spentex industries ltd Auditors report

To the Members of CLC Industries Limited (Formerly Known as Spentex Industries Limited) Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code, 2016 (IBC)

The Honble Company Law Tribunal, New Delhi ("NCLT") admitted the Corporate Insolvency Resolution Process (‘C1RP") application filed against CLC Industries Limited and appointed Mr. Subhash Kumar Kundra as the Interim Resolution Professional under Insolvency and Bankruptcy Code, 2016 ("Code") vide order dated January 03, 2020. Further the Committee of Creditors ("COC") constituted during the C1RP has confirmed the appointment of Mr. Subhash Kumar Kundra as the Resolution Professional ("RP") on February 20, 2020 to manage the affairs of CLC Industries Limited as per the provisions of insolvency and Bankruptcy Code, 2016, and the management of affairs of the company are continuing to be exercised by the Resolution Professional. Subsequently, on 20lh April, 2021 the application for approval of the Resolution Plan under section 30(6) and section 31(1) of the Insolvency and Bankruptcy Code, 2016 read with regulation 39 of 1BB1 (insolvency Resolution Process for Corporate Persons) Regulations, 2016 was filed by the Resolution professional with the Honble Principal Bench of the NCLT for its approval. The Honble Principal Bench of the NCLT approved the said resolution plan vide its order dated 12th May 2023.

Report on the Audit of the Standalone Financial Statements

Disclaimer of Opinion

We have audited the accompanying standalone financial statements of CLC Industries Limited (Formerly known as Spentex Industries Limited) (The Company), which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and the notes to the Standalone Financial Statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements")

We do not express an opinion on the accompanying Standalone financial statements of the Company. Because of the significance of the maner described in the Basis lor Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these Standalone financial statements.

Basis for Disclaimer of Opinion

a. In Respect of Property. Plant and Equipment. Physical possession and verification report of Tangible and Intangible Assets and title deeds of Immovable Property has not been provided for by the Management, in the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the balance of Property, Plant and Equipment as at March 31, 2023.

b. In respect of Inventories, during the reporting period, the management has not provided any

report for undertaking of physical verification of Inventories at periodic intervals. The Company has neither provided inventory records for physical verification of Inventory. Hence, we present status of inventory and its carrying Valuation in books of account/1 Y? \

c. The Company has not computed and provided for penal interest on defaults under borrowings as per the contractual terms of the underlying agreements. We are unable to determine the possible impact thereof on the loss for the year and borrowings and equity as on such date.

d. As mentioned in Note No, 48 to the standalone financial statements, pursuant to commencement of C1RP of the Company under Insolvency and Bankruptcy Code, 2016, there are various claims submitted by the financial creditors, operational creditors, employees and other creditors to the RP. The overall obligations and liabilities including interest, penalty on loans and the principal amount of loans/ liabilities shall be determined during the CiRP and reconciliation with books of accounts is pending. Pending final outcome of the CIRP, no accounting impact in the books of accounts has been made in respect of excess, short, or nonreceipts of claims for operational and financial creditors. Hence, consequential impact, if any, is currently not ascertainable and we are unable to comment on possible financial impacts of the same.

c. Wc have not received Bank Reconciliation/ Bank Statement/ Direct confirmation for balance confirmation in current accounts amounting Rs. 137.48 Lakhs- and balance of margin money amounting Rs. 8.68 Lakhs, as at March 31, 2023. Cash amounting to Rs. 40.62 Lakhs has not shown to us for physical verification. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the balance of cash and cash equivalent and equity as at March 31, 2023,

f. During the year ended March 31. 2019. loans from Stale Bank of India and Indian Bank amounting to Rs. 261.49.61 Lakhs and Rs.39.42.63 Lakhs respectively has been assigned to Asset Reconstruction Company Private Limited (ARC) under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFES1) Act,2002. Same loan is appearing in the name of State Bank of India and Indian Bank respectively. No confirmation from the ARC was received for assignment of the loan, in the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the balance of cash and cash equivalent and other equity as at March 31.2023.

g. We have neither got bank statements nor have been able to obtain direct confirmations for borrowings. Debentures and overdraft from banks, financial institutions and other parties amounting Rs. 48,167.34 Lakhs as at March 31.2023. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and the balance of borrowings and other equity as at March 31,2023.

