Directors' Report

To

THE MEMBERS,

INGERSOLL-RAND (INDIA) LIMITED

Your Directors are pleased to submit the Ninety-Fourth Annual Report along with the Audited Balance Sheet and Statement of Profit and Loss for the year ended March 31, 2016, that is, the year under review.

MANAGEMENT DISCUSSION AND ANALYSIS

I. Industry Structure and Development: The Economic Survey of India reports the India GDP growth for fiscal 2015-16 at 7.5% making it the fastest growing economy in the World. The rise in growth can be credited to several factors including structural reforms and higher investment, higher discretionary demand on Pay Commission wage hike, low inflation, high corporate profitability, ongoing implementation of public capex and an accommodative monetary policy stance. The effect of gradual implementation of structural reforms is also expected to contribute to higher growth despite lack of progress on big ticket reforms including Land Acquisition Amendment Bill and the Goods and Services Tax. The Make in India campaign has successfully built a positive sentiment for the investors and positioned India well for attracting Foreign Direct Investment (FDI) and boosting industrial progress within the country. Your Company's products are primarily sold to industries in the automotive, metals, pharmaceutical and textile sectors and these sectors have shown positive growth improving the revenue growth this year.

Segment-wise operational performance: Air Solutions is the only continuing segment in your Company's operations. The gross revenue of Air Solutions business in the year under review was INR 6,765 million as against INR 6,515 million in the previous financial year. Your Company continues to focus on local innovation and developing products 'for India and by India'.

Your Company had set up a manufacturing facility at Mahindra World City in Chennai for manufacture of refrigeration products and to be sold exclusively to Ingersoll Rand Climate Solutions Private Limited (IRCSPL). At a meeting of the Board of Directors held on 21st September 2015, your Directors decided to discontinue the operations at the Company's plant in Chennai on account of lack of future orders from IRCSPL and entered into a termination agreement for terminating the supply agreement with IRCSPL. In terms of the termination agreement, IRCSPL will reimburse all the loss, expenses and taxes that may be suffered by your Company by way of damages upto the time all assets of Chennai Plant are disposed of and proceeds received by the Company. The gross revenue from Chennai Plant was INR 357 million during the year under review as against INR 502 million in the previous financial year.

The profit before tax and after exceptional items is Rs. 835 million in the year under review as against Rs. 1,009 million in the previous financial year.

Outlook: The outlook for the financial year 2016-17 is optimistic with the GDP growth rate projected to be around 7.5%. The raise in foreign investment limits in sectors of defense, real estate and insurance and foreign equity in railways should boost the Indian Economy. As per a report by CMIE (Centre for Monitoring Indian Economy), the slow but steady improvement in size of the Indian economy is likely to continue in 2016-17. Your Company will continue to focus on revenue growth through value added services. Cost reduction will continue to be a focus area to ensure profitability.

Threat and concerns: The primary threat continues to be leading competitors that are using price pressures as a tool to win the market share. However, your Company is securing customer orders and mindshare with superior product quality and strong brand image. Our focus on innovation ensures that we stay ahead of competition. High inflation and fluctuation in foreign currency rates will have impact on imports. Localization of components, value analysis and value engineering initiatives has helped offset inflation and differentiate your Company's products from the competition.

Safety, Health and Environment: Your Company continues to operate with the vision of building an 'Incident Free' and 'Zero Environment Incidents' organization. The management is committed to conducting the Company's business in a sustainable manner with stringent procedures around safety systems and processes. Several measures have been implemented to revitalize safety systems and processes especially across the extended Supply Chain operations (starting with suppliers). Task risk assessments were conducted in the manufacturing plant at Naroda and actions were taken as a key focus area during the year under review. Employees across the Company were extensively trained and educated on safety awareness, process safety management and road safety measures. Regular health checkups and hygiene studies are conducted every year for the employees. Your Company also achieved substantial savings by carrying out energy audits and implementing key projects to save energy.

VI. Technology Innovation: Your Company continues to invest in product innovation and operational excellence to drive growth and profitability.

