DIRECTORS' REPORT

Your Board hereby present the 41st Annual Report and the Audited Financial Statements for the year ended
31st March, 2026.

Financial Highlights

The highlights of financial results of the Company for the year under review are given below:

Dividend

During the year, the Company has paid an interim dividend
on equity shares at 360% i.e, ' 36.00 per share for the
year ended 31 March 2026. Considering the payment of
interim dividend during the year, impacted margins from
higher commodity and weaker INR and planned capital
expenditure in line with our growth plans, the Directors
have decided not to recommend any final dividend for
the financial year 2025-26.

A New Chapter: Bosch Home Comfort India
Limited

Financial year 2025-26 marks a defining milestone
in the evolution of the Company. On 1 August 2025,
Bosch Home Comfort Group, a division of Robert Bosch
GmbH, Germany completed the acquisition of 100%
of the Johnson Controls-Hitachi Air Conditioning joint
venture globally, including the 74.25% controlling stake
in Johnson Controls-Hitachi Air Conditioning India
Limited. Consequently, the name of the Company has
been changed as Bosch Home Comfort India Limited.
This strategic integration leverages Bosch’s global
engineering capabilities, advanced technology platforms,
and extensive research expertise, creating a strong
foundation for innovation, operational excellence, and
sustainable growth. With this acquisition, Robert Bosch
Group intends to strengthen its position, in HVAC segment
expanding outside of Europe into Asia and Americas to
have global presence and achieve economies of scale.
With its technology and products, Bosch intends to make
a bigger contribution to energy efficiency and to provide
more comfort and a better quality of life for many people
impacted by global warming. That’s ‘Invented for life’ in
its truest sense in Bosch language.

Robert Bosch Group has secured a long-term licensing
agreement with Hitachi Group to use the ‘HITACHI’ brand
for air-conditioning products. Backed by decades of
customer trust in India, the brand holds a strong market
reputation among consumers and channel partners,
founded on its legacy of dependable performance,
energy-efficient solutions, and advanced premium
cooling technologies.

The Company is now well positioned to leverage the scale
and capabilities of the Bosch Home Comfort Group to
drive sustainable growth, strengthen its market presence
and further deepen its engagement with customers and
channel partners in a rapidly growing market. Together,
the engineering might of Bosch and the advanced

technology & brand heritage of Hitachi, create a uniquely
powerful proposition in one of the world’s fastest-
growing air conditioning markets. The Company is now
positioned to leverage Bosch Home Comfort Group's
global scale — encompassing over €8 billion in revenues
and more than 26,000 employees worldwide — to invest
in product innovation, manufacturing excellence, and
customer experience at a pace faster than before.

The Board of Directors is pleased to present this Report
as the Company embarks on this new phase with
strengthened capabilities and a clear strategic direction.

Industry Outlook and Business Overview

Room Air Conditioners

The growth outlook for the Indian Room Air Conditioning
industry remains highly encouraging, supported by a
combination of favorable demographic and economic
drivers. With room air-conditioner penetration still
at relatively modest levels, increasing disposable
incomes, rising aspirations, and improvements in power
infrastructure continue to broaden demand across
the country. Consumers today are well researched,
better informed and increasingly value energy-efficient
technologies that deliver superior comfort while reducing
energy consumption. Moreover, the growing acceptance
of digital platforms for researching and purchasing high-
value consumer durables is reshaping the customer
journey and broadening market access. As these trends
gather momentum, the industry remains well positioned
for healthy and sustainable growth in the years ahead.

The Company continued to serve its premium consumer
base with the launch of a wide range of feature-rich room
air conditioners. The Company sharpened its focus on
premiumization by strengthening its high performance
and feature-loaded SUMO series of Heavy-Duty Inverter
RAC offerings. These heavy-duty air conditioners provide
robust cooling performance even under severe India
summers. SUMO series features bigger indoor units that
provide 24m long air throw reaching every corner of the
room and providing uniform cooling. These WiFi-enabled
smart air conditioners enable voice control through smart
home assistants and easy operation through airCloudGo
mobile app. The company also introduced premium
range of inverter room air conditioners with SmartView
Display which allows precise temperature control and
provides self-diagnosis error codes for first-time right
troubleshooting. These units are also equipped with
4-way air distribution that provides even air circulation in
the room. The inbuilt anti-bacterial superfine mesh filter
and the innovate IceClean feature powered by patented
FrostWash technology ensure fresh and healthy air.