h. We have neither got reconciliation nor have been able to obtain direct confirmations for Inter corporate loan amounting Rs. 4.695.90 Lakhs as at March 31, 2023. We requested for direct confirmation, but no response from management. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and the balance of borrowings and other equity as at March 31,2023.

i. We have neither got reconciliation nor have been able to obtain direct confirmations for Loans from related parties amounting to Rs. 665.92 Lakhs as at March 3!. 2023. We requested for direct confirmation, but no response from management, in the absence of sufficient appropriate audT^iSfjqe. we are unable to determine any possible impact thereof

on the loss for the year fl^Sdltebaiaf&Vf borrowings and other equity as at March 31,2023.

j Note No. 52 to the Standalone Financials for the year ended March 31, 2023, regarding balances of parties under the head trade receivable, trade payable and loans & advances taken and given. Security Deposit, claim receivable. Investment, balances with Govt. Authorities, Employee Benefits Payables, Other payables, which are subject to confirmation, reconciliation. We requested for direct confirmation, but no response from management. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and other equity as at March 31,2023.

k. In the ahsence of information with respect to Provision for bonus, Ex-gratia. leave encashment and Gratuity not provided for by the Management. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the other equity as at March 31,2023.

1 No information/ Audit Evidence provided in respect of Revenue from operations. Other income. Cost of raw material consumed, Purchase of Stock in Trade, Changes in inventories of finished goods, work-in-progress and Stock in Trade, Employee benefits expense. Finance Costs, Depreciation and amortization expense and other expenses. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the equity as at March 31, 2023.

m. Note No. 46 of the Standalone Financials for the year ended March 31, 2023, wherein the Company had made 100% provision of the value of long term Investments held in Amit Spinning Industries Limited (AS1L), erstwhile subsidiary of the Company during F.Y. 2017- 18. National Company Law Tribunal (NCLT) vide order dated 01.08.2017 had admitted ASiLs petition and had appointed Resolution Professional for ASH. under the Insolvency and Bankruptcy Code. The NCLT vide its order dated 31st July 2018, has approved the resolution plan as per which the Company was required to transfer its entire shareholding held in AS1L at a total consideration of Rs. One only in favour of Resolution Applicants, The Company was holding 2, 09,81,077 equity shares (50.96%) in ASIL. No further information provided to us. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the other equity as at March 31, 2023.

Further we are unable to determine the amount of liability that may arise on account of Corporate Guarantee given on behalf of subsidiary, and compliance of IND-AS 109 in respect to accounting of corporate guarantee,

n. Note No. 21 of the Standalone Financials for the year ended March 31, 2023. wherein the Company had not allotted shares against share application amount of Rs. 1109,50 Lakhs which was brought in by the promoters in various instalments up to 30th December 2015 and accordingly not complied with the provision of Section 42 of the Companies Act, 2013. in FY 2018-19, such Share application money pending allotment amounting to Rs.l 109.50 Lakhs has been treated as Deposits as per Companies (Acceptance of Deposits) Rules, 2014 made under Chapter V of the Companies Acl,2013 at the Board Meeting held on 13th February 2019 vide resolution no. 19(ii). Necessary compliances under Section 42 and Section 73 of Companies Act. 2013 read with Companies (Acceptance of Deposit) Rules and reguiarisation of continuing defaults thereof are pending by the Company.

o. Note No. 50 to the Standalone Financials for the year ended March 31, 2023, where tire

Company was required to deposit/invest a sum of at least 15% of the amount of its Debentures maturing during the financial year 2018-19 in one or more of the prescribed methods vide circuiaj^n?i^/?(H3 dated February 11, 2013 issued by Ministry of Corporate Affairs. However. xfeC^mptKPTbas failed to comply with the requirements of the said Circular. (gf (row yc\

p. Goods and Services Tax Return for the current period not filed and GST Audit for the FY 2017-18 and onward are pending. We are unable to determine any possible impact thereof on the loss for the year and on the other equity as at March 31, 2023.

q. Company is in default to appoint Key Managerial personals as per Section 203 of Company Act, 2013, Further No Limited Review has been done for Quarter Ended June 30. 2022, September 30, 2022, December 31, 2022 and Year ended March 31, 2023. We are unable to determine any possible impact thereof on the loss for the year and on the other equity as at March 31, 2023.

r. No details were being provided with respect to Inter-unit reconciliation, in the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the other equity as at March 31, 2023.

s. No details were being provided in relation to related party name and transaction. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the other equity as at March 31,2023.

