June 18, 2025 to June 17, 2028.

Apart form mentioned above, during the financial year

2025-26, there was no change in the composition of the
Board and no new Director was appointed. The Board
continued to function with its existing Directors, ensuring
continuity, stability and effective oversight. However,
after the closure of the Financial Year, the Board, on the
recommendation and approval of the Audit Committee,
appointed Mr. Pawan Nawal as Chief Financial officer
and Key Managerial Personnel (KMP) of the Company with
effect from 15th May, 2026.

The disclosures required under Regulation 36 of the
Listing Regulations and Secretarial Standards-2 (”SS-
2”) on General Meetings including a brief resume,
details of expertise and other directorships/committee
memberships held by these Directors, form part of the
Notice convening the ensuing AGM.

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Sections 2(51) and 203 of the
Act, read in conjunction with the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 (as
amended), the Key Managerial Personnel ("KMPs”) of the
Company during the financial year were as follows:

Mr. Santosh Kumar Yadav, Managing Director
Mrs. Anju Devi, whole-time Director

*Mr. Jitendra Kumar Sharma, Company Secretary & Compliance
Officer

**Mr. Sonu Gupta, Chief Financial Officer
***Mr. Pawan Nawal, Chief Financial Officer

*Mr. Jitendra Kumar Sharma, has appointed as Company
Secretary & Compliance Officer (CS&CO) of the Company w.e.f.
28th April, 2026

**Mr. Sonu Gupta, has been resigned from the position of
Chief Financial officer of the Company w.e.f. 14th May, 2026
and redesignated as General Manager-Finance and Senior
Management Personnel (SMP) of the Company w.e.f. 15th May,
2026.

***Mr. Pawan Nawal has appointed as Chief Financial officer
(CFO) of the Company w.e.f. 15th May, 2026.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from
all Independent Directors as required under Section 149(7)
of the Companies Act, 2013 and Regulation 25(8) of the
Listing Regulations, confirming that they meet the criteria
of independence as laid down under Section 149(6) of the

Companies Act, 2013 and Regulation 16(1)(b) of the Listing
Regulations, respectively.

In compliance with Section 150 of the Companies Act, 2013 read
with Rule 6 of the Companies (Appointment and Qualification
of Directors) Rules, 2014, the details of all the Independent
Directors have been registered with the databank maintained
by the Indian Institute of Corporate Affairs (IICA). Further, all
the Independent Directors have passed the online proficiency
self-assessment test conducted by IICA except those who
have been exempted by the Act.

The Independent Directors of the Company strictly adhere to
the Code for Independent Directors, as outlined in Schedule
IV of the Act. Based on these declarations received from
the Independent Directors, the Board has evaluated and
confirmed that all Independent Directors remain independent
of the management and are in full compliance with the relevant
statutory provisions.

SHARE CAPITAL
AUTHORISED SHARE CAPITAL

The Authorised Share Capital of the Company remained
unchanged during the financial year. As of 31st March, 2026
it stand at Rs. 72,00,00,000 consisting of 7,20,00,000 equity
shares of a face value of Rs. 10/- each.

ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL

The issued, subscribed, and paid up equity share capital of the
Company remained unchanged during the financial year. As of
31st March, 2026 it stand at Rs. 62,15,66,000 /- (Rupees sixty
Two Crore Fifteen Lakhs Sixty Six Thousand Only) consisting of
6,21,56,600 equity shares of a face value Rs. 10/- each.

After the close of the financial year the Company issued and
allotted 33,01,886 Equity Shares of face value '' 10 each to
eligible qualified institutional buyers at the Issue price of
'' 1,060.00 per Equity Share, i.e., at a premium of '' 1,050.00 per
Equity Share (which includes a discount of 4.85% of the floor
price, as determined in terms of the SEBI ICDR Regulations)
against the floor price of Rs. 1,114.05 per Equity Share),
aggregating to '' 34,999.99 lakhs, pursuant to the Issue.

Pursuant to the above allotment of Equity Shares in the Issue,
the paid-up equity share capital of the Company stands
increased from '' 62,15,66,000 consisting of 6,21,56,600
Equity Shares of '' 10 each to '' 65,45,84,860.00 consisting of
6,54,58,486 Equity Shares of '' 10 each.

During the period under review, the Company has not issued
any preference shares.

ANNUAL LISTING FEE

The Annual Listing Fee for the financial year 2025-26 has been
paid to both the Stock Exchanges i.e. BSE Limited and National
Stock Exchange of India Limited.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR
EDUCATION AND PROTECTION FUND

During the financial year, the Company has not declared
dividends on the Equity Shares, therefore, provisions for
transfer of unclaimed/unpaid dividend and shares to Investor
Education and Protection Fund under the Companies Act, 2013
were not applicable.

KRN EMPLOYEE STOCK OPTION PLAN 2026 (“ESOP PLAN")

During the year under review, the Board in its meeting held on
12th January, 2026 on the recommendation of the NRC, had
accorded its approval to implement the ''KRN Employee Stock
Option Plan 2026'' (''ESOP Plan'') and the same was approved by
the Members of the Company at their Extra-Ordinary General
Meeting (EGM) held on 15th April, 2026.

Further, pursuant to the applicable provisions of the Listing
Regulations and SEBI (Share Based Employee Benefits and
Sweat Equity) Regulations, 2021 (''SBEB & SE Regulations''), the
Company has applied for in-principle approval for the proposed
issue of equity shares under the said the ESOP Plan from both
the stock exchanges i.e. BSE Limited (BSE) and National Stock
Exchange of India Limited (NSE) where the equity shares of the
Company are listed.

It is confirmed that the ESOP Plan is in compliance with the
SBEB & SE Regulations and during the year under review no
material changes were made to the ESOP Plan.

The Company''s Employee Stock Option Scheme (ESOP) was
approved by the Members on 15 April 2026, subsequent to the
close of the financial year under review. Accordingly, as on
31 March 2026, no stock options had been granted, vested,
exercised, lapsed, or remained outstanding. Therefore, the
disclosures relating to ESOPs for the financial year ended 31
March 2026 are not applicable.

The requisite disclosures as mandated under SBEB & SE
Regulations is available on the website of the Company at
https:krnheatexchanger.com/wp-content/uploads/2026/08/
ESOP-DisclosureKRN.pdf

DIVIDEND

The Board does not propose to pay any dividend for the
financial year ended 31st March, 2026. The Dividend

Distribution Policy of the Company is available at the website of
the Company at https://krnheatexchanger.com/wp-content/
uploads/2025/11/Dividend-Distribution-Policy.pdf.

DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE
AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION
DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL
INSTITUTIONS ALONG WITH THE REASONS THEREOF.

There was no instance of one-time settlement with any Bank
or Financial Institution during the financial year 2025-26.

AMOUNT TRANSFER TO RESERVES

Details with regard to amount transferred to reserves are
provided in the Notes to Financial Statements forming part of
this Annual Report.

PUBLIC DEPOSITS

During the year under review, the Company has neither invited
nor accepted any deposits from the public pursuant to the
provisions of Section 73 of the Companies Act, 2013 read with
the Companies (Acceptance of Deposits) Rules, 2014.

Additionally, the Company has not accepted loans/ borrowings
from its Directors and their relatives during this period.

MATERIAL CHANGES AND COMMITMENTS AFFECTING
THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE
OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR AND
THE DATE OF THE REPORT

No material changes and commitments have occurred
between the end of the financial year of the Company and the
date of this report which could affect the financial position of
the Company, Except following:-

1. During the year under review, the Board of Directors, at
its meeting held on 13 March 2026, approved the proposal
to raise funds through issuance of equity shares by way
of Qualified Institutions Placement (QIP). After the close
of the financial year the Company issued and allotted
33,01,886 Equity Shares of face value '' 10 each to eligible
qualified institutional buyers at the Issue price of ''
1,060.00 per Equity Share, i.e., at a premium of '' 1,050.00
per Equity Share (which includes a discount of 4.85% of
the floor price, as determined in terms of the SEBI ICDR
Regulations) against the floor price of Rs. 1,114.05 per
Equity Share), aggregating to '' 34,999.99 lakhs.

2. During the year under review, the Board in its meeting
held on 12th January, 2026 on the recommendation of the

NRC, had accorded its approval to implement the ''KRN
Employee Stock Option Plan 2026'' (''ESOP Plan'') and after
the close of the financial year the Company the same
was approved by the Members of the Company at their
Extra-Ordinary General Meeting (EGM) held on 15th April,
2026. Further, pursuant to the applicable provisions of
the Listing Regulations and SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 (''SBEB & SE
Regulations''), the Company has applied for in-principle
approval for the proposed issue of equity shares under
the said the ESOP Plan from both the stock exchanges i.e.
BSE Limited (BSE) and National Stock Exchange of India
Limited (NSE) where the equity shares of the Company
are listed.

RISK MANAGEMENT AND IMPLEMENTATION OF A RISK
MANAGEMENT POLICY

The Company has implemented a dynamic and comprehensive
Risk Management Framework designed to identify, assess, and
mitigate risks across all business operations. This framework
is integrated into our strategic planning and is in full alignment
with regulatory requirements and industry benchmarks.

The Company is exposed to various financial and operational
risks, including market risk, credit risk, liquidity risk, regulatory
risk, human resource risk, and commodity price risk.

During the year under review, the Board has constituted Risk
Management Committee (''RMC''), pursuant to the provisions
of Regulation 21 read with Part D of Schedule II of the Listing
Regulations to frame, implement and monitor the risk
management process and framework of the Company. The
details of the composition of the RMC, its terms of reference,
number of meetings held during the financial year, attendance
at meetings and other requisite details as required under
Listing Regulations are provided in the Corporate Governance
Report which forms part of the Annual Report.

Risk Management has been integrated with major business
processes such as strategic planning, business planning,
operational management and investment decisions to ensure
consistent consideration of risks in all decision- making.
Major risks identified by the businesses and functions are
systematically addressed through mitigating actions on a
continuing basis.

To minimize the adverse consequence of risks on business
objectives the Company has framed this Risk Management
Policy pursuant to Regulation 17(9) of the Listing Regulations.
The main objective of this policy is to ensure sustainable
business growth with stability and to promote a pro-active

approach in reporting, evaluating and resolving risks
associated with the business. In order to achieve the key
objective, the policy establishes a structured and disciplined
approach to Risk Management, in order to guide decisions on
risk related issues.

In today''s challenging and competitive environment, strategies
for mitigating inherent risks in accomplishing the growth plans
of the Company are imperative. The common risks inter alia
are: Regulations, competition, Business risk, Technology
obsolescence, Investments, retention of talent and expansion
of facilities.