In the year under review, room air conditioner business
went through a series of demand disturbances. The year
started out on a subdued note due to delayed and mild
summer, adversely impacting the demand for room air
conditioning products. The sweeping tariffs and the

volatile trade policies that were announced in April
2025 put several sectors under pressure and impacted
consumer sentiment. The implementation of the revised
GST rates on air conditioners coincided with festive
season, resulting in demand postponement in Q2 ‘25.
Subsequently, the industry started to experience the
impact of rising commodity costs and rupee depreciation,
which were further exacerbated by West Asia crisis. Our
Company focus on prudent cost controls and disciplined
execution helped in mitigating some of the adverse
impact of these external head winds.

Commercial Air Conditioners

The Commercial Air Conditioning business recorded mid¬
teens revenue growth during the year heavily contributed
by Cassette and Variable Refrigerant Flow - VRF
products. The innovation-led enhanced product portfolio
and focused market interventions led the Company to
strengthen its market position to further expand and
continue to capture growth opportunities.

The Commercial Air Conditioning segment exhibited
strong resilience in FY 2025-26, supported by broad-
based demand from government-sponsored infrastructure
spending and private sector investments. Growing
government expenditure in healthcare, educational
institutions, metro, and railway networks — combined
with private investments in commercial real estate,
hospitality, and data centres — continued to drive demand
for ducted systems, VRF and precision cooling solutions.

Leveraging its well-established channel network across
key urban centres, the Company effectively capitalized on
these opportunities, strengthening its market presence
and supporting sustained growth in the Commercial Air
Conditioning segment.

During the year, the Company developed full range of
products to restore its entire commercial portfolio in
line with Quality Control Orders (QCO) requirements.
With Bosch Home Comfort Group's global engineering
capabilities, the Company is now better positioned
to leverage global R&D and product synergies for the
commercial segment, particularly in high-growth areas
such as data centre cooling and premium residential
VRF. After setting-up the manufacturing facility of Gen-
3 VRF line-up in India plant, the company continues
to invest in engineering capabilities for VRF and other
products of commercial application along with the test
lab infrastructure for developing products not only to
support the high-growth under execution for domestic
market but also for global market requirements.

In the VRF product category, Air365 Max side smart
offers industry-leading space saving energy efficient
cooling solutions.

The Company retained its strong position in Packaged
Air Conditioners (PAC). The company's energy efficient
inverter PAC lineup has seen keen interest from the key

customers in sectors ranging from banking, retail and
government. During the year, the company focused on
further strengthening this inverter PAC range by offering
AHU connectivity, which allows the use of this technology
to critical applications such as clean rooms, operation
theatres and pharmaceuticals.

The Company has also strengthened its range of inverter
cassettes with new product launches like 1-way inverter
cassette which has seen strong demand from corporate
customers, high-end apartments, villas and small offices
and shops. Such product enhancements with a clear
focus on driving energy efficiency are expected to support
the company in maintaining its strong market position.

Aftermarket Service Excellence, Digital
Transformation and Customer Experience

Our Aftermarket Service organization continues to
strengthen customer relationships and create long-term
value through service excellence, digital innovation, and
capability development. During the year, through our
network of over 1,500 authorized service dealers, we
provided reliable service support to approximately 2
million customers across India, with plans to add 100
new service dealers to further enhance service reach.

Customer satisfaction remains a strategic priority. Using
digital engagement platforms, we connected with nearly
all service customers to better understand their experience
and expectations. Responses received highlighted
strong customer sentiment and helped inform focused
improvement actions across our operations. We remain
committed to elevating the customer experience through
continuous learning, improvement, and innovation.