t. Due to Non Compliance with various Laws and Regulations, e.g. Ministry of Corporate Affairs, Security Exchange Board of India, National Stock Exchange, Income tax Act, Good and Service Tax Act, The Foreign Exchange Management Act, Companies Act, 2013, The Employees Provident Funds Scheme, 1952, Employees State Insurance Act, Gratuity Act. Labour Laws, The Micro, Small And Medium Enterprises Development Act, 2006 etc, the amount of penalty cannot be reliably estimated at this stage. 1 lence, consequential impact, if any, is currently not ascertainable and we are unable to comment on possible financial impacts of the same.

u. Company failed to redeem its debentures on the due date i.e. March 31, 2018 and failed to pay interest due thereon and such failure to redeem debentures and payment of interest thereon continuing for one year or more, therefore directors shall not be eligible to be reappointed as a director of the company.

v. Baramati Unit is inoperative since September 2017, Bootiburi and Pitampur units were inoperative since October, 2019, as per Ind AS 36, Impairment testing is required to be done for the units. In the absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on the loss for the year and on the other equity as at March 31. 2023.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. However because of the matters described in the Basis of Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit

opinion on these standalone fina^jStitafSments.

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Material uncertainty related to going concern

As mentioned in Note No. 47 to the standalone financial statements, the Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, and there are persistent severe strains on the working capital and there is considerable decline in level of operations of the Company and net worth of the Company as on the reporting dale is negative and it continues to incur losses. The Company has received invocation notices of corporate guarantees given by it and also the personal guarantees of promoter directors have been invoked. Since Corporate Insolvency Resolution Process (C1RP) is currently in progress, as per the Code, it is required that the Company be managed as going concern during C1RP. Accordingly, the standalone financial statements are continued to be prepared on going concern basis. However, there exists a material uncertainty about the ability of the Company to continue as a "Going Concern". The same is dependent upon the resolution plan to be approved by NCLT. The appropriateness of the preparation of standalone financial statements on going concern basis is critically dependent upon C1RP as specified in the Code necessary adjustments required on the carrying amount of assets and liabilities are not ascertainable at this stage.

Information other than the Financial Statements and Auditors Report thereon

The Companys Board of Directors/RP is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis. Boards Report including Annexure to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

if, based on the work we have performed, we conclude that there is a material misstatement of this other information: we are required to report that fact. We have nothing to report in this regard.

Managements Responsibility and Those Charged with Governance for the Standalone Financial Statements

In view of the pendency of corporate insolvency resolution process ("CIRP"), pursuant to the order passed by National Company Law Tribunal ("NCLT") dated January 03. 2020, the management of the affairs of the Company and powers of board of directors of the Company are now- vested with Mr. Subhash Kumar Kundra as Resolution Professional ("RP"), who is appointed by the Committee of Creditors ("CoC"). These Standalone lnd AS Financial Statements have been prepared by the management of the Company and Signed by Mr. Subhash Kumar Kundra-Resolution Professional

The Companys Board of Directors RP is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the lnd AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities: selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent: and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation one financial statements that give a true and fair view and

are free from material misstqferhent. wfiMner due to fraud or error

In preparing the standalone financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The management / RP is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a materia! misstatement when it exists. Misstatements can arise from fraud or error and are considered material if. individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section f 43(3 )(i) of the Act, we are also responsible for explaining our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of .managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or. if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (il planning the scopejifautaudit work and in evaluating the results of our work; and (ii) to evaluate the effect of anv idp^^lo-i^js^atements in the standalone financial statements.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (II) of section 143 of the Act, we give in the "Annexure A "a statement on the matters specified in paragraphs 3 and 4 of the Order,

As required by section 143(3) of the Act. based on our audit we report that:

a) except for the matter described in the Basis for Disclaimer of Opinion paragraphs, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) except for the possible effects of the matters described in the Basis for Disclaimer of opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account,

d) Except for the effects of the matter described in the Basis for Disclaimer of opinion above, in our opinion, the aforesaid financial statements comply with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies Rules, 2015, as amended.

e) In terms of section 17 (1) (b) of the Insolvency and Bankruptcy Code, 2016 ("the code"), the powers of the Board of Directors have been suspended and are exercised by the Resolution Professional. Hence, written representation from directors have not been taken on record by the Board of Directors, Accordingly, we are unable to comment whether none of the directors is disqualified as on March 31,2023 from being appointed as a director in the terms of Section 164 (2) of the Act,.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to the&^t^Rd^lone financial statements and the operating effectiveness of such controls, refer to o y&F***$ Spurt in "Annexure B" to this report.