We believe that innovation will be key to meet our customer needs and accelerate our performance. This year, your Company launched Ultra EL, a high-performance lubricant incorporating the latest performance-additive technologies. The product will provide various performance benefits when compared to ultra coolant and other fluids available in the marketplace today. Ingersoll Rand Ultra EL is a high-performance compressor coolant based on a blend of PAG and POE base stocks and incorporates the latest performance additive technology. The new generation of coolant technology for rotary screw air compressors has been developed extensively over a period of three years during which every possible aspect was subjected to rigorous laboratory analysis, controlled compressor endurance tests and field trials. The main goal of the development work was to produce a product that would last up to 16,000 hours in a rotary screw air compressor, twice the expected life of similar products available in the market place today.

Your company also announced the launch of Contact Cooled Rotary Screw Air Compressors with a new level of reliability, efficiency, productivity and serviceability. Contact Cooled Rotary Screw Air Compressors will cater to industries like textile, sugar, rubber, general machinery, automobile, engineering, fabrication, cement, ceramics, ferrous & non ferrous, air separation, paper and rice amongst others. This new offering will be manufactured in your Company's manufacturing plant at Naroda, Gujarat. The New 30-37 kW Air Compressors comes with best of time proven designs and technologies with new advanced features while increasing productivity, reducing cost of operation by consuming less power and consumables.

3. DIVIDEND

Your Company declared an interim dividend at the rate of Rs. 3/- per share, absorbing Rs. 94.70 million. Your Directors now recommend payment of final dividend for the year under review at the rate of Rs. 3/- per share, bringing the total dividend for the year to Rs. 6/- per share (60%). The total dividend, if approved by the shareholders at the Annual General Meeting, would absorb Rs. 189.40 million out of the profits for the year (previous year Rs. 189.40 million).

Dividend distribution tax payable by the Company amounting to Rs. 38.56 million (previous year Rs. 38.22 million) has been appropriated out of profits.

4. RESERVES

Pursuant to the provisions of the Companies Act, 2013, your Directors have decided to carry forward the full profits for the year under review in the Statement of Profit and Loss.

5. MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments which has occurred, affecting the financial position of the Company between the end of the financial year of the Company i.e. March 31, 2016 and the date on which this report has been signed. Fs 94th Annual Report 2015-21

6. CHANGE IN REGISTERED OFFICE

Pursuant to the approval from Members, through postal ballot, the Registered office of the Company has been changed from "Plot No. 35, KIADB Industrial Area, Bidadi, Bangalore 562 1 09" to "8th Floor, Tower D, IBC Knowledge Park, No. 4/1, Bannerghatta Main Road, Bangalore - 560029" with effect from April 25, 2016.

7. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS IMPACTING THE GOING CONCERN STATUS

There are no significant and material order(s) passed by any of the Regulators or Courts or Tribunals which could impact the going concern status of the Company and its future operations.

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

The Company's management is responsible for establishing and maintaining an adequate system of internal controls over financial reporting. Accordingly, your Directors have laid down internal financial controls to be followed by the Company and such policies and procedures to be adopted by the Company for ensuring efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the accuracy and completeness of the accounting records and the timely preparation of financial information. The internal controls are commensurate with the size, scale and complexity of your Company's operations and facilitate prevention and timely detection of any irregularities, errors and frauds. The internal controls are continuously assessed and improved/modified to meet changes in business conditions, statutory and accounting requirements.

As a subsidiary of a corporation that is publicly listed on the New York Stock Exchange, your Company complies with the requirements of the Sarbanes Oxley Act of 2002. The Company through its own Corporate Internal Audit Department carries out periodic audits to independently assess the design and operating effectiveness of the internal control system to provide a credible assurance to the Board of Directors and the Audit Committee regarding the adequacy and operating effectiveness of the internal control system. The observations arising out of audit are periodically reviewed by the Audit Committee and compliance ensured.