The Company introduced an industry-leading automated
customer satisfaction measurement system across
Light Commercial and Commercial Product segments,
enabling real-time feedback analysis and faster service
enhancements.

To strengthen the service ecosystem, we conducted
extensive dealer engagement programs nationwide,
gathering insights that are being integrated into service
improvement initiatives. We also invested significantly
in workforce capability development, delivering over
120,000 training man-hours and certification programs
to enhance technician competence and service quality.

During the year, we began integrating Artificial
Intelligence (AI) with human expertise across service
processes, resulting in improved responsiveness,
operational efficiency, issue resolution, and customer
convenience. The Company plans to expand AI-enabled
service initiatives in the coming years.

In line with our sustainability objectives, we digitized
almost all service operations, significantly reducing
paper-based processes while improving efficiency,
transparency, and customer experience.

Looking ahead, we remain focused on expanding
service coverage, strengthening dealer partnerships,
enhancing technician capabilities, accelerating AI-led
transformation, and delivering world-class customer
experiences. With a strong service network, to better
serve more than 2 million customers annually, and
continued investments in people and technology, we are
well positioned to further strengthen our leadership in
aftermarket service excellence and create sustainable
value for all stakeholders.

International Sales

During the year under review, the Company continued to
strengthen its presence across key South Asian markets,
including Bangladesh, Maldives, Sri Lanka, Nepal, and
Bhutan. Despite economic and geopolitical challenges in
certain markets, the Company expanded its channel and
customer base through targeted market development
initiatives, appointment of new channel partners, and
continued support through training programs, customized
product offerings, and focused marketing activities.

These efforts enhanced market reach and customer
engagement, contributing to improved business
performance and reinforcing the Company’s long-term
growth prospects in international markets.

Manufacturing Excellence and Operational
Performance

During the year under review, the Company continued
to strengthen its manufacturing capabilities through
strategic investments in automation, localization,
quality assurance, and sustainability initiatives. These
efforts were aimed at enhancing operational efficiency,
improving product quality, and strengthening supply
chain resilience. The Company also further enhanced its
quality assurance ecosystem through advanced testing
and validation facilities, thereby improving product
reliability and customer satisfaction.

As part of its commitment to sustainable operations,
the Company expanded its renewable energy initiatives,
enabling approximately 31% of the energy requirements
of its Manufacturing Facility and Global Development
Center to be met through renewable sources. These
initiatives reflect the Company’s focus on reducing its
environmental footprint and promoting responsible
business practices.

The manufacturing facility successfully cleared the
Bureau of Indian Standards (BIS) surveillance audit
and continued to maintain its internationally recognized
management system certifications, including ISO
9001:2015 for Quality Management, ISO 14001:2015
for Environmental Management, and ISO 45001:2018 for
Occupational Health and Safety Management. The facility
also successfully completed safety and environmental
audits, receiving commendations for adherence to best

practices, regulatory compliance, and high standards of
operational excellence.

Design and Development

The Company’s Global Development Center (GDC),
located at Kadi, Gujarat, continued to play a pivotal role
as a key Research and Development (R&D) hub for the
Bosch Home Comfort global organization. Established in
2019, the GDC operates with the vision of “Design in
India for the World”, developing innovative and energy-
efficient cooling solutions for the Indian, European, and
North American markets.

During the year under review, the GDC further
strengthened its engineering and innovation capabilities
and now houses a team of 170 engineers supported
by 21 state-of-the-art laboratories for product testing
and validation. To enhance in-house development and
validation capabilities, the Company invested in advanced
high-capacity Variable Refrigerant Flow (VRF) testing
laboratories. These facilities enable faster performance
validation, reduce development lead times, and support
accelerated product launches.

These investments are expected to accelerate the
development of next-generation, energy-efficient
HVAC solutions and further strengthen the Company's
competitive position. The enhanced R&D capabilities
place the Company in a favorable position to capitalize
on the growing opportunities in the light commercial
air-conditioning market while supporting its long-term
innovation and growth objectives.