g) As required by section 197(16) of the Act, we report that the company has not paid the remuneration to its directors during the year ended March 31,2023.

h) With respect to the other matters to be included in the Auditors Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 35 to the standalone financial statements.

ii. Except for the possible effects of matters described under Basis for Disclaimer of Opinion paragraph. The Company did not bave any long-term contracts including derivative contracts for which there were any material foreseeable losses.

in. In the absence of information provided, we are unable to determine whether there were amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. (a) The Resolution Professional has represented that the Company is under C1RP and Control of RP and to the best of its knowledge and belief as fact mentioned in Disclaimer of Opinion, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries:

b) The Resolution Professional has represented that the Company is under C1RP and Control of RP and to the best of its knowledge and belief as fact mentioned in Disclaimer of Opinion, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

C) As company was under CIRP and nothing has been reported to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e). as provided under (a) and (b) above, contain any material misstatement

v. No dividend has beyiLcropased in the currem financial year.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from Aprii 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements in the Independent Auditors Report of even date to the members of CLC Industries Limited (Formerly known as Spentex Industries Limited) on the standalone financial statements for the year ended March 31.2023

(i) In respect of the Companys Property, Plant and Equipment and Intangible Assets:

(a) (A) Ihe Company has not maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment.

(B) The Company has not maintained proper records showing full particulars of intangible assets.

(b) During the year, fixed assets have not been physically verified by the management. Hence, discrepancies if any cannot be ascertained.

(C) No title deeds/ Lease agreements were provided for Verification. In the absence of information unable to comments whether title deeds of Immovable Properties / Lease deeds are in the name /duly executed in favour of Company or not.

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year.

(e) According to information and explanations given to us and on the basis of our examination of the records of the Company, there are no proceedings initiated or pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

(ii) (a) The inventory has not been physically verified by the management during the year and

in respect of inventory lying with third parties, these have not been confirmed by them.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not been sanctioned any working capital limits in excess of five crore rupees in aggregate from banks and financial institutions on the basis of security of current assets at any point of time of the year. Accordingly, clause 3(ii)(b) of the Order is not applicable to the Company.

(iii) No Information and explanation were provided to us whether the Company has not made any investments, provided guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, limited liability partnerships or any other parties during the year. Accordingly, we are unable to comments on provisions of clauses 3(iii)(a) to 3{iii)(f) of the Order.

(iv) No information and explanation were provided to us in respect of loans, investments, guarantees and securities, made under Section 185 and f 86 of the Companies Act. 2013 and whether Company has complied or not with the provisions of Section 185 and 186 of the Act. Hencey?abtesto comment on this clause.

(v) No information and explanations given to us. whether, the Company has accepted or not any deposits from the public within the provisions of Sections 73 to 76 of the Act and the ruies framed there under, Hence unable to comment on this.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie, the prescribed accounts and records have not been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) The company is not regular in depositing undisputed statutory dues including Goods and

Services Tax. provident fund, employees state insurance, income-tax. sales-tax. service tax. duty of customs, duty of excise, value added tax. cess and any other statutory dues to the appropriate authorities and .

if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, are as follows: -

Name of the statute	Nature of the dues	Amount "(In Lakhs)		Period to which the amount relates		Due Date		Date of Pay me nt
Employees Provident Fund and Miscellaneo us Provisions Act, 1952	Provident fund & 1 merest payable	285.47 & 93.15 635.78 & 112.90 310.31 & 21.13		April 2016 to march 2017 April 2017 to March 2018 April 20)8 to 30 September 2018		15th of the next month to which amount relates		Unpaid till date
Employees	Employees	54.22		August 2016 to		15 th of the		Unpaid
Stale	State	&		march 2017		next		till date
Insurance Act,! 948	Insurance & Interest Payable jtN	15.83 119.92 & 20.08		April 2017 to March 2018 April 2018 to 30		month to which amount relates
			71.58 & 5.61		September 2018
Income Tax Act, 1961	TDS and TCS & Interest Payable		118.00 & 70.86 98.12 & 34.28 70.07 & 11.20		April 2016 to march 2017 April 2017 to March 2018 April 2018 to 30 September 2018		7th of the next month to which amount relates		Unpaid till date
Professional Tax Act, 1975	Professional Tax & Interest Payable		19.74 & 11.19 22.80 & 6.99		April 2016 to march 2017 April 2017 to March 2018		30th of the next month to which amount relates		Unpaid till date
			5.53 & 0.8!		April 2018 to 30 September 2018
Finance Act 1994	Service Tax & Interest Payable		20.3 & 15.32		April 2016 to March 2017		6th of the next month to which amount relates		Unpaid till date