9. DETAILS OF JOINT VENTURES, SUBSIDIARIES AND ASSOCIATES

Ingersoll Rand Company, USA is the holding Company and Ingersoll-Rand plc, Ireland, is the ultimate holding company of your Company. Your Company does not have any associate, subsidiary or joint venture either in India or anywhere else in the world.

10. DEPOSITS

During the year under review, your Company has not accepted any fixed deposits from the public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. There are no unclaimed deposits as on March 31, 2016.

11. STATUTORY AUDITORS

The Statutory Auditors of the Company, M/s. Price Waterhouse & Co, Bangalore LLP (Firm Registration No. 007567S/S-200012), Chartered Accountants, Bangalore, were appointed at the 92nd Annual General Meeting held on 12th September, 2014 as the auditors for a period of 3 years until the conclusion of the 95th Annual General Meeting in year 2017. Pursuant to the proviso to Section 139(1) of the Companies Act, 2013, the appointment is required to be ratified by the Members at the forthcoming Annual General Meeting. The Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Act and that the ratification, if made, shall be in accordance with the applicable provisions of the Act and rules framed thereunder. The ratification proposed is within the time frame for transition under the third proviso to sub-section (2) of Section 139 of the Companies Act, 2013.

12. COST AUDITORS

As per Section 148 of the Act read with Companies (Cost Records and Audits) Rules, 2014, as amended, on the recommendation of the Audit Committee, the Board of Directors has appointed M/s. Ashish Bhavsar & Associates, Cost Accountants, as cost auditors for conducting the Cost Audit for the year ending on March 31, 2017. The Company has received their written consent that the appointment is in accordance with the applicable provisions of the Act and rules framed thereunder. As required under the Companies Act, 2013, the remuneration payable to cost auditors is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Members' ratification for the remuneration payable to M/s. Ashish Bhavsar & Associates, Cost Accountants is included in the Notice convening the Annual General Meeting.

13. SHARE CAPITAL

The Company has only one class of share viz. equity share with a face value of Rs. 10 each. During the year under review, there is no change in the issued and subscribed capital of your Company. The outstanding capital as on March 31, 2016 is Rs. 315.68 million comprising 31,568,000 equity shares of Rs. 10/- each. Share capital audit as per the directives of the Securities and Exchange Board of India is being conducted on a quarterly basis by M/s. Parikh & Associates, Company Secretaries and the Audit Reports are duly forwarded to the stock exchanges where the equity shares of your Company are listed.

14. EXTRACT OF THE ANNUAL RETURN

The Extract of Annual Return as per Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is set out in Annexure A forming part of this report.

15. NUMBER OF MEETINGS OF THE BOARD

Six meetings of the Board of Directors were held during the year under review. For details of the meetings of the Board of Directors, please refer to the corporate governance report of this annual report on page no. 52.

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

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo required to be disclosed as per the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is set out in Annexure B forming part of this report.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has a long and proud history of supporting good activities of philanthropic organizations. Each year, your Company contributes time and financial support to the communities and beneficiaries in and around its areas of operation. Your Company undertakes its Corporate Social Responsibility (CSR) activities through a variety of effective programs. This year, your Company has continued its CSR initiatives to focus on providing education, healthcare & sanitation, livelihood and furthering sustainability. These activities are in accordance with Schedule VII of the Companies Act, 2013. The Board of Directors and CSR Committee review and monitor from time to time all the CSR activities being undertaken by the Company.

The details of CSR activities carried out by your Company during the year under review are set out in Annexure C forming part of this report.

18. INDEPENDENT DIRECTORS

The Board has an optimum combination of Independent and Non-Independent Directors. In line with the requirements of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, half of the Board comprises of Independent Directors. Mr. Hemraj C. Asher and Mr. Darius C. Shroff, independent directors of the Company hold office up to the conclusion of the 97th Annual General Meeting which will be held in the year 2019. The independent directors have given a declaration confirming that they meet the criteria of independence as laid down under Section 149 (6) the Companies Act, 2013 and Regulation 16 (1) (b) of SEBI (Listing Obligations & Disclosures Requirement) Regulation 2015.