Risks, Concerns and Challenges

Geopolitical Risk

Persistent geopolitical tensions in West Asia remained a
key source of uncertainty, impacting fuel, gas, and energy
markets, disrupting supply chains, driving inflation
in energy and commodity costs, increasing currency
fluctuations, and affecting global trade flows.

Seasonality risk

The Company's business remains highly sensitive to
seasonal patterns. As a company specializing in air
conditioning products, our operations are naturally
influenced by seasonal demand. Unpredictable factors
like intermittent rainfall, extreme temperature variations,
and supply chain disruptions can affect our operations.
To minimize the risk of missed opportunities or surplus
inventory, we have enhanced our demand and supply
planning process, ensuring agility and responsiveness to
seasonal fluctuations.

Raw Material and Input Cost Volatility

Fluctuations in raw material prices can lead to significant
variations in component costs, impacting supply chain
stability and potentially affecting the Company's
profitability. To mitigate these risks, the Company has
developed a robust local supplier base and implemented
a dual-sourcing strategy for critical components.

Regulatory Framework and Government Policies

The Company's core product business operates within a
dynamic regulatory environment and is subject to a wide
range of government policies and regulations, including
energy efficiency norms, Quality Control Orders (QCOs),
environmental regulations, manufacturing standards,
non-tariff barriers, incentive schemes, anti-dumping
duties, EXIM policies, international trade agreements,
and taxation frameworks. Changes in these regulations
can directly or indirectly influence product costs, pricing
strategies, and overall business operations. To effectively
manage this risk, the Company maintains a proactive
approach by closely monitoring regulatory developments
and implementing timely measures to ensure compliance
and minimize potential business impacts.

The Company actively engages with industry associations
and other relevant stakeholders to promote constructive
dialogue with government authorities on policy and
regulatory matters impacting the business and the
industry. These engagements support the development of
a progressive and sustainable business environment and
are aligned with governmental objectives, particularly
in the areas of sustainability, energy efficiency, and
regulatory advancement. Through such collaborative
efforts, the Company continues to contribute to industry
development while advocating for policies that foster
long-term growth and innovation.

Human Resources

Human Capital

As on March 31, 2026, the total employee strength (Staff
and Operators) of the Company stood at 1204. Our
employees remain the cornerstone of our success, and
during the year, the Human Resources function played
a pivotal role in supporting the organization through a
significant phase of transition from JCH to Bosch.

This transformation journey has been focused on aligning
our people practices, systems, and culture with Bosch
global standards, while ensuring continuity, stability,
and engagement across the workforce.

Transformation and Transition Initiatives

FY 2025-26 marks an important phase in the ongoing
transition from JCH to Bosch. The HR function has been
actively driving multiple strategic initiatives to enable
smooth integration and alignment with Bosch systems
and processes. These initiatives are currently underway
and progressing in a phased manner:

• Culture Change Communication (CCC) initiatives:

A long-term project has been initiated by a cross
functional team comprising of business leaders, HR
team, and Marketing team to actively engage with
employees to communicate Bosch Legacy, Values,
Mission and the Bosch Way of doing business.

• Organization Talent Review (OTR), Succession
Planning & Talent Development:

The OTR framework is being progressively aligned
with Bosch standards to enhance talent assessment,
succession planning, and readiness for future roles.
The organization is in the process of identifying high-
potential employees across levels to strengthen the
leadership pipeline and enable focused development
interventions. We are actively engaging with the
central teams in Bosch HQ to leverage Bosch
talent development programs for our high potential
employees across all levels.

These initiatives are being implemented in a
structured and phased approach and are expected
to further strengthen organizational alignment with
Bosch global practices.

Employee Engagement and Culture Building

Recognizing the importance of employee engagement
during a phase of transformation, several initiatives were
carried out to foster connection, well-being, and cultural
integration:

• Health & Wellness Initiatives:

Programs such as the Step-Up Health Challenge
encouraged employees to adopt healthier lifestyles
and promote overall well-being.