1

Above information are based on information available for the year ended March 31, 2019 and no information provided for the year ended March 31,2023

(b) According to the information and explanation given to us. the dues outstanding with respect to, income tax, sales tax, service tax. Goods and Service Tax, PF/ ESI. value added tax, customs duty, excisgjiiiljcetc. on account of any dispute, are as follows:

Name ol the statute	Nature of dues	Amount Disputed (In Lakhs)	Amount paid under protest (In Lakhs)	Period to which the amount relates (In Lakhs)	Forum where dispute is pending (In Lakhs)
The Income Tax Act, 1961	Income Tax	108.76	39.81	Rs. 68.94 for A.Y 2003-04 And 39.81 for A.Y 2001-02	Income Tax Tribunal Delhi-Rs.39.81 High Court-Rs.68.94
The Income Tax Act. 1961	Income Tax	271,06	20,00	Rs.83.16 for A.Y 2003-04 Rs.78.31 for A.Y 2005- 06 Rs. 109.59 for A.Y 2006- 07	High Court-New Delhi
The MP Commercial Tax Act, 1994	Sales Tax	T64"	0.13	1996-97	First Appellate Authority
The MP Commercial Tax Act, 1994	Sales Tax	8.15	8.15	2009-10	MP Commercial lax Appellate Board Bhopal
The MP Commercial Tax Act. 1994	Sales tax	19.70	0	2001-03 2009-10	Assessing Authority Indore
The MP Commercial Tax Act. 1994	Sales Tax	4,55	1.14	2013-14	First Appellate Authority
The MP Commercial Tax Act, 1994	Sales Tax	3.76	1.05	2010-11	MP Commercial Tax Appellate Board Bhopal
Entry Tax Act. 1976	Entry Tax	15.38	4,15	1992-97	Assessing Authority Bhopal
Maharashtra Value Added Tax Act.2002	Sales Tax Demand	5.33	2.00	2004-05	Deputy Commissioner, Nagpur
Central Sales tax act, 1956	Sales Tax Dema?t?i?h	,29.99	10.00	2004-05	Deputy Commissioner Nagpur
Central Sales tax act, 1956	Sales Tax	5.02	1.26	2014-15	First Appellate Authority
Central Sales tax act, 1956	Sales Tax	12.18	3.05	2014-15	First Appellate Authority
Central Sales tax act, 1956	Entry tax	9.95	2.49	2014-15	First Appellate Authority
Central Sales tax act, 1956	Profession al Tax	5.94	0	2008-09	First Appellate Authority
Maharashtra Value Added Tax Act.2002	Sales Tax Demand	360.62	0	2012-13	Joint Commissioner Appeal, Pune
Central Sales Tax. 1956	Sales Tax Demand	524.38	0	2012-13	Joint Commissioner Appeal. Pune
Finance Act, 1994	Service Tax	2.81	0	2005-06	Customs, Excise& Service Tax Appellate Tribunal, New Delhi
Finance Act. 1994	Service tax	10.80	1.08	2009- 10 to 2010- 1 1	Customs. Excise& Service Tax Appellate Tribunal, New Delhi
The MP Commercial Tax Act, 1994	Sales Tax	2.48	0.25	2015-16	First Appellate Authority
The MP Commercial Tax Act, 1994	Sales Tax	1.80	0	2015-16	First Appellate Authority
The Central Excise Act. 1944	Excise	0.82	0.03	201 1-12	Commissioner (Appeals). Central Excise, Bhopal
The Central Excise Act. 1944	Excise Demand	108.06	lo	June-99 to Dec-01	Custom, Excise& Service Tax Appellate Tribunal, Mumbai
The Central Excise Act, 1944	Excise	1.69	0	Apr-00 to Mar-04	Commissioner) Appeal s),Central Excise. Indore
The Central Excise Act, 1944	Excise	8.68 "	0	Apr-03 to July 2015	Customs, Excise& Service Tax Appellate Tribunal, New Delhi- Rs.0.81 Commissioner) Appeals)-Rs.7.87
The Central Excise Act, 1944	Excise	A A	0.68	Apr-03 to Oct-13	Customs. Excise& Service Tax Appellate Tribunal.Nagpur- Rs. 1.18 Deputy Commissioner, Central Excise. Nagpur-Rs. 2-15
The Central Excise Act. 1944	Excise	52.70	6.73	2002-03 to 2010-11	Customs, Excise <fc Service Tax Appellate Tribunal, Nagpur - Rs. 25.66 Additional Commissioner of Centra! Excise. Nagpur- Rs.25.52 Deputy Commissioner of Central Excise. Nagpur-Rs. 1.52
The Central Excise Act. 1944	Excise	532.91	133.23	Mar-04 to Feb-07	High Court, Indore
The Central Excise Act, 1944	Excise	51.01	3.83	April 2015 to March 2017	The Commissioner Central Excise! Appeals), Bhopal
I he Central Excise Act. 1944	Excise	925.31	0		Customs. Excise & Service Tax Appellate Tribunal, Nagpur
The Central Excise Act. 1944	Excise	125.46	0		Deputy Commissioner/Assista m Commissioner Appeals, Nagpur
The Central Excise Act. 1944	Excise	32.91	0		Assistant Commissioner. Nagpur
The Central Excise Act. 1944	Excise	258.52	28.72		Customs, Excise & Service Tax Appellate Tribunal, New Delhi
The Central Excise Act, 1944	Excise	41.18	3.83		Commissioner (Appeals), Central Excise, Bhopal
Employees Provident Fund & Miscellaneo us Provisions Act, 1952	EPF Appellate Authority	31.30	15.65