Business risk, inter-alia includes financial risk, political risk,
fidelity risk and legal risk. As a matter of policy, these risks are
assessed and steps as appropriate are taken to mitigate the
same.

DETAILS WITH RESPECT TO THE ADEQUACY OF INTERNAL
FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL
STATEMENTS

To ensure operational efficiency and financial integrity, the
Board has implemented a comprehensive internal control
framework. This includes robust policies and procedures
designed for the safeguarding of assets, the prevention and
detection of frauds and errors, and the ensuring of accuracy
and completeness of accounting records.

The Audit Committee maintains active oversight, periodically
reviewing the adequacy and effectiveness of these systems
and recommending enhancements to meet evolving business
needs.

Our internal financial control systems are fully compliant with
the Ind AS, the Act, Securities and Exchange Board of India
(SEBI) Regulations and other relevant legislative frameworks.
By ensuring strict adherence to these standards, the Company
reinforces its commitment to upholding the highest standards
of corporate governance and regulatory compliance.

For a comprehensive understanding of the internal financial
controls, including their effectiveness and alignment with the
Company''s strategic goals, please refer to the Management
Discussion and Analysis section of this Report.

ANNUAL EVALUATION BY THE BOARD PERFORMANCE AND
PERFORMANCE OF ITS COMMITTEES AND DIRECTORS

The Board, pursuant to the provisions of the Act and Listing
Regulations, has carried out an Annual Evaluation of its own
performance, performance of the Board Committees and of
the individual Directors (including the Independent Directors)
on various parameters.

The criteria for the evaluation of the performance of the Board,
the Committees of the Board and the individual Directors,
including the Chairperson of the Board was approved by
the Nomination and Remuneration Committee ("NRC") of
the Company. The Board decided to circulate the set of
questionnaires for the performance evaluation to the directors
and on the basis of those questionnaires, the evaluation of the
Board Committees and of the individual Directors (including
the Independent Directors) was done for the FY 2025-26.

The performance evaluation of the Non-Independent Directors
and Chairman of the Board was carried out by the Independent
Directors in a separate meeting.

The Directors expressed their satisfaction with the evaluation
process. Further, the evaluation process confirms that the
Board and its Committees continue to operate effectively, and
the performance of the Directors is satisfactory.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197(12) of the
Companies Act, 2013 and the particulars of the employees
who are covered under the provisions contained in Rule 5 (1)
of Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, are attached as Annexure II.

As per the second proviso to Section 136(1) of the Act, the
Directors'' Report and Financial Statements are being sent
to the Members of the Company excluding the statement
of particulars of employees under Rule 5(2) and (3) of the
Remuneration Rules. If any Member is interested in obtaining
a copy thereof, the Member may send an email to the Company
Secretary at [email protected], whereupon a
copy would be sent to such Member.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has formulated "Whistle Blower Policy” to
provide Vigil Mechanism to the employees including Directors
of the Company to report genuine concerns and to ensure
strict compliance with ethical and legal standards across the
Company. The provisions of this Policy are in line with the
provisions of the Section 177(9) of the Companies Act, 2013
and the rules made thereunder and Regulation 22 of Listing
Regulations. The Company''s Whistle Blower Policy is available
on the website of the Company at https://krnheatexchanger.
com/wp-content/uploads/2024/05/Whistle-Blower-and-
Vigil-Mechanism.pdf.

During the period under review, the Company has not received
any complaint under the Whistle Blower Policy of the Company.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEE(S)
Number of Meetings of the Board:

The Board met 9 (Nine) times during the financial year 2025¬
26.. The intervening gap between the meetings was within
the time limit prescribed under the provisions of Section 173
of the Act and the Secretarial Standards (SS-1) issued by the
Institute of Company Secretaries of India, and the SEBI Listing
Regulations.

Comprehensive details of these Board meetings, including
attendance, Meeting date composition etc. are set out in the
Corporate Governance Report which forms part of Annual
Report.

Independent Directors'' Meeting

In accordance with the provisions of Section 149 (8) of the Act,
read with the Schedule IV of Code for Independent Directors
and rules made thereunder and Regulation 25(3) of the Listing
Regulations, the Independent Directors are required to hold
at least one separate meeting in a financial year. To uphold
the highest standards of corporate governance and effective
Board oversight,

During the Financial Year two (02) separate meetings of the
Independent Directors of the Company were held on 11th
March, 2026 and 30th March, 2026 without the attendance of
Non-Independent Directors and members of the Management,
thereby providing a dedicated forum for independent
deliberations on the Board''s performance, governance
framework and overall strategic oversight.

Committees of the Board

The Board has constituted the following Committees with
adequate delegation of powers:

I. Audit Committee

II. Nomination and Remuneration Committee

III. Stakeholders'' Relationship Committee

IV. Corporate Social Responsibility Committee

V. Risk Management Committee (Constituted on 12.05.2025)

VI. Banking and Finance Committee (Constituted on
12.05.2025)

VII. Operative Committee (Constituted on 12.05.2025)

VIII. Fund Raising Committee (Constituted on 13.03.2026)

The details of the composition of the Committees, their
terms of reference, attendance of Directors at meetings of
the Committees and other requisite details as required under
Listing Regulations are provided in the Corporate Governance
Report which forms part of the Annual Report.

SECRETARIAL STANDARDS

The Secretarial Standards i.e. SS-1 & SS-2 relating to meetings
of the Board of Directors and General Meetings, respectively
have been duly complied with by the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies
Act, 2013, the Directors of the company, to the best of their
knowledge and belief and based on the information and
interpretations obtained by them, hereby confirms and states
that:

a. in the preparation of annual accounts for the financial
year ended 31st March, 2026, the applicable Accounting
Standards have been followed and there are no material
departures, from the same;

b. they have selected such accounting policies and applied
them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and
fair view of the State of Affairs of the Company as at 31st
March, 2026 and of the profit of the Company for that
period;

c. they have taken proper and sufficient care for the
maintenance of adequate accounting records in
accordance with the provisions of the Act, 2013 for
safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going
concern basis;

e. they have laid down internal financial controls to be
followed by the Company and that such internal financial
controls are adequate and are operating effectively; and

f. they have devised proper system to ensure compliance
with the provisions of all applicable laws and such
systems were adequate and operating effectively.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
(BRSR)

Pursuant to the requirements of Regulation 34 (2) (f) of
the Listing Regulations, the Company has prepared a
comprehensive Business Responsibility and Sustainability
Report ("BRSR”) for the financial year 2025-26. This report
forms an integral part of this Annual Report, provides a
transparent, detailed account of the Company''s initiatives,
progress, performance and achievements across all the ESG
dimensions.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34 of the Listing Regulations, the
Management Discussion and Analysis Report for the year
under review is annexed separately forming part of the Annual
Report.

CORPORATE GOVERNANCE REPORT

Guided by a culture of transparency, the Company strictly
adheres to the governance norms stipulated under Regulation
34, read with Para C of Schedule V of the Listing Regulations.
A detailed Corporate Governance Report is featured as an
integral part of this Annual Report, providing stakeholders with
a clear view of our ethical framework and internal practices,
which collectively reinforce our commitment to integrity,
accountability and stakeholder trust.

To provide independent assurance of our compliance with
the corporate governance norms as stipulated in the Listing
Regulations, the Company has obtained a certificate from
Practicing Company Secretaries confirming compliance with
the conditions of Corporate Governance as stipulated under
the Listing Regulations. This certificate is incorporated within
the Report on Corporate Governance forming part of this
Annual Report.

This certificate underscores the Company''s dedication to
operational excellence and ethical leadership. Together,
the Corporate Governance Report and the accompanying
certificate clearly demonstrate the Company''s commitment
to fostering enduring trust and confidence among its valued
stakeholders.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In alignment with Section 135 of the Act and the Companies
(Corporate Social Responsibility Policy) Rules, 2014, the
Company has a duly constituted CSR Committee. The
Committee is responsible for formulating and monitoring the
CSR Policy and overseeing the implementation of projects
that create sustainable social impact. Details regarding the
composition of the Committee and meetings held during the
year are provided in the Corporate Governance Report.

The Company has in place Corporate Social Responsibility
Policy ("CSR Policy”) which outlines the Company''s philosophy
and responsibility and lays down the guidelines and mechanism
for undertaking socially impactful programs towards welfare
and sustainable development of the community around the area
of its operations. The CSR Policy of the Company is available
on the website of the Company and the weblink is: https://
krnheatexchanger.com/wp-content/uploads/2025/08/CSR-
Policy.pdf.

Pursuant to clause (o) of sub section (3) of Section 134 of the Act
and Rule 8 of the Companies (Corporate Social Responsibility)
Rules, 2014, as amended, the Annual Report on Corporate
Social Responsibility activities of the Company undertaken
during the year under review, including salient features of
Company''s CSR Policy forms part of this Report as Annexure III.

AUDITORS AND AUDIT REPORTS
STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies
Act, 2013 read with rules made thereunder, M/s Keyur Shah &
Co., Chartered Accountants (Firm Registration No. 141173W)
has been appointed as the Statutory Auditors of the Company
in the 6th Annual General Meeting of the Company held on 30th
September, 2023 to hold office for a period of four (5) years till
the conclusion of 11th Annual General Meeting.

The Auditors'' Report does not contain any qualification,
reservation, adverse remark or disclaimer of opinion. The
Notes to the Financial Statements (including the Consolidated
Financial Statements) referred to in the Auditors'' Report are
self-explanatory and do not call for any further comments.

The Reports issued by the Statutory Auditors on the Standalone
and Consolidated Financial Statements of the Company for the
financial year ended March 31, 2026, form part of this Annual
Report.

SECRETARIAL AUDITORS

M/s SMD & Co., Company Secretary in practice (Firm
Registration Number S2023HR924000), was appointed as
Secretarial Auditors of the Company for conducting Secretarial
Audit for a term of five consecutive years, commencing
from financial year 2025-26 till financial year 2029-30 in
the 8th Annual General Meeting of the Company held on 16th
September, 2025.

The Secretarial Audit Report for the financial year ended
March 31, 2026, issued by the Secretarial Auditors in Form MR-
3, is annexed as Annexure IV. to this Report. The observations
and suggestions of the Secretarial Auditors were reviewed,
and necessary corrective/ preventive actions were taken by
the Company.

As of March 31, 2026, the Company have one material unlisted
subsidiary incorporated in India, as defined under Regulation
24A of the Listing Regulations. Consequently, the requirement
to annex Secretarial Audit Reports of such subsidiaries is
applicable for the year under review and forming part of this
Annual Report attached as annexure V.