Your Company has been familiarizing the Independent Directors on its Board with detailed presentations on Company's operations, business model, strategic business plans, new products, significant aspects of industry in which Company operates and future outlook.

19. AUDIT COMMITTEE

The Audit Committee comprises of Mr. Hemraj C. Asher, Chairman, Mr. Darius C. Shroff and Mr. Roman Steinhoff. The powers and role of Audit Committee are included in the corporate governance report section of the annual report on page no. 53. All the recommendation made by the Audit Committee was accepted by the Board of Directors.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year, Mr. Venkatesh Valluri relinquished his office as Director and Non-Executive Chairman of the Company with effect from November 5, 2015. The Board appointed Mr. Roman Steinhoff as Non-Executive Chairman of the Company to replace Mr. Venkatesh Valluri. The Board of Directors placed on record their sincere appreciation for the valuable contribution made by Mr. Venkatesh Valluri during his tenure as Director on the Board.

In accordance with the provisions of Section 152 (6) of the Companies Act, 2013 and the Article 131 of the Articles of Association of the Company, Ms. Jayantika Dave retires by rotation at the forthcoming Annual General Meeting, and being eligible, offers herself for re-appointment. The brief resume and other details of Ms. Jayantika Dave as required under SEBI (Listing Obligations & Disclosures Requirement) Regulation 2015 are provided in the Corporate Governance Report that forms part of this report.

The Company has received a notice in writing from a Member proposing the candidature of Mr. Sekhar Natarajan for the office of Director of the Company. The Board has recommended for the appointment of Mr. Sekhar Natarajan as an Independent Director at this Annual General Meeting. The brief resume and other details of Mr. Shekhar Natarajan are provided in the Corporate Governance Report that forms part of this Report.

Mr. Amar Kaul was appointed as a Manager under the provisions of the Companies Act, 1956 at the meeting of the Board of Directors of the Company held on July 21, 2011 and designated as "Vice President & General Manager - Air Solutions" for a period of five years from July 22, 2011 to July 21, 2016. The Members at the 90th Annual General Meeting held on July 19, 2012 have approved his appointment.

At the meeting of the Board held on May 26, 2016, the Board has, subject to approval of the Members at this Annual General Meeting, appointed Mr. Amar Kaul as the "Manager" of the Company, for a further period of one month from July 22, 2016 to August 21, 2016. It is also the intention of the Board to appoint Mr. Amar Kaul as Director and Managing Director of the Company later.

There are no changes in Key Managerial Personnel during the year under review.

21. PARTICULARS OF EMPLOYEES

Pursuant to Section 197 (12) read with Rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration of directors and key managerial personnel are furnished in Annexure D forming part of this report.

22. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

Your Company has an effective Vigil Mechanism system which is embedded in its Code of Conduct. The Code of Conduct of your Company serves as a guide for daily business interactions, reflecting your Company's standard for appropriate behaviour and living corporate values. The Code of Conduct is applicable to all employees of the Company.

The suppliers and vendors of the Company are also required to adhere to Code of Conduct as it is a prerequisite for conducting business with your Company.

The Whistle Blower Policy has been uploaded on the website of the Company www.ingersollrand.co.in. The Company's Whistle Blower Policy is the mechanism for directors and employees of the Company to raise concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct, violations of legal or regulatory requirements, incorrect or misrepresentation in any financial statements and reports etc. The policy provides for adequate safeguards against victimization of those who avail the mechanism and also provides for direct access to the Chairman of Audit Committee in exceptional cases.

23. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

The Nomination and Remuneration Committee of the Company which comprises Mr. Hemraj C. Asher, Chairman Mr. Roman Steinhoff, Director and Mr. Darius C. Shroff, Director has formulated a policy relating to the remuneration of the directors, key managerial personnel and other employees of the Company. The Company's policy on directors' appointment and remuneration including the criteria for determining qualifications, positive attributes, independence of a director and other details are set out in Annexure E forming part of this report.

24. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of the Board as a whole, the Directors individually as well as the working of the Board and its Committees.

25. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the year under review, your Company has not given any loans or provided any guarantees or made any investments within the meaning of Section 186 of the Companies Act, 2013.

26. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions (RPTs) that were entered into during the year were on an arm's length basis and were in the ordinary course of business. All RPTs are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature.

A statement giving details of all RPTs is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The particulars of related party transactions are stated in the Note no. 33 in the financial statements of the Company.

There are no materially significant related party transactions entered into by the Company with its promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

As per Regulation 23(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, material RPTs shall require prior approval of the Members. A transaction with a related party shall be considered material if the transaction/transactions to be entered into individually or taken together with previous transactions during a financial year, exceeds ten percent of the annual turnover as per last audited financial statements of the Company. In pursuance of the same, the shareholders of the Company have approved and authorised the Board of Directors and Audit Committee to enter into transactions, in excess of 10% of the Company's annual turnover, with Ingersoll Rand Company, USA and Ingersoll Rand International Limited, Ireland up to December 31, 2020.

The Related Party Transactions Policy of the Company approved by the Board of Directors is displayed on website of the Company www.ingersollrand.co.in

27. SECRETARIAL AUDIT REPORT

The Board of Directors appointed Mr. Natesh K, Practicing Company Secretary, to conduct the Secretarial Audit. The Secretarial Audit Report issued by Mr. Natesh K is set out in Annexure F forming part of this report.

There is no qualification, reservation or adverse remark or disclaimer made by the auditor in his report and by the company secretary in practice for the year under review.

28. CORPORATE GOVERNANCE CERTIFICATE

The Company is committed to adhere to highest standards of Corporate Governance in all areas of its functioning. As required under Regulation 34 read with Schedule V of SEBI (Listing Obligations & Disclosures Requirement) Regulation 2015, a report on Corporate Governance together with a certificate from Mr. Natesh K, Practicing Company Secretary confirming compliance with the requirements of Corporate Governance is set out in Annexure G, forming part of this report.

29. RISK MANAGEMENT POLICY

Your Company has constituted a Risk Management Committee which comprises Mr. Roman Steinhoff - Chairman, Mr. Darius C. Shroff, Director, Ms. Jayantika Dave, Director, Mr. Amar Kaul, Vice President - Air Solutions and Mr. G. Madhusudhan Rao, Vice President - Finance.

The Committee has formulated a risk management policy which identifies the elements of risk, which in the opinion of the Board of Directors, threatens the existence of the Company; sets out the objectives and elements of risk management within the organization; and helps to promote risk awareness amongst employees along with facilitating integration of risk management within the corporate culture.

The formulation and monitoring of the Risk Management Policy at the corporate levels illustrates the executive management's commitment to implement and continuously develop risk management within the Company.

30. BUSINESS RESPONSIBILITY STATEMENT

Business Responsibility Report as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been hosted on the website of the Company www.ingersollrand.co.in and is available to all the members, and should be deemed as contained in this annual report. A physical copy of the Business Responsibility Report will be made available on a request by any member in writing to the company secretary any member interested in obtaining a physical copy of the same may write to the Company Secretary at the registered office of the Company.

31. PREVENTION OF SEXUAL HARASSMENT POLICY

The Company has in place a policy on prevention of sexual harassment in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the year under review, no complaints were received by the Company relating to sexual harassment.

32. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations provided to them, your Directors, pursuant to sub-section (5) of Section 134 of the Companies Act, 2013, state:

(a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;

(b) that appropriate accounting policies have been selected and applied consistently and have 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 March 31, 2016 and of the profit and loss of the Company for the year ended March 31, 2016;

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

(d) that the annual accounts have been prepared on a going concern basis;

(e) that proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

33. ACKNOWLEDGEMENTS

Your Directors express their gratitude to the various stakeholders - customers, shareholders, banks, dealers, vendors and other business partners for the continued cooperation and support extended by them during the year under review. Your Directors would also like to acknowledge the exceptional contribution and commitment from all the employees of the Company during the year under review.

For and on behalf of the Board of Directors

Roman Steinhoff

Chairman

Mumbai, May 26, 2016