Above information are based on information available for the year ended March 31, 2019 and no information provided for the year ended March 31,2023.

(viii) According to the information and explanations given to us and on the basis of our

examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.

(a) According to the information and explanations given to us, the Company has defaulted in repayment of loans or borrowings to financial institution(s), bank(s), government(s) or dues to debenture holder(s) as mentioned below:

Nature of borrowing including debt securities	Name of the lender	Amount not paid on due date (Rs. In lakhs)	Whether principal or interest	No. of days delay or unpaid (NPA as on)	Remark S : i
1. Ternt Loan	Axis Bank Ltd.	183.68		31.03 2019
2. Term Loan	Bank of Baroda	720.86		31.03.2019
3. Term Loan	Canara Bank	382.71		31.03.2019
4. Term Loan	IDB1 Bank Ltd	363.96		31.03.2019
5. Term Loan	Indian Bank	3,942.63	Principal	31.03.2019
6. Term Loan	State Bank Of India	26,149.61		31.03.2019
7. Term Loan	1NO Vysa Bank Ltd.	3,048.56		31.03.2019
8. Term Loan	Oriental Bank of Commerce	9,795.86		31.03.2019
9. Term Loan	Other lenders	3,541.00		31 03.2019
10. Debenture	Other lenders (including interest)	1,121.31	Principal- Interest	31.03.2019
	Total	49.250.19

Above information are based on information available for the year ended March 31. 2019

and no information provided for the year ended March 31,2023.

Interest not provided in the books for the year.

(b) Refer to above para. The Company has defaulted to repayment its Loan since 2019, for the current year no further information provided to us whether Company declared wilful defaulter or not, hence no unable to comment on this clause.

(c) According to Information and explanation provided to us, no term loan obtained during the year. Hence this clause is not applicable.

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, no short-term funds were raised by the Company during the year. Hence this clause is not applicable.

(e) According to the information and explanations given to us and on an overall examination of the financial statements of the company, we report that the company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries. Further company have no associates or joint ventures as defined under Companies Act, 2013.

(0 According to the information and explanations given to us and procedures performed by us. we report that the company has not raised loans during the year on the piedge of securities held in its subsidiaries. Further company have no associates or joint ventures companies (as defined under Companies Act, 2013).

(x) (a) No Information has been provided to us whether the Company has raised any money by

way of initial public issue offer or further public offer (Including debt Instruments). Accordingly, unable to comment on paragraph 3(x) of the Order.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, clause 3(x)(b) of the Order is not applicable.

(xi) (a) No information/ Explanation provided to use whether any instance of fraud by the

Company or any fraud on the Company, noticed or reported during the year. Accordingly unable to comment of this clause.