INTERNAL AUDITORS

Pursuant to the provisions of Section 138 of the Companies
Act, 2013 read with rules made thereunder, the Board of
directors had appointed M/s Sharma Shankar & Co., Chartered
Accountants, as Internal Auditor of the Company to conduct
the Internal Audit of the Company for the financial year 2025¬
26.

Internal Audit Reports are discussed with the management
and are also reviewed by the Audit Committee of the Company.
During the year under review, the Internal Auditors carried out
their functions as per the scope of work assigned and placed
their reports at the meetings of the Audit Committee.

The observations and suggestions of the Internal Auditors
were reviewed, and necessary corrective/ preventive actions
were taken in consultation with the Audit Committee.

COST AUDITORS

Pursuant to the provisions of Section 148 of the Companies Act,
2013Board of Directors of the Company on the recommendation
of the Audit Committee has approved the appointment of
M/s R S Chauhan & Associates, Cost Accountant (Reg. No.
003517) as Cost auditors of the Company for the F.Y 2025-26.
The Company has received a written confirmation from the
firm regarding their eligibility and independence as per the
prescribed standards. The Cost Auditors will submit their Cost
Audit Report within the timelines prescribed under the Act.

In accordance with the provisions of Section 148(1) of the Act,
read with the Companies (Cost Records and Audit) Rules, 2014,
the Company is maintaining the requisite cost records

There has been no qualification, reservation, adverse remark
or disclaimer given by the Cost Auditors in their Report for the
financial year ended March 31, 2026.

As per the provisions of Section 148 of the Act read with the
Companies (Audit and Auditors) Rules, 2014, the remuneration
payable to Cost Auditors is required to be ratified and
confirmed by the members in General Meeting. Accordingly,
resolution seeking members'' ratification for the remuneration
payable to M/s R S Chauhan & Associates, Cost Accountant for
the F.Y. 2026-27 is included in the Notice convening the AGM.

DETAILS IN RESPECT OF FRAUD REPORTED BY AUDITOR
UNDER SECTION 143(12) OTHER THAN WHICH ARE
REPORTABLE TO THE CENTRAL GOVERNMENT

There was no fraud reported in the Company during the
Financial Year ended 31st March, 2026. This is also being
supported by the report of the auditors of the Company as no

fraud has been reported in their audit report under Section 143
(12) of the Companies Act, 2013 for the Financial Year ended
31st March, 2026.

PARTICULARS OF LOANS GIVEN, GUARANTEES GIVEN,
SECURITIES PROVIDED AND INVESTMENTS MADE

The detailed particulars of loans given, guarantees given,
security provided and investments made during the year in
accordance with Section 186 of the Act forms part of the notes
to the Audited Financial Statements provided in this Annual
Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE
WITH RELATED PARTIES PURSUANT TO THE SECTION 188 (1)
OF THE COMPANIES ACT, 2013

The Company has robust processes and procedures for
identification and monitoring related party(ies) and related
party transactions.

The Company has formulated a policy on related party
transactions which is also available on the website of the
Company at www.krnheatexchanger.com. All related party
transactions are placed before the Audit Committee for review
and approval. Prior omnibus approval is obtained for related
party transactions on a quarterly basis which are of repetitive
nature and/ or entered in the ordinary course of business
and are at an arm''s length basis. There were no related party
transactions entered into by the Company with Directors,
KMPs or other related parties which may have a potential
conflict with the interest of the Company.

All related party transactions entered during the financial year
were in the ordinary course of the business and at an arm''s
length basis and the Company has not entered into any material
related party transaction as stipulated under Regulation 23 of
the Listing Regulations. Accordingly, the disclosure of related
party transactions as required under Section 134(3)(h) of the
Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 in
Form AOC-2 is not applicable to the Company for FY 2025-26.

The detailed disclosure on related party transactions as per
IND AS-24 containing name of related parties and details of
the transactions entered into with them have been provided
under Note No. 40 of the Standalone Financial Statements of
the Company.

BOARD POLICIES

In compliance with the Act and Listing Regulations, the
Company has made all Board-approved policies available
on its website at https://krnheatexchanger.com/investors/
policies/.

POLICY ON DIRECTOR''S AND KMP APPOINTMENT AND
REMUNERATION

Pursuant to Section 134(3Xe) and Section 178(3) of the Act, the
Nomination & Remuneration Committee (NRC) of your Board
had fixed the criteria for nominating a person on the Board
which inter alia include desired size and composition of the
Board, age limit, qualification / experience, areas of expertise
and independence of individual.

The Board of Directors, on the recommendation of the NRC
of the Company, had framed a Policy for Nomination and
Appointment of Directors. Further, pursuant to provisions of
the Act, the NRC recommended to the Board a Remuneration
Policy for remuneration payable to, to Directors, Key Managerial
Personnels and Senior Management Personnel and other
employees of the Company, which was duly approved by the
Board. The Board on the recommendation of the Committee
appoints the Senior Management Personnel from time to
time. The NRC has also developed the criteria for determining
the qualifications, positive attributes and independence of
Directors and for remuneration to Executive Directors of
the Company. The Remuneration Policy of the Company is
available on Company''s website at https://krnheatexchanger.
com/investors/.

We hereby affirm that the remuneration paid to all Directors
during the financial year was in strict accordance with the
terms and conditions stipulated in the Nomination and
Remuneration Policy.

SELECTION AND PROCEDURE FOR NOMINATION AND
APPOINTMENT OF DIRECTORS

The NRC is tasked with identifying and developing the core
competency requirements for the Board, ensuring alignment
with the Company''s evolving industry landscape and strategic
goals. Our current Board composition is the result of a
deliberate analysis, ensuring a deep collective understanding
of the Company''s operations, financial health, and complex
regulatory environment.

The NRC maintains a rigorous selection process that includes
benchmarking potential candidates against identified
competency gaps, conducting comprehensive due diligence,
and performing background references. Prior to a formal
recommendation to the Board, the NRC engages in detailed
interviews with candidates to brief them on the specific
expectations and expert knowledge required for their
respective roles.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT
WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL)
ACT, 2013

The Company has zero tolerance towards Sexual Harassment

of Women at Workplace and values the dignity of individuals
and is committed to provide an environment, which is free of
discrimination, intimidation and abuse.

As per the requirement of The Sexual Harassment of Women
at Workplace (Prevention, Prohibition & Redressal) Act, 2013
(''Act'') and rules made there under, the Company has adopted
a Sexual Harassment Policy for women to ensure healthy
working environment without fear of prejudice, gender
bias and sexual harassment and Complying with the other
applicable provisions of the Act.

As per the requirement of the POSH Act and Rules made
thereunder, the Company constituted an Internal Complaints
Committee (ICC) to redress the complaints received regarding
sexual harassment. The Committee is led by a senior-level
female employee and includes an external member with
expertise in the field. Beyond complaint resolution, the ICC
focuses on preventive sensitization and policy adherence. The
Board maintains active oversight of the ICC''s activities and
policy compliance, ensuring that a culture of accountability,
trust, and transparency remains embedded across the
organization.

Further, to reinforce compliance, real-time tracking, and
central monitoring by the Ministry of Women and Child
Development, the Company has successfully registered its
establishment and active Internal Committee details on the
Government of India''s SHe-Box Portal.

We prioritize a proactive approach through regular employee
awareness workshops and specialized training for ICC
members. Pursuant to the requirements of the POSH Act and
the Listing Regulations, the details pertaining to complaints on
matters pertaining to sexual harassment during the Financial
Year 2025-26, are as below:

In line with our commitment to a safe workplace, the Company
strictly enforces its Policy on Prevention of Sexual Harassment,
which applies to all employees regardless of gender or sexual
orientation. This policy is available on the Company''s website
at www.krnheatexchanger.com.

COMPLIANCE OF MATERNITY BENEFIT ACT, 1961

The Company has complied with provisions relating to the
Maternity Benefit Act, 1961. as amended by the Maternity
Benefit (Amendment) Act, 2017. All eligible women employees
are entitled to maternity benefits, including paid leaves, as
prescribed under the law.

The Company remains committed to supporting its women
employees by providing a safe, inclusive and enabling
workplace that encourages work-life balance and facilitates a
smooth transition during and after maternity.

No complaints or grievances relating to maternity benefits
were reported during the financial year 2025-26.

DECLARATION REGARDING COMPLIANCE BY BOARD
MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH
THE COMPANY''S CODE OF CONDUCT

The Board of Directors of the Company has approved a ''Code of
Conduct and Business Ethics'' (Code) for all Board members, Key
Managerial Personnel and Senior Management Personnel. All
the members of the Board and Senior Management Personnel
have affirmed the compliance of the same. A copy of the
Code is available on the website of the Company viz. https://
krnheatexchanger.com/wp-content/uploads/2024/05/
Code-of-Conduct-for-Directors-and-Senior-Management-
Personnel-Policy.pdf.

In accordance with the SEBI Listing Regulations, a formal
declaration by the Chairman & Managing Director, affirming
that all Board Members and Senior Management Personnel
have complied with the Code of Conduct for the financial
year ended March 31, 2026, is incorporated into the Corporate
Governance Report forming part of this Annual Report.

CERTIFICATE FROM PRACTICING COMPANY SECRETARIES

Pursuant to the SEBI Listing Regulations, The Company hereby
confirms that none of its directors have been debarred or
disqualified from appointment or continuation as directors by
the Securities and Exchange Board of India (SEBI), the Ministry
of Corporate Affairs (MCA), or any other statutory authority. A
certificate to this effect has been obtained from M/s Deepak
Arora & Associates (Firm Registration No. P2001RJ080000),
Practicing Company Secretaries, and is included as part of this
report.

The Board is comprised of highly experienced individuals of
esteemed repute, exhibiting a diverse and balanced mix of
Executive and Non-Executive Directors, with a majority of
Independent Directors.

FAMILIARIZATION PROGRAMS FOR INDEPENDENT DIRECTORS

In accordance with the provisions of Regulation 25(7) of
the Listing Regulations, the Company has been conducting
familiarisation programmes for Independent Directors. The
familiarisation programme comprises of a combination
of written communication, presentation made in various

meetings and interactions with the management team to
provide the directors an opportunity to familiarize with the
Company, its management, operation, policies and practices.

Further, periodic presentations are made at the Board and
Committee meetings, on business and performance updates
of the Company, global business environment, business
strategy and risks involved. Updates on relevant statutory
changes are provided to the Directors in the Board meetings.
Upon appointment, the Independent Directors are issued
a letter of appointment setting out in detail the terms of
appointment including their roles, functions, responsibilities
and their fiduciary duties as a Director of the Company.