• Family Connect Initiatives:

Celebrations of Mother’s Day and Father’s Day were
organized by inviting employees’ parents to visit the
plant and office, providing them an opportunity to
experience their children’s workplace and fostering
a sense of pride and belonging.

• Ongoing Engagement Platforms:

Continuous dialogue mechanisms and engagement
platforms like Pulse - Employee/HR interactions,
HR Surveys, were leveraged to gather feedback
and support employees throughout the transition
journey.

Internal Control and Systems

The Company has a well-defined and adequate internal
control system commensurate to the size of its business
and the nature of industry it operates in. The Internal
Control system ensures safeguarding and protecting the
assets of the Company. Internal Audit was conducted
by an external professional auditing firm at plant, head
office and branches as per the detailed scope defined
and approved by the Audit Committee. The Internal Audit
is planned to substantiate and review the adequacy of
internal controls and laid down procedures & systems.

Observations of Internal Auditors and the detailed plan
of action are reviewed and discussed at the meetings of
the Audit Committee on quarterly basis.

Auditors

Pursuant to the provisions of Section 139 of the
Companies Act, 2013, through postal ballot held
on 17th October, 2025, Members of the Company
approved appointment of M/s. S R B C & CO LLP,
Chartered Accountants (Firm Registration No: 324982E/
E300003) as Statutory Auditors of the Company to fill
casual vacancy caused by the resignation of M/s. Price
Waterhouse & Co. Chartered Accountants LLP (Firm
Registration No. 304026E / E300009) for conducting
audit for the Financial year 2025-26 and to hold office as
the Statutory Auditors of the Company till the conclusion
of the next Annual General Meeting of the Company to
be held in calendar year 2026 on such remuneration as
may be determined by the Board as per recommendation
of Audit Committee.

At the meetings held on 6th August, 2026, Audit
Committee recommended and Board approved, subject
to the approval of the Shareholders at the ensuing
Annual General Meeting, re-appointment of M/s. S R B
C & CO LLP, Chartered Accountants (Firm Registration
No: 324982E/E300003) as the Statutory Auditors of the
Company to hold office as the Statutory Auditors of the
Company from conclusion of the Annual General Meeting
of the Company to be held in year 2026 to the conclusion
of the Annual General Meeting of the Company to be
held in year 2030.

Directors’ Responsibility Statement

Your Directors confirm that:

a) In the preparation of the annual accounts, the
applicable accounting standards have been followed
along with proper explanations relating to material
departures;

b) Such accounting policies selected and applied
consistently and judgments and estimates made
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 or
loss of the Company for that period;

c) Proper and sufficient care has been taken for the
maintenance of adequate accounting records in
accordance with the provisions of Companies Act,
2013 for safeguarding the assets of the Company
and for preventing and detecting fraud and other
irregularities;

d) Annual accounts have been prepared on a going
concern basis;

e) Internal financial controls which are to be followed
by the Company have been laid down and that such
internal financial controls are adequate and are
operating effectively; and

f ) Proper systems have been devised to ensure
compliance with the provisions of all applicable
laws and that such systems were adequate and
operating effectively.

Change in Board of Directors

There were following changes in the Board of Directors

of the Company:

1. Cessation of Mr. Nobuyuki Tao as a Non-Executive
Non-Independent Director with effect from
28^th February, 2026 due to resignation.

2. Cessation of Mr. Yoshikazu Ishihara as a Non¬
Executive Non-Independent Director with effect
from 28^th February, 2026 due to resignation.

3. Appointment of Mr. Rishi Mehta, Chief Financial
Officer as Executive Director-Finance and CFO with
effect from 1st April, 2026.

4. Appointment of Mr. Marcel Heese as a Director of
the Company with effect from 19th May, 2026.

Performance Evaluation

The Board has carried out an annual evaluation of
the performance of the Board, Audit Committee, Risk
Management Committee, Stakeholder Relationship
Committee, Nomination and Remuneration Committee,
Executive Committee, ESG Committee, Vigil Mechanism
Committee and CSR Committee.