(b) According to the information and explanations given to us. no report under sub-section (12) of Section 143 of the Companies Act, 2013 has been filed by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules. 2014 with the Central Government.

(c) No Information and explanation was provided to us whether the any whistle-blower complaints received by the Company or not, Hence unable to comment on this clause.

(xii) In our opinion and according to the information and explanations given to us. the Company

is not a Nidhi Company. Accordingly, paragraph 3(xii) (a), (b) and (c) of the Order is not

applicable to the Company—

(xiii) No information and explanation given to us. whether all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of Act or not. Accordingly, unable to comment on paragraph 3(xiii) of the Order.

(xiv) {a) Based on the information and explanations provided to us, though the Company is

required to have an internal audit system under section 138 of the Companies Act. 2013. it did not have such a system during the year.

(b) We were unable to obtain any the internal audit reports of the Company, hence the Internal Audit Reports could not be considered by us.

(xv) No information and explanations given to us, whether the Company has entered or not into any non-cash transactions with directors or persons connected with him. Accordingly. Unable to comment on this.

(xvi) (a) According to the information and explanation given to us the Company is not required

to be registered under Section 45-1A of the Reserve Bank of India Act, 1934.

(b) The Company is not required to be registered under Section 45-1A of the Reserve Bank of India Act. 1934. Accordingly, clause 3(xvi)(b) of the Order is not applicable.

(c) The Company is not a Core Investment Company (C1C) as defined in the regulations made by the Reserve Bank of India. Accordingly, clause 3(xvi)(c) of the Order is noi applicable

(d ) No information and explanations provided to us during the course of audit. Hence unable to comment whether the Group does have more than one C1C or not.

(xvii) The Company has incurred cash losses of Rs. 1943.66 lakhs in the current financial year and Rs. 211.11 Lakhs in the immediately preceding financial year.

• There has been no resignation of the statutory auditors during the year. Accordingly, clause

3(xviii) of the Order is not applicable.

, . , We draw attention to Note 1.02 and 47 to the financial statements, which indicates that the

Company has incurred a net loss of during the year ended 31 March 2023 and, as of that date, the Companys net worth is fully eroded and that the Company is in default in repayment of its Loans and related Interest, has negative working Capital and C1RP has initiated the of Company. On the basis of the above and No information and explanations given to us whether the Company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date . the aforesaid events or conditions indicate that a material uncertainty exists as on the date of the audit report regarding whether the Company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

(XV) The requirements as stipulated by the provisions of Section 135 are not applicable to the Company. Accordingly, clauses 3(xx){a) and 3(xx)(b) of the Order are not applicable.

"Annexurc B" to Independent Auditors Report

Referred to in paragraph g under ‘Report on Other Legal and Regulatory Requirements in the Independent Auditors Report of even date to the members of CLC Industries Limited (Formerly known as Spentex Industries Limited) on the standalone financial statements for the year ended March 31,2023.

Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of CLC Industries Limited (Formerly known as Spentex Industries Limited) ("the Company") as of March 31. 2023 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Interna! Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India("JCAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing specified under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both issued by the ICAL Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Because of the matter described in Disclaimer of Opinion paragraph below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls over financial reporting system with reference to standalone financial statements of the Company..

Meaning oflnternal Financial Controls over Financial Reporting

A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A companys internal financial control over financial reporting includes those policies and procedures that (1 ) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asjiecessary to permit preparation of financial statements in accordance with

generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Basis for Disclaimer of Opinion

We are unable to obtain sufficient appropriate audit evidence on which to base our opinion on the effectiveness of Companys interna! financial controls over financial reporting with reference to these standalone financial statements over the assessment of the extent of the loss allowance/impairment to be recognised on inter-corporate deposits and advances and of the potential liability to be recognised for the corporate guarantees given to / on behalf of certain companies that are part of the Promoter Group. Consequent to the material weakness in such internal controls, the possible effects on the financial statements of undetected misstatements could be both material and pervasive.

Disclaimer of Opinion

As described in the Basis for Disclaimer paragraph above, because of the significance of the matters, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls over financial reporting with reference to these standalone financial statements and whether such internal financial controls were operating effectively as at March 31, 2023 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

We have considered the disclaimer reported above in determining the nature, timing and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended March 31. 2023 and the disclaimer has affected our opinion on the financial statements of the standalone Company and we have issued a disclaimer of opinion on the financial statements for the year ended on that date.