Details regarding familiarization programs imparted to
independent Directors has been disclosed on the given
weblink:https://krnheatexchanger.com/wp-content/
uploads/2024/05/Familarization-Programme.pdf.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

Innovating for a sustainable future, the Company harnesses
technology to tackle pressing environmental challenges,
including climate change, water scarcity, and waste
management. Equally important is its commitment to social
responsibility, demonstrated by investments in digital skilling,
fostering inclusive workplaces, prioritizing employee well¬
being, and empowering communities. Guided by its core values
and overseen by a dedicated ESG team, the company is setting
new standards for ethical and sustainable business practices.

CONFLICT OF INTERESTS

To ensure absolute transparency and the highest standards of
corporate governance, all Directors provide annual disclosures
regarding their external directorships and committee
memberships, with timely updates provided as changes occur
throughout the year.

This rigorous practice underpins the Company''s commitment
to identifying and preventing potential conflicts of interest.
In line with statutory requirements and the Company''s Code
of Conduct, any Board Member having a personal interest or
concern in a matter under discussion abstains from both the
deliberation and the voting process for such transactions. This
ensures that all Board decisions are made objectively and in
the best interests of the Company and its stakeholders.

INSIDER TRADING CODE

The Company has instituted a mechanism to avoid Insider
Trading and abusive self-dealing in the securities of the
Company. In accordance with the Securities and Exchange
Board of India (Prohibition of Insider Trading) Regulations, 2015

(''SEBI PIT Regulations''), the Company has established systems
and procedures to prohibit insider trading activity and has
framed the Code of Prohibition of Insider Trading (the "Code”).
The Code of the Company prohibits the designated employees
from dealing in the securities of the Company on the basis of
any Unpublished Price Sensitive Information (UPSI), available
to them by virtue of their position in the Company. The
objective of this Code is to prevent the misuse of any UPSI and
prohibit any insider trading activity to protect the interests
of the shareholders at large. The Board of Directors of the
Company has adopted the Code and formulated the Code
of Practices and Procedures for Fair Disclosure in terms of
the requirements of the SEBI PIT Regulations. The Company
Secretary has been appointed as the Compliance Officer for
ensuring implementation of the Code. The Code is available on
the website of the Company at www.krnheatexchanger.com.

DIRECTORS AND OFFICERS LIABILITY INSURANCE (D&O)

The Company provides Directors and Officers Liability
Insurance (D&O Insurance) to indemnify directors, including
Independent Directors and Officers of the Company,
against liabilities arising from negligence, breach of duty,
misstatement in the performance of their duties or other
related acts, in accordance with Regulation 25(10) of Listing
Regulations

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO

The prescribed particulars on conservation of energy,
technology absorption and foreign exchange earnings and
outgo stipulated under Section 134(3Xm) of the Act, read with
Rule 8 (3) of the Companies (Accounts) Rules, 2014 are detailed
in Annexure VI to this Board''s Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY
REGULATORS OR COURTS

There is no significant and material order was passed by the
regulators or courts or tribunals impacting the going concern
status and your Company''s future operations;

INDUSTRIAL RELATIONS

In pursuit of sustainable, long-term growth and robust order
book visibility, the Company maintains its pre-qualified and
empanelled status with premier government authorities, public
sector undertakings, and major institutional clients, thereby
ensuring its continuous eligibility for high-value infrastructure
tenders. To optimize project execution timelines, manage
resource allocation, and mitigate operational risks associated

with complex engineering projects, the Company strategically
enters into collaborative arrangements, including Joint
Ventures, consortia, and structured sub-contracting
agreements with select industry partners. These synergistic
alliances successfully aggregate complementary technical
expertise, financial capabilities, and operational strengths,
thereby sharpening the Company''s competitive advantage
during the bidding stage and ensuring the successful delivery
of large-scale, capital- intensive infrastructure assets.

OTHER INFORMATION

The Board states that no disclosure or reporting is required in
respect of the following items as there were no transactions
on these items during the year under review:

• As per rule 4(4) of the Companies (Share Capital and
Debentures) Rules, 2014, the Company has not issued
equity shares with differential rights as to dividend,
voting or otherwise;

• As per rule 8(13) of the Companies (Share Capital and
Debentures) Rules, 2014, the Company has not issued
shares (including sweat equity shares) to employees of
the Company under any scheme;

• No buyback of shares has been undertaken

• As per rule 12(9) of the Companies (Share Capital and
Debentures) Rules, 2014, the Company has not issued
equity shares under the scheme of employee stock
options;

• Neither the Managing Director nor the Whole-time
Directors have received any remuneration or commission
from any subsidiaries of the Company except sitting fees
as entitled as a Non-Executive Directors in subsidiary
companies;

• The equity shares of the Company have not been
suspended from trading by the SEBI and/ or Stock
Exchanges;

• Since the Company has not formulated any scheme
of provision of money for the purchase of own shares
by employees or by the trustee for the benefit of the
employees in terms of Section 67(3) of the Act, no
disclosures are required to be made

• There was no revision of financial statements and the
Board''s Report of the Company during the year under
review;

• No application has been made under the Insolvency and
Bankruptcy Code, hence the requirement to disclose

the details of the application made or any proceeding
pending under the Insolvency and Bankruptcy Code, 2016
(31 of 2016) during the year along with their status as at
the end of the financial year is not applicable; and

• The requirement to disclose the details of the difference
between the amount of the valuation done at the time of
one-time settlement and the valuation done while taking
a loan from the Banks or Financial Institutions, along with
the reasons thereof, is not applicable.

ACKNOWLEDGEMENT

The Board of Directors wish to place on record their sincere
appreciation to all the employees for their dedication and
commitment. Their hard work and unstinted efforts enabled
the Company to sustain its performance and consolidate its
sectoral leadership.

The Board of Directors would like to express their sincere
appreciation for assistance and co-operation received from
vendors and stakeholders, including financial institutions,
banks, Central and State Government authorities, customers
and other business associates, who continued to extend
their valuable support during the year under review. It will be
the Company''s endeavour to nurture these relationships in
strengthening business sustainability.

By the order of the Board
For KRN HEAT EXCHANGER AND REFRIGERATION LIMITEDSANTOSH KUMAR YADAV

DATE:12-08-2026 Chairman & Managing Director

PLACE: NEEMRANA DIN: 07789940

The Company has prepared the Standalone and Consolidated
Financial Statements for the Financial Year 2024-25 in
accordance with the Companies (Indian Accounting
Standards) Rules, 2015 prescribed under Section 133 of the
Companies Act, 2013 (the "Act").

STATE OF COMPANY''S AFFAIRS

KRN Heat Exchanger and Refrigeration Limited, founded
in 2017 in Neemrana, India, specializes in manufacturing
aluminium and copper fin and tube heat exchangers,
including water coils, condenser coils, and evaporator coils.
Their products are widely used by OEMs in the HVAC&R
industry for heating, ventilation, air conditioning, and
refrigeration applications.

In addition to extensive product offerings, your Company
manufacture various components such as aluminium / copper
fins and copper tubes, bar and plate and other components,
which are critical to manufacturing process. KRN focuses on

product quality and manufacturing processes for reliable end-
user solutions.

FINANCIAL HIGHLIGHTS

Standlaone level

During the Financial Year 2024-25, your Company clocked total
revenue from operations of '' 43846.64 Lakh as compared to
'' 31359.92 Lakh in the Financial Year 2023-24 at Standalone level.

The profit after tax ("PAT") of the Company for the Financial
Year 2024-25 was '' 5017.46 Lakh as compared to '' 3988.49
Lakh in the Financial Year 2023-24.

Consolidated level

During the Financial Year 2024-25, your Company clocked total
revenue from operations of '' 44170.93 Lakh, as compared to
'' 31374.09 Lakh in the Financial Year 2023-24 at Consolidated
level.

The profit after tax ("PAT") of the Company for the Financial
Year 2024-25 was '' 5287.54 Lakh as compared to '' 3938.99
Lakh in the Financial Year 2023-24.

INITIAL PUBLIC OFFERING ("IPO") AND LISTING ON
MAIN BOARD- BSE LIMITED ("BSE") AND NATIONAL
STOCK EXCHANGE OF INDIA LIMITED ("NSE")

In order to unlock further potential and unleash greater value
creation for all stakeholders, your Company came up with IPO
of its equity shares. The equity shares of your Company got
listed on Stock Exchanges with effect from October 3, 2024.

The Company successfully completed its Initial Public Offer
(IPO) of 15543000 Equity Shares of face value of '' 10/-
each at an Offer Price of '' 220 per Equity Share including a
premium of '' 210 per Equity Share aggregating to '' 34,194.60
Lakhs. The Initial Public Offer opened on September 25, 2024
and closed on September 27, 2024. The Equity Shares of the
Company were listed and admitted for trading on BSE and NSE
with effect from 3rd October, 2024.

CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business of your
Company during the year under review.

INFORMATION ABOUT SUBSIDIARY, ASSOCIATE
COMPANY AND THEIR FINANCIAL PERFORMANCES

Your Company has the following wholly owned subsidiaries as
on March 31, 2025. The details are as follows:

a) KRN HVAC Products Private Limited

b) Thermotech Research Laboratory Private Limited*

* The Board of Directors approved the incorporation of
Thermotech Research Laboratory Private Limited in FY25.

It was incorporated on February 26, 2025, for HVAC&R Lab
in India to equipped with the latest testing, validation, and
certification technologies.

Except as stated above, there was no change in the holding
of any subsidiary, joint venture or associate company during
the year.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES,
ASSOCIATES AND JOINT VENTURES

A statement containing the salient features of the financial
statements of the Subsidiaries, Joint Ventures and Associates
of the Company is attached in Form AOC-1 as Annexure I as
required under Rule 5 of the Companies (Accounts) Rules, 2014.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of
the Act, the Annual Return for the year ended on 31st March,
2025 is available on the Company’s website at https://
krnheatexchanger.com/investors/.

DIRECTORS AND KMPs

The Company’s Board, consisting of highly qualified
individuals, maintains a balanced structure of Executive and
Non-Executive Directors, Women Independent Directors with
a majority of Independent Directors, in compliance with all
regulations. This composition ensures effective leadership
and oversight. The Board currently has 07 Directors (02
Executive Directors, 01 Non executive and 04 Independent)
and engages in regular succession planning to maintain
alignment with the Company’s future needs.

