Dear Shareholder,

Sub. : Update and half yearly financial results

I enclose a copy of the company's half yearly results approved by our Board at its meeting held on October 18, 2012. I take this opportunity to apprise you of certain other initiatives and activities of our company during the first half of the year 2012-13.

Financial Highlights You will observe that the net sales from operations for the first half of the year 2012-13 are ` 91184 lacs as against ` 83671 lacs during the corresponding period of the previous year, an overall rise of about 7513 lacs over the previous period. The net profit of the company for the current half year is at 2378 lacs.

As you are aware, our company continues to be selective with orders and execution to improve the sales mix. However, execution of major orders, reduction in inventory and reduction in notional loss on foreign currency borrowings due to Rupee appreciation in September 2012, are factors which improved the situation. Project sectors continued to be sluggish from the liquidity perspective and controlled billing resulted in the decrease in profitability. Further, the previous period's profit contains profit on sale of company's investment in Gondwana Engineers Limited.

Efforts are being made to improve domestic sales and steps have been taken to cater to export market as well.

Other Highlights Our new plant located at Sanand in Gujarat, commenced trial production in June, 2012. This state of the art manufacturing facility will produce energy efficient submersible pumps and cater to markets across the country. The plant is set up on 14 acres of land with a built-up area of 8500 square meters and this facility employs 64 associates, of which 14 are women. At present, the plant's production capacity is 125 pumps per shift per day.

To bring the service facilities and spare parts closer to customers, a pioneering initiative has been taken for the first time in the country through “Kirloskar authorized refurbishment centers (KRC)”. Through the nearest KRC, customers will be able to get their small and medium industrial pumps serviced or repaired withoutsending them to the factory, which generally is a tedious and time consuming process leading to a loss of valuable production time.

An ASME survey team conducted the final audit for N and NPT stamp and certification has been recommended for the Company. This certification shall qualify our company to supply Class 1 Pumps and pump componentsfor nuclear reactor applications worldwide. Our company is the first pump company in India to qualify for this stringent certification.

Kirloskar Brothers Europe B.V. received “ISO 9001:2008” certification for import, export, sale and distributionof pumps and pumping systems. The certification shows continued thrust towards system based working for better productivity and outcomes.

The performance of most of the subsidiaries of the company is good. The management is ensuring to improvise respective operating efficiencies and performances.

I look forward to your continued support and encouragement. It would be our endeavor to continue the better momentum in subsequent quarters to enhance value for our stakeholders.

With regards and Season's Greetings,

Sanjay C. KirloskarChairman and Managing Director

Encl. : As above

Pune : October 18, 2012

Notes :1 The above results have been reviewed by the Audit Committee and approved by the Board of Directors at their

respective meetings held on October 18, 2012.2 The Limited review of the financial results for the quarter ended September 30, 2012, pursuant to clause 41 of the

listing agreement, has been carried out by the statutory auditors.3 Profit before tax for the half year ended September 30, 2011 includes profit of 3,506 lacs on sale of investment

in Gondwana Engineers Limited.4 Figures related to Equity Share Capital Earnings per share and public and promoters shareholdings are after

issue of shares under ESOS.5 Figures have been regrouped wherever necessary.