The Board has also carried out an annual evaluation
of the performance of individual Directors, who were
evaluated considering levels of their engagement and
contribution, safeguarding the interests of the Company
and its minority shareholders, etc. The performance
evaluation of the Chairman and the Non-Independent
Directors were carried out by the Independent Directors
at their separate meeting.

Details of Establishment of Vigil Mechanism

The Company has established a Vigil Mechanism process

as an extension of the Company’s Code of Conduct whereby any employee, director, customer, vendor or associate
of the Company can lodge his genuine concern in good faith in Compliance Hotline about unethical behavior, actual
or suspected fraud or violation of the Company’s Code of Conduct or ethics policy, so that appropriate action can
be taken to safeguard the interest of the Company. In exceptional circumstances, a complaint can also be made by a
complainant to Chairperson of Audit Committee.

This mechanism is overseen by the Audit Committee.

Disclosure under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014:

We hereby affirm that the remuneration given to all the employees, Directors and KMP is as per the Remuneration
policy of the Company.

Risk Management System

Company has implemented Enterprise Risk Management (ERM) system to identify, assess, monitor and mitigate the
various risks associated with the Company.

Risks are identified and then classified into different categories such as Strategic, Operational and Business risks.
Then score based on level and significance of risk is given and subsequently risk mitigation steps are taken. ERM
covers various functional risks including cyber securities related risks.

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Board has formed a
Risk Management Committee to discuss critical and vital risks.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to its financial statements. These
controls ensure the accuracy and completeness of the accounting records and the preparation of reliable financial
statements.

Other Disclosures

• Number of meetings of the Board: 8 (Eight) Board Meetings were held, i.e., on 20th May, 2025, 3rd July, 2025,
24th July, 2025, 22nd August, 2025, 17th September, 2025, 14th November, 2025, 28th January, 2026 and 24th
March, 2026.

• Members of the Audit Committee as on 31st March, 2026 are as under:

Mr. Anil Shankar - Chairman

Ms. Shalini Kamath - Member
Mr. Raman Madhok - Member

• The Company has received necessary declaration from each Independent Director under Section 149(7) of
the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the
Companies Act, 2013.

• Details of the CSR amount spent for the year 2025-26 is attached as Annexure A. Details about the Policy
on Corporate Social Responsibility (CSR) as required under Section 134(3)(o), 135(2) read with Companies
(Corporate Social Responsibility Policy) Rules, 2014 has been placed on the website of the Company and weblink
is as under:

https://buy.hitachiaircon.in/cms/materials/f93c4f84a3.pdf

CSR projects to be implemented by the Company for the year 2026-27 have been placed on the website of the
Company and weblink is as under:

https://buy.hitachiaircon.in/cms/materials/9761cfad7a.pdf

• Formal Appointment and Evaluation Policy of the Board of Directors and Senior Management of the Company
which has been formulated and recommended by Nomination and Remuneration Committee and adopted by
Board of Directors covering appointment and remuneration including criteria for determining qualifications,
positive attributes, independence of a director and other matters provided under Section 178(3) has been placed
on the website of the Company and weblink is as under:

https://buy.hitachiaircon.in/cms/materials/bbae9ad852.pdf

• No commission was paid to Directors of the Company, so no disclosure is required to be made under Section
197(14).

• The Draft Annual Return in form MGT-7 as provided under sub-Section (3) of section 92 has been placed on the
website of the Company and weblink is as under:

https://buy.hitachiaircon.in/cms/materials/94f8a6627d.pdf

• No loan was granted by the Company to any person to purchase or subscribe to fully paid-up shares of the
Company.

Key Financial Ratios

Details of the significant changes (i.e. change of 25% or more as compared to the immediately previous financial
year) in key financial ratios, along with detailed explanations thereof:

For and on behalf of the Board of Directors

Sanjay Sudhakaran

Managing Director

Place : Karan Nagar, Kadi Rishi Mehta

Date : 6th August, 2026 Executive Director Finance & CFO