Pursuant to the provisions of Section 152(6) of the Act,

Mr. Santosh Kumar Yadav (DIN 07789940), Chairman and
Managing Director, retire by rotation at the ensuing Annual
General Meeting (AGM) and being eligible, offer themselves
for re-appointment. A brief resume, details of expertise and
other directorships/committee memberships held by these
Directors, form part of the Notice convening the ensuing AGM.

There is no change in the Directors of the Company during the
year under review.

After closure of the Financial Year, the Board, on the
recommendation of the NRC, appointed Mr. Jitendra Kumar
Sharma (ICSI Membership No. A65048) as Company Secretary,
Compliance officer and Key Managerial Personnel (KMP) of
the Company with effect from 28th April, 2025 and appointed
Mrs. Meenakshi Sharma (DIN: 11153602) as Additional Non¬
Executive Independent Director of the Company with effect
from 18th June, 2025

The relevant resolution for the approval of the shareholders for
the appointment of Mrs. Meenakshi Sharma (DIN: 11153602),
as the Non-Executive Independent Director on the Board of
the Company is mentioned in the Notice of ensuing AGM.

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Sections 2(51) and 203 of the
Act, read in conjunction with the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 (as
amended), the Key Managerial Personnel ("KMPs") of the
Company during the financial year were as follows:

Mr. Santosh Kumar Yadav, Managing Director

Mrs. Anju Devi, whole-time Director

Mr. Mr. Sonu Gupta, Chief Financial Officer

*Mr. Praveen Kumar, Company Secretary S Compliance Officer

**Mr. Jitendra Kumar Sharma, Company Secretary &

Compliance Officer

*Mr. Praveen Kumar, has been resigned from the position of
Company Secretary & Compliance Officer of the Company
w.e.f. 17th February, 2025.

**Mr. Jitendra Kumar Sharma has been appointed as Company
Secretary & Compliance Officer of the Company w.e.f. 28th
April, 2025.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from
all Independent Directors as required under Section 149(7)
of the Companies Act, 2013 and Regulation 25(8) of the
Listing Regulations, confirming that they meet the criteria
of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Regulation 16(1)(b) of the Listing
Regulations, respectively.

In compliance with Section 150 of the Companies Act,

2013 read with Rule 6 of the Companies (Appointment and
Qualification of Directors) Rules, 2014, the details of all
the Independent Directors have been registered with the
databank maintained by the Indian Institute of Corporate
Affairs (IICA). Further, all the Independent Directors have
passed the online proficiency self-assessment test
conducted by IICA except those who have been exempted by
the Act.

SHARE CAPITAL

Authorised share capital

The Authorised Share Capital of the Company is ''
72,00,00,000 divided into 7,20,00,000 equity shares of '' 10/-
each. During the year under review, there was no change in
the Authorised Share Capital of the Company.

Paid up share capital

During the year under review, the Company had issued
4,77,000 equity shares of '' 10/- each by private placement
and issued 1,55,43,000 equity shares of '' 10/- each in its IPO.
The paid up equity share capital as on 31st March, 2025 was
'' 62,15,66,000 /- (Rupees sixty Two Crore Fifteen Lakhs Sixty
Six Thousand Only) divided into 6,21,56,600 equity shares of
'' 10/- each.

ANNUAL LISTING FEE

The Annual Listing Fee for the financial year 2025-26 has been
paid to both the Stock Exchanges i.e. BSE Limited and National
Stock Exchange of India Limited.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR
EDUCATION AND PROTECTION FUND

The Company has not declared dividends on the Equity
Shares, therefore, provisions for transfer of unclaimed/unpaid
dividend and shares to Investor Education and Protection
Fund under the Companies Act, 2013 were not applicable.

DIVIDEND

The Board does not propose to pay any dividend for the
financial year ended 31st March, 2025.

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF
THE VALUATION DONE AT THE TIME OF ONE TIME

SETTLEMENT AND THE VALUATION DONE WHILE
TAKING LOAN FROM THE BANKS OR FINANCIAL
INSTITUTIONS ALONG WITH THE REASONS THEREOF.

There was no instance of one-time settlement with any Bank
or Financial Institution during the financial year 2024-25.

AMOUNT TRANSFER TO RESERVES

Details with regard to amount transferred to reserves are
provided in the Notes to Financial Statements forming part of
this Annual Report.

PUBLIC DEPOSITS

During the year under review, the Company has neither invited
nor accepted any deposits from the public pursuant to the
provisions of Section 73 of the Companies Act, 2013 read with
the Companies (Acceptance of Deposits) Rules, 2014.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments have occurred
between the end of the financial year of the Company and the
date of this report which could affect the financial position of
the Company.

RISK MANAGEMENT

Risk Management has been integrated with major business
processes such as strategic planning, business planning,
operational management and investment decisions to ensure
consistent consideration of risks in all decision- making.

Major risks identified by the businesses and functions are
systematically addressed through mitigating actions on a
continuing basis.

To minimize the adverse consequence of risks on business
objectives the Company has framed this Risk Management
Policy. The main objective of this policy is to ensure
sustainable business growth with stability and to promote
a pro-active approach in reporting, evaluating and resolving
risks associated with the business. In order to achieve the key
objective, the policy establishes a structured and disciplined
approach to Risk Management, in order to guide decisions on
risk related issues.

In today’s challenging and competitive environment,
strategies for mitigating inherent risks in accomplishing the
growth plans of the Company are imperative. The common
risks inter alia are: Regulations, competition, Business risk,
Technology obsolescence, Investments, retention of talent
and expansion of facilities.

Business risk, inter-alia includes financial risk, political risk,
fidelity risk and legal risk. As a matter of policy, these risks are
assessed and steps as appropriate are taken to mitigate the
same.

DETAILS OF INTERNAL FINANCIAL CONTROLS WITH
REFERENCE TO THE FINANCIAL STATEMENTS

The Company has documented its internal financial controls
considering the essential components of various critical
processes, both physical and operational. This includes its
design, implementation and maintenance, along with periodic
internal review of operational effectiveness and sustenance
and whether these are commensurate with the nature of its
business and the size and complexity of its operations.

This ensures orderly and efficient conduct of its
business, including adherence to the Company’s policies,
safeguarding of its assets, prevention of errors, accuracy
and completeness of the accounting records and the timely
preparation of reliable financial information.

Internal financial controls with reference to the financial
statements were adequate and operating effectively.

ANNUAL EVALUATION BY THE BOARD

The Board, pursuant to the provisions of the Act and Listing
Regulations, has carried out an Annual Evaluation of its own
performance, performance of the Board Committees and of
the individual Directors (including the Independent Directors)
on various parameters.

The criteria for the evaluation of the performance of the Board,
the Committees of the Board and the individual Directors,
including the Chairperson of the Board was approved by
the Nomination and Remuneration Committee ("NRC") of
the Company. The Board decided to circulate the set of
questionnaires for the performance evaluation to the directors
and on the basis of those questionnaires, the evaluation
of the Board Committees and of the individual Directors
(including the Independent Directors) was done for the FY
2024-25.

The performance evaluation of the Non-Independent
Directors and Chairman of the Board was carried out by the
Independent Directors in a separate meeting.

The Directors expressed their satisfaction with the evaluation
process. Further, the evaluation process confirms that the
Board and its Committees continue to operate effectively and
the performance of the Directors is satisfactory.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197(12) of the
Companies Act, 2013 and the particulars of the employees
who are covered under the provisions contained in Rule 5 of
Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, are attached as Annexure II.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has formulated "Whistle Blower Policy" to

provide Vigil Mechanism to the employees including Directors
of the Company to report genuine concerns and to ensure
strict compliance with ethical and legal standards across
the Company. The provisions of this Policy are in line with the
provisions of the Section 177(9) of the Companies Act, 2013
and the rules made thereunder and Regulation 22 of Listing
Regulations. The Company’s Whistle Blower Policy is available
on the website of the Company at https://krnheatexchanger.
com/wp-content/uploads/2024/05/Whistle-Blower-and-Vigil-
Mechanism.pdf.

During the period under review, the Company has not
received any complaint under the Whistle Blower Policy of the
Company.

MEETINGS OF THE BOARD OF DIRECTORS AND
COMMITTEE(S)

The Board met 12 (twelve) times during the year ended March
31, 2025. The number of meetings of the Board and various
Committees of the Board including attendance, composition
etc. are set out in the Corporate Governance Report which
forms part of Annual Report. The intervening gap between
the meetings was within the time limit prescribed under the
provisions of Section 173 of the Act and Listing Regulations.

In accordance with the provisions of Schedule IV to the
Act and applicable Regulations, a separate meeting of the
Independent Directors of the Company were held on 27th
January, 2025 and 31st March, 2025 without the attendance
of Non-Independent Directors and members of the
Management.

The Board has constituted the following Committees with
adequate delegation of powers:

I. Audit Committee

II. Nomination and Remuneration Committee

III. Stakeholders’ Relationship Committee

IV. Corporate Social Responsibility Committee

Details of the composition of the Committees, their terms
of reference, attendance of Directors at meetings of the
Committees and other requisite details as required under
Listing Regulations are provided in the Corporate Governance
Report which forms part of the Annual Report.

SECRETARIAL STANDARDS

The Secretarial Standards i.e. SS-1 S SS-2 relating to meetings
of the Board of Directors and General Meetings, respectively
have been duly complied with by the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies
Act, 2013, the Directors hereby confirm that:

a. in the preparation of annual accounts for the financial
year ended 31st March, 2025, the applicable Accounting
Standards have been followed and there are no material
departures, from the same;

b. they have selected such accounting policies and applied
them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and
fair view of the State of Affairs of the Company as at 31st
March, 2025 and of the profit of the Company for that
period;

c. they have taken proper and sufficient care for the
maintenance of adequate accounting records in
accordance with the provisions of the Act, 2013 for
safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going
concern basis;

e. they have laid down internal financial controls to be
followed by the Company and that such internal financial
controls are adequate and are operating effectively; and

f. they have devised proper system to ensure compliance
with the provisions of all applicable laws and such
systems were adequate and operating effectively.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT(BRSR)

The BRSR for the FY 25, as stipulated under Regulation 34(2)
(f) of the Listing Regulations, is annexed separately forming
part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34 of the Listing Regulations, the
Management Discussion and Analysis Report for the year
under review is annexed separately forming part of the Annual
Report.

CORPORATE GOVERNANCE

The Company is committed to adhere to best corporate
governance practices. The separate section on Corporate
Governance and a Certificate from the Practicing Company
Secretary regarding compliance of conditions of Corporate
Governance as stipulated under Listing Regulations forms
part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has in place Corporate Social Responsibility
Policy ("CSR Policy") which outlines the Company’s philosophy
and responsibility and lays down the guidelines and

mechanism for undertaking socially impactful programs
towards welfare and sustainable development of the
community around the area of its operations. The CSR Policy
of the Company is available on the website of the Company
and the weblink is: https://krnheatexchanger.com/wp-
content/uploads/2025/08/CSR-Policy.pdf.

Pursuant to clause (o) of sub section (3) of Section 134
of the Act and Rule 8 of the Companies (Corporate Social
Responsibility) Rules, 2014, as amended, the Annual Report
on Corporate Social Responsibility activities of the Company
undertaken during the year under review, including salient
features of Company’s CSR Policy forms part of this Report as
Annexure III.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies
Act, 2013 read with rules made thereunder, M/s Keyur Shah
S Co., Chartered Accountants (Firm Registration No. 141173W)
has been appointed as the Statutory Auditors of the Company
in the 6th Annual General Meeting of the Company held on
30th September, 2023 to hold office for a period of Five (5)
years till the conclusion of 11th Annual General Meeting.

The Auditors’ Report does not contain any qualification,
reservation, adverse remark or disclaimer of opinion. The
Notes to the Financial Statements (including the Consolidated
Financial Statements) referred to in the Auditors’ Report are
self-explanatory and do not call for any further comments.

SECRETARIAL AUDITORS

M/s S Khatri S Associates, Company Secretary in practice,
was appointed as Secretarial Auditors of the Company for FY
2024-25. The Secretarial Audit for FY ended 31 March 2025 is
annexed at Annexure-IV.

The observations and suggestions of the Secretarial Auditors
were reviewed, and necessary corrective/ preventive actions
were taken by the Company.

INTERNAL AUDITORS

Pursuant to the provisions of Section 138 of the Companies
Act, 2013 read with rules made thereunder, the Board has
appointed M/s Sharma Shankar S Co., Chartered Accountants,
as Internal Auditor of the Company.

Internal Audit Reports are discussed with the management
and are also reviewed by the Audit Committee of the
Company. During the year under review, the Internal Auditors
carried out their functions as per the scope of work assigned
and placed their reports at the meetings of the Audit
Committee.

The observations and suggestions of the Internal Auditors
were reviewed, and necessary corrective/ preventive actions
were taken in consultation with the Audit Committee.

COST AUDITORS

Pursuant to the provisions of Section 148 of the Companies
Act, 2013, Board of Directors of the Company on the
recommendation of the Audit Committee has approved
the appointment of M/s R S Chauhan S Associates, Cost
Accountant (Reg. No. 003517) as Cost auditors of the
Company for the F.Y 2024-25 and the necessary resolution
for ratification on the remuneration payable to the cost
auditors was approved by the members of the Company in the
previous AGM.

In accordance with the provisions of Section 148(1) of the
Act, read with the Companies (Cost Records and Audit) Rules,
2014, the Company is maintaining the requisite cost records.

There has been no qualification, reservation, adverse remark
or disclaimer given by the Cost Auditors in their Report for the
financial year ended March 31, 2025.

As per the provisions of Section 148 of the Act read with the
Companies (Audit and Auditors) Rules, 2014, the remuneration
payable to Cost Auditors is required to be ratified and
confirmed by the members in General Meeting. Accordingly,
resolution seeking members’ ratification for the remuneration
payable to M/s R S Chauhan S Associates, Cost Accountant for
the F.Y. 2025-26 is included in the Notice convening the AGM.

DETAILS IN RESPECT OF FRAUD REPORTED BY
AUDITOR UNDER SECTION 143(12) OTHER THAN
WHICH ARE REPORTABLE TO THE CENTRAL
GOVERNMENT

There was no fraud reported in the Company during the
Financial Year ended 31st March, 2025. This is also being
supported by the report of the auditors of the Company as no
fraud has been reported in their audit report under Section
143 (12) of the Companies Act, 2013 for the Financial Year
ended 31st March, 2025.

PARTICULARS OF LOANS, GUARANTEES AND
INVESTMENTS

Particulars of loans, guarantees given, security provided and
investments made during the year in accordance with Section
186 of the Act forms part of the notes to the Audited Financial
Statements provided in this Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS
MADE WITH RELATED PARTIES PURSUANT TO THE
SECTION 188 (1) OF THE COMPANIES ACT, 2013

The Company has robust processes and procedures for
identification and monitoring related party(ies) and related
party transactions.

The Company has formulated a policy on related party
transactions which is also available on the website of the
Company at www.krnheatexchanger.com. All related party
transactions are placed before the Audit Committee for review

and approval. Prior omnibus approval is obtained for related
party transactions on a quarterly basis which are of repetitive
nature and/ or entered in the ordinary course of business
and are at an arm’s length basis. There were no related party
transactions entered into by the Company with Directors,
KMPs or other related parties which may have a potential
conflict with the interest of the Company.

All related party transactions entered during the financial
year were in the ordinary course of the business and at an
arm’s length basis and the Company has not entered into
any material related party transaction as stipulated under
Regulation 23 of the Listing Regulations. Accordingly, the
disclosure of related party transactions as required under
Section 134(3)(h) of the Act and Rule 8(2) of the Companies
(Accounts) Rules, 2014 in Form AOC-2 is not applicable to the
Company for FY 2024-25.

The detailed disclosure on related party transactions as per
IND AS-24 containing name of related parties and details of
the transactions entered into with them have been provided
under Note No. 39 of the Standalone Financial Statements of
the Company.

BOARD POLICIES

In compliance with the Act and Listing Regulations, the
Company has made all Board-approved policies available on
its website at www.krnheatexchnager.com

POLICY ON DIRECTOR''S APPOINTMENT AND
REMUNERATION

Pursuant to Section 134(3)(e) and Section 178(3) of the Act,
the Nomination S Remuneration Committee (NRC) of your
Board had fixed the criteria for nominating a person on the
Board which inter alia include desired size and composition
of the Board, age limit, qualification / experience, areas of
expertise and independence of individual.

The Board of Directors, on the recommendation of the NRC
of the Company, had framed a Policy for Nomination and
Appointment of Directors. Further, pursuant to provisions of
the Act, the NRC recommended to the Board a Remuneration
Policy for remuneration payable to, to Directors, Key
Managerial Personnels and Senior Management Personnel
and other employees of the Company, which was duly
approved by the Board. The Board on the recommendation of
the Committee appoints the Senior Management Personnel
from time to time. The NRC has also developed the criteria
for determining the qualifications, positive attributes and
independence of Directors and for remuneration to Executive
Directors of the Company. The Remuneration Policy of the
Company is available on Company’s website at https://
krnheatexchanger.com/investors/.

DISCLOSURE UNDER SEXUAL HARASSMENT OF
WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013

The Company has zero tolerance towards Sexual Harassment
of Women at Workplace and values the dignity of individuals
and is committed to provide an environment, which is free of
discrimination, intimidation and abuse.

As per the requirement of The Sexual Harassment of Women
at Workplace (Prevention, Prohibition & Redressal) Act,

2013 (''Act'') and rules made there under, the Company has
adopted a Sexual Harassment Policy for women to ensure
healthy working environment without fear of prejudice, gender
bias and sexual harassment and Complying with the other
applicable provisions of the Act.

As per the requirement of the POSH Act and Rules made
thereunder, the Company constituted an Internal Complaints
Committee (ICC) to redress the complaints received regarding
sexual harassment.

The details pertaining to complaints on matters pertaining to
sexual harassment during the Financial Year 2024-25, are as
below:

The Policy is available on the Company''s website at https://
krnheatexchanger.com/investors/

COMPLIANCE OF MATERNITY BENEFIT ACT, 1961

The Company has complied with provisions relating to the
Maternity Benefit Act, 1961. as amended by the Maternity
Benefit (Amendment) Act, 2017. All eligible women employees
are entitled to maternity benefits, including paid leaves, as
prescribed under the law.

The Company remains committed to supporting its women
employees by providing a safe, inclusive and enabling
workplace that encourages work-life balance and facilitates a
smooth transition during and after maternity.

No complaints or grievances relating to maternity benefits
were reported during the financial year 2024-25.

DECLARATION REGARDING COMPLIANCE BY BOARD
MEMBERS AND SENIOR MANAGEMENT PERSONNEL
WITH THE COMPANY''S CODE OF CONDUCT

The Board of Directors of the Company has approved a ''Code
of Conduct and Business Ethics'' (Code) for all Board members,
Key Managerial Personnel and Senior Management Personnel.
All the members of the Board and Senior Management
Personnel have affirmed the compliance of the same. A copy
of the Code is available on the website of the Company viz.
https://krnheatexchanger.com/wp-content/uploads/2024/05/
Code-of-Conduct-for-Directors-and-Senior-Management-
Personnel-Policy.pdf.

CERTIFICATE FROM PRACTICING COMPANY
SECRETARIES

The Company hereby confirms that none of its directors
have been debarred or disqualified from appointment or
continuation as directors by the Securities and Exchange
Board of India (SEBI), the Ministry of Corporate Affairs (MCA),
or any other statutory authority. A certificate to this effect
has been obtained from M/s Deepak Arora & Associates
(Firm Registration No. P2001RJ080000), Practicing Company
Secretaries, and is included as part of this report.

The Board is comprised of highly experienced individuals of
esteemed repute, exhibiting a diverse and balanced mix of
Executive and Non-Executive Directors, with a majority of
Independent Directors.

FAMILIARIZATION PROGRAMS FOR INDEPENDENT
DIRECTORS

In accordance with the provisions of Regulation 25(7) of
the Listing Regulations, the Company has been conducting
familiarisation programmes for Independent Directors. The
familiarisation programme comprises of a combination
of written communication, presentation made in various
meetings and interactions with the management team to
provide the directors an opportunity to familiarize with the
Company, its management, operation, policies and practices.

Further, periodic presentations are made at the Board and
Committee meetings, on business and performance updates
of the Company, global business environment, business
strategy and risks involved. Updates on relevant statutory
changes are provided to the Directors in the Board meetings.
Upon appointment, the Independent Directors are issued
a letter of appointment setting out in detail the terms of
appointment including their roles, functions, responsibilities
and their fiduciary duties as a Director of the Company.

Details regarding familiarization programs imparted to
independent Directors has been disclosed on the given
weblink: https://krnheatexchanger.com/wp-content/
uploads/2024/05/Familarization-Programme.pdf.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

Innovating for a sustainable future, the Company harnesses
technology to tackle pressing environmental challenges,
including climate change, water scarcity, and waste
management. Equally important is its commitment to social
responsibility, demonstrated by investments in digital skilling
fostering inclusive workplaces, prioritizing employee well¬
being, and empowering communities. Guided by its core
values and overseen by a dedicated ESG team, the company
is setting new standards for ethical and sustainable business
practices.

CONFLICT OF INTERESTS

To maintain transparency, the Directors annually disclose the
external board and committee roles, with updates throughout
the year. This practice supports the Company commitment
to avoiding conflicts of interest. The Members of the Board
restrict themselves from any discussions and voting in
transactions in which they have concerns or interests.

INSIDER TRADING CODE

The Company has instituted a mechanism to avoid Insider
Trading and abusive self-dealing in the securities of the
Company. In accordance with the Securities and Exchange
Board of India (Prohibition of Insider Trading) Regulations,

2015 (''SEBI PIT Regulations''), the Company has established
systems and procedures to prohibit insider trading activity
and has framed the Code of Prohibition of Insider Trading (the
"Code"). The Code of the Company prohibits the designated
employees from dealing in the securities of the Company
on the basis of any Unpublished Price Sensitive Information
(UPSI), available to them by virtue of their position in the
Company. The objective of this Code is to prevent the
misuse of any UPSI and prohibit any insider trading activity
to protect the interests of the shareholders at large. The
Board of Directors of the Company has adopted the Code
and formulated the Code of Practices and Procedures for
Fair Disclosure in terms of the requirements of the SEBI PIT
Regulations. The Company Secretary has been appointed as
the Compliance Officer for ensuring implementation of the
Code. The Code is available on the website of the Company at
www.krnheatexchanger.com.

DIRECTORS AND OFFICERS LIABILITY INSURANCE

(D&O)

The Company provides Directors and Officers Liability
Insurance (D&O Insurance) to indemnify directors, including
Independent Directors, against liabilities arising from
negligence,

CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND
OUTGO

The information on conservation of energy, technology
absorption and foreign exchange earnings and outgo
stipulated under Section 134(3)(m) of the Act, read with Rule
8 of the Companies (Accounts) Rules, 2014 is detailed in
Annexure VI to this Board''s Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY
REGULATORS OR COURTS

There is no significant and material order was passed by the
regulators or courts or tribunals impacting the going concern
status and your Company''s future operations;

OTHER INFORMATION

During the year under review:

• There has been no issue of equity shares with differential
rights as to dividend, voting or otherwise;

• There has been no issue of shares (including sweat
equity shares) to employees of the Company under any
scheme;

• No buyback of shares has been undertaken

• As per rule 12(9) of the Companies (Share Capital and
Debentures) Rules, 2014, the Company has not issued
equity shares under the scheme of employee stock
options;

• None of your Directors have received any remuneration or
commission (accept the sitting fees by the Independent
Directors) from any subsidiary of the Company

• The equity shares of the Company have not been
suspended from trading by the SEBI and/ or Stock
Exchanges;

• As per rule 12(9) of the Companies (Share Capital and
Debentures) Rules, 2014, the Company has not issued
equity shares under the scheme of employee stock
options; employees in terms of Section 67(3) of the Act,
no disclosures are required to be made

• There was no revision of financial statements and the
Board''s Report of the Company during the year under
review;

• No amount or Shares were required to be transferred to
the Investor Education and Protection Fund.

ACKNOWLEDGEMENT

The Board of Directors wish to place on record their sincere
appreciation to all the employees for their dedication and
commitment. Their hard work and unstinted efforts enabled
the Company to sustain its performance and consolidate its
sectoral leadership.

The Board of Directors would like to express their sincere
appreciation for assistance and co-operation received from
vendors and stakeholders, including financial institutions,
banks, Central and State Government authorities, customers
and other business associates, who continued to extend
their valuable support during the year under review. It will be
the Company’s endeavour to nurture these relationships in
strengthening business sustainability.

By the order of the Board
For KRN HEAT EXCHANGER AND REFRIGERATION LIMITED

SANTOSH KUMAR YADAV

Chairman and Managing Director
DIN: 07789940

DATE:18.08.2025
PLACE: NEEMRANA

1''he Board o [''Directors have pleasure in presenting the 7^th Board’s Report of your Company together with the audited standalone and consolidated Ind AS financial statements for the financial year ended March 31.2024.

1. State of Company Affairs:

A. Standalone Finaneial Highlights:

The highlights of the Standalone financial performance of the Company during the financial year ended 31^s1 March 2024 as compared to previous financial year ended 31^sl March 2023 are summarized herein below:

(Amount in Rs. Lakhs)

R. Consolidated Financial Highlights:

The highlights of the Consolidated financial performance of the Company during the financial year ended 31^s1 March 2024 are summarized herein below:

( Amount in Us. I.nklis)

C. Business Performance:

Revenue

Total revenue from operations for the year ended on March 31,2024, amounted to Rs. 30823.54 in Lakhs against Rs. 24748.08 in Lakhs for the corresponding previous year, which consists of revenues from manufacturing and trading of Heat Exchangers, OEM coils, Condensing units, Copper fittings and allied products.

The Total consolidated revenue from operations for the year ended on March 31, 2024, amounted to Rs. 30828.31 in Lakhs.

Profit After Tax

The Profit after tax for the year ended on March 31, 2024, amounted to Rs. 3984.29 in Lakhs as against Profit of Rs. 3354.90 in Lakhs for the previous year. The business of the company is growing continually across the world and makes profits despite challenging times by introducing innovations and putting its best efforts across promotions, network connections, technology and connecting with stakeholders.

The 4''otal consolidated profit after tax for the year ended on March 31,2024, amounted to Rs. 3938.99 in Lakhs.

I). Share Capital:

During the year under review, the following changes were made in the capital structure of the Company:

• Authorised Share Capital of the Company was increased from Rs. 66.00 Crores to Rs. 72.00 Crores in an extra ordinary general meeting of members of the Company held on 23.12.2023.

• Issue. Subscribed and Paid-Up capital of the Company was raised up to Rs. 46.13 Crores by issue and allotment of 21,36,600 fully paid-up equity shares on a preferential basis by way of private placement in the board meeting held on 21.10.2023 ranked pari passu in all respects with the existing equity shares.

Further, during the period under review, your Company has not bought back any of its securities/ has not issued any Sweat Equity Shares / has not issued shares with differential voting rights and there has been no change in the voting rights of the shareholders.

L. Change in the nature of business, if any:

During the year under review, there is no change in the nature of business of the company as compared to immediately preceding year.

2. Amount transfer to reserves:

The Board of Directors of your company has decided not to transfer any amount to the Reserves for the year under review.

3. Dividend:

Your directors are unable to recommend any dividend for shareholders for the financial year ended on 31.03.2024.

4. Web Address, if any, where Annual Return referred to in Sub-Section (3) of Section 92 has been placed:

Pursuant to Section 92 of the Companies Act, 2013 read with Rule 12 of The Companies (Management and Administration) Rules, 2014 and Section 134 (3) (a), the copy of Annual Return can be accessed on the website of the Company at https://www. krnheatexchxmacr. com.

5. Number of Meetings of the Board of Directors and Members and Committees of Board:

Board Meetings:

During the year under review, the Board of Directors of the company met 25 (Twenty-Five) times. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Proper notices were given, and the proceedings were properly recorded and signed in the Minutes Book as required by the Articles of Association of the Company and the Act.

Members Meetings:

During the year under review, Seven (7) meetings were held by the members of the Company.

Proper notices were given, and the proceedings were properly recorded and signed in the Minutes Book as required by the Articles of Association of the Company and the Act.

Committees of the Board:

The Board had duly constituted/ reconstituted the following Committees, which are in line with the provisions of applicable laws:

a. Audit Committee

b. Nomination and Remuneration Committee

c. Corporate Social Responsibility Committee

d. Stakeholders’ Relationship Committee

e. Internal Complaints Committee

6. Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report:

In terms of Section 134(B)(1) of the Companies Act, 2013, no material changes and commitments occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report which may materially affect the financial position of the Company.

7. Directors and Key Managerial Personnel (KMP):

The Board of Directors is duly constituted and during the year under review the following changes took place:

• Mr. Surendcr Singh was appointed as the CFO of the company w.e.f. 09.05.2023.

• The category of Mr. Manohar Lai having DIN: 10040507 was changed to non-executive director & member of Promoter group w.e.f. 09.05.2023.

• Mr. Santosh Kumar Yadav (DIN: 07789940) was appointed as Managing Director and CEO of the Company w.e.f. 09.05.2023. Later he was re-designated as Chairman & Managing Director by the Board w.e.f. 06.06.2023 and the same was approved by members in the Extra-ordinary General Meeting held on 10.06.2023.

• Mrs. Anju Devi (DIN: 06858442) was appointed as Whole Time Director of the Company w.e.f. 09.05.2023

• Mr. A jay Pal Yadav (DIN: 10040569), Mr. Bheem Singh Yadav (DIN 09268161) and Mr. Rajat Raj Yadav (DIN: 10118405) were appointed by the Board as Additional Independent Directors on 09.05.2023. Later their appointment was regularized as Independent Director in Extra-ordinary General Meeting held on 13.05.2023.

• Mr. Surender Singh resigned from the post of CFO w.e.f. 19.07.2023 and later Mr. Sonu Gupta was appointed as CFO w.e.f. 19.08.2023.

• Mr. A jay Pal Yadav (DIN: 10040569), Mr. Bheem Singh Yadav (DIN 09268161) and Mr. Rajat Raj Yadav (DIN: 10118405), who were serving as Independent Directors have resigned from the directorship w.e.f. 20.03.2024.

• Mr. Kelan Sharma (DIN: 10541058), Mr. Deepak Batheja (DIN: 10555193) and Mr. Srinivasa Rao Anasingaraju (DIN: 10541655) were appointed as Additional Director (Independent & Non-Executive) by the Board w.e.f. 20.03.2024 and later their appointment was regularized as Independent Director in Extra-ordinary General Meeting held on 26.03.2024.

• As per the declarations received from Directors under section 164 of the Companies Act, 2013 none of the directors are disqualified.

l)ircctor(s) liable to Retire by Rotation

In accordance with the Provisions of section 152 (6) the Companies Act, 2013 and Relevant Article of the Article of Association of Company, Mrs. Anju Devi having DIN: 06858442, Whole-time Director of the Company, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers herself for reappointment. The Board recommends her re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.

Declaration of Independent Directors of the Company:

As on date of this report, the Board comprises of 6 (Six) Directors. The composition includes 3 (Three) Independent Directors. All the Independent Directors are appointed on the Board of your Company in compliance with the applicable provisions of the Act. Your Company has received declarations from all the Independent Directors confirming that they meet/continue to meet, as the case may be, the criteria of Independence under sub-section (6) of section 149 of the Act and their continued registration in the databank as maintained by the Indian Institute of Corporate Affairs (“IICA”) in line with Rule 6(3) of the Companies (Appointment and Qualifications of Directors) Rules. 2014.

Also, the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Act and have confirmed that they are in compliance with the Code of Conduct for Directors and Senior Management personnel formulated by the Company.

In the opinion of the Board, there has been no change in the circumstances, which may affect their status as Independent Director of the Company and the Board is satisfied with the integrity, expertise, experience including proficiency of all the Independent Directors on the Board.

8. Deposits:

During the year under review, the Company has not accepted any deposits falling within the ambit of Chapter V of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification, amendment, or re-enactment thereof for the time being in force). The Company had not accepted any deposits in earlier years; hence the question of outstanding deposits, unpaid or unclaimed deposit and default in repayment thereof does not arise.

9. Details of Subsidiaries, Joint Vcntures/Associatc Companies:

9.1 As on March 31, 2024. the Company has 1 (one) subsidiary company namely KRN FIVAC Products Private Limited (ON: U28191RJ2023PTC086784) which was incorporated on 07.04.2023 having registered office located at A-60, Green Acre, Neemrana, Alwar, Nccmrana, Rajasthan, India, 301705. Further, your company does not have any Joint Ventures/Associate Companies within the meaning of applicable sections of Companies Act, 2013 read with rules made thereunder (including any statutory modification, amendment, or re-enactment thereof for the time being in force). The salient features of the financial statements of the subsidiaries and their contribution to the overall performance of the Company during the year under review has been provided in Form No. AOC-1 and notes to accounts respectively both forming part of this Board’s Report.

9.2 Consolidated financial statements:

1 he consolidated financial statements as required in terms of Section 129(3) of the Companies Act, 2013 have been provided along with standalone financial statements. Further, a statement containing salient features of the financial statements of the subsidiaries in Form No. AOC-1 as required to be given in terms of first proviso to Section 129(3) of the Companies Act, 2013 has been provided in a separate section which forms part of this Board’s Report. The financial statements including the consolidated financial statements, financial statements of the subsidiaries and all other documents are available on the Company’s website at htlys://\vww,krnhealexchansier.com.

h). Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future:

During the year under review, there has been no significant and material orders passed by the Regulators/Courts/Tribunals that would impact the going concern status of the Company and its future operations.

11. Auditors & Auditors’ Report:

11.1 Statutory Auditors:

Pursuant to the provisions of Section 139, 142 and other applicable provisions, if any, of the Companies Act. 2013, read with the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification, amendment, or re-enactment thereof for the time being in force), M/s. Keyur Shah & Co., Chartered Accountants, (FRN: 021227C), were appointed as Statutory Auditors of the Company for a term of 5 years in the 6^lh Annual General Meeting to hold office until the conclusion of ll^lh Annual General Meeting of the Company.

The Independent Auditors Report given by the Statutory Auditors on the financial statements of your Company forms part of this Board’s Report. There has been no qualification, reservation, adverse remark, or disclaimer given by the Auditors in their Report. The Notes on financial statement are self-explanatory and needs no further explanation.

11.2 Cost Auditors:

In terms of the Section 148 of the Act read with Companies (Cost Records and Audit) Rules, 2014, your Company is required to maintain cost accounting records and get them audited every year from Cost Auditor and accordingly such accounts and records are maintained by your Company.

The Board of Directors, on the recommendation of the Audit Committee, appointed M/s. R S Chauhan & Associates, Cost Accountants (FRN: 003517), as Cost Auditors to audit the cost accounts of your Company for the Financial Year 2024-25 at its meeting held on 20^lh August 2024.

1 T.3 Internal Auditors:

During the year under review, Mr. Satish Kumar Sharma, Chartered Accountant (Membership No. 43952), conducted the internal audit of the company.

The Board of Directors, on the recommendation of the Audit Committee and in terms of Section 138 of the Companies Act. 2013 read with the Companies (Accounts) Rules, 2014 appointed Mr. Shankar Sharma. Chartered Accountant (Membership No.: 534022), as the internal auditor of the Company for the FY 2024-25 and onwards.

11.4 Details of fraud required to be reported by the Auditors

During the year under review, there was no instance of fraud required to be reported to Central Government, Board of Directors or Audit Committee, as the case may be, by any of the auditors of the Company in terms of Section 143(12) of the Companies Act. 2013.

12. The conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo:

A. Conservation of Energy:

The Company continues its efforts to improve methods for energy conservation and its utilization. Disclosure of particulars with respect to conservation of energy:

tAmount in Rs. Lakhs)

U. Technology Absorption:

Operations of the company do not involve any kind of special technology and there was no expenditure on research & development during the year.

C. Foreign Exchange Earnings and outgo:

The detail of Foreign Exchange earnings and outgo during the financial year ended on 31^st March 2024 is as follows:

tAmount in Rs. Lakhs)

13. Particulars of Employees:

Information pursuant to Section 134(3)(q) of the Companies Act. 2013 read with Companies (Appointment and Remuneration) Rules, 2014 (including any statutory modification, amendment, or reenactment thereof for the time being in force), during the reporting period, none of employees is drawing salary up to and exceeding the limit specified in the said rules. Hence, no information is required to be appended to this report in this regard.

14. Particulars of Loans, Guarantees or Investments under section 186 of the Act:

The particulars of loans, guarantees and investments in terms of Section 186 of the Companies Act, 2013 for the year under review have been provided in the notes to the financial statements which forms part of this Board''s Report.

15. Particulars of contracts or arrangements with related parties:

The particulars of contracts / arrangements with related parties referred to in Section 188(1) entered into during the year under review as required to be given in Form No. AOC-2, have been provided in an annexure which forms part of the Board''s Report.

16. Internal financial controls and their adequacy:

The Company has adequate internal controls and processors in place with respect to its financial statements with provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. The Company has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.

17. Statement concerning development and implementation of Risk Management Policy:

The Company has constituted a Risk Management Committee, and the Board of Directors of the Company identifies and evaluates business risks and opportunities. The Directors of the Company take pro-active steps to minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. Presently no material risk has been identified by the directors except general business risks, for which the Company is leveraging on their expertise and experience.

18. Corporate Social Responsibility:

During the year under review, the composition of the Corporate Social Responsibility committee of the Board was in accordance with provisions of section 135 and rules framed under the Companies Act, 2013. The CSR Committee was reconstituted on 27.03.2024 as under:

1. Chairman of Committee - Mr. Santosh Kumar Yadav (Chairman And Managing Director)

2. Member of Committee - Mr. Ketan Sharma (Independent Director)

3. Member of Committee - Mr. Deepak Batheja (Independent Director)

During the period under review, the CSR Committee of the Board of Directors met two times, detailed as

below:

Attendance of the Members in the Meeting of CSR Committee is as follows:

The Company has developed and implemented the Corporate Social Responsibility Policy (CSR Policy) duly recommended by the CSR Committee and approved by the Board of Directors of the Company. The Company undertakes its CSR initiatives as per the activities included in the CSR Policy of the Company.

The brief outline/ contents of the Corporate Social Responsibility (CSR) policy of the Company, the initiative undertaken by the Company and Board’s Report on CSR activities during the year are set out in ANNEXURE-I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules. 2014. which forms part ofthis Board’s Report.

19. Whistle Blower Policy & Vigil Mechanism

While every employee’s contract of employment stipulates that he will not disclose confidential information about the employer’s affairs, in order to bring about accountability and transparency, there should be a mechanism to enable employees to voice their concerns where they discover information which they believe shows serious malpractice, impropriety, abuse or wrong doing within the organization. The employees should be encouraged and assisted to raise concerns without any fear of victimization, subsequent discrimination or disadvantage. If the employee has acted in good faith it does not matter if one is mistaken and the Company shall ensure protection from any harassment or victimization of/against the disclosing employee.

The Company has adopted a Whistle Blower Policy which applies to all permanent employees of the Company including those who are on probation, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the

Chairman of the Audit Committee, It is affirmed that no personnel of the Company have been denied

access to the Audit Committee.

Details of the Vigil Mechanism policy are made available on the Company''s website

hUns://krnheatexchanger.com

20. Directors’ Responsibility Statement:

Pursuant to the requirement under section 134 (3) (c) of the Companies Act, 2013, the Directors’

Responsibility Statement hereby Stated:

(a) that in the preparation of the annual accounts for the financial year ended 31^sl March 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) that the Directors had prepared the annual accounts on a going concern basis;

(e) the Company being unlisted, sub clause (e) of section 134(5) of the Companies Act, 2013 pertaining to laying down internal financial controls is not applicable to the Company; and

(f) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

21. Other Disclosures:

1. Pursuant to the provisions of Section 118 of the Companies Act. 2013, during the year, the company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Companies Secretaries of India.

2. The Company does not fall under the criteria as specified in Section 204 of the Companies Act, 2013, relating to Secretarial Audit, hence disclosure specified in section 134(3)(f)(ii) is not required.

3. The Company does not fall under the criteria as specified in Section 134(3)(p) relating to statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors, hence disclosure under the aforesaid section is not required.

4. During the year under review, the Company was not required to transfer any amount in Investor Education and Protection fund account. Further the company also does not have any amount which is required to transfer to IEPF account.

5. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act. 201 3: The Company has in place an Internal Complaints Committee, constituted under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, which entertains the complaints made by any aggrieved woman. During the year under review, there were no cases reported in this regard.

6. The Company has not revised its financial statement or the Report in respect of any of the three preceding financial years either voluntarily or pursuant to the order of a judicial authority. Therefore, the said disclosures are not applicable to the company.

7. No application tiled for corporate insolvency resolution process, by any financial or operational creditor or by the Company itself under the Insolvency and Bankruptcy Code (IBC), 2016, before the NCLT.

8. The Company is in the process of listing of its shares at BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”).

22. Acknowledgement:

The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Boards of Directors also wish to place on record its deep sense of appreciation for the committed services by the Company’s executives, staff and workers.

By order of the Board of Directors For KRN Meat Exchanger and Refrigeration Limited

For KRN Heat Exchanger And RHiMion United Tor KRN Heat Ewhanger And Migration LMtw

'' Chairman And MvMg^^rector . Whole-Time

Santosh Kiilmy Yadav Anju Devi

(Chairman & Managing Direetor) (Whole Time Director)

DIN:07789940 DIN:06858442

Place: Neemrana, Alwar Dated: 06.09.2024