Elgi Rubber Company Ltd Auditor Reports

To the Members of M/s. Elgi Rubber Company Limited

Report on the audit of Standalone Financial Statements

Opinion

1. I have audited the accompanying standalone financial statements of ELGI Rubber Company Limited ("the Company"), which comprise the standalone balance sheet as at 31st March 2024, the standalone statement of Profit and Loss, the standalone statement of changes in equity, and the standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information in which are included the financial statements/ information for the year ended on that date.

2. In my opinion and to the best of my information and according to the explanations given to me, the aforesaid standalone financial statements give the information required by the Companies Act ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2024, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.

Basis for Opinion

3. I conducted my audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. My responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the "Standalone Financial Statements" section of my report. I am 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 my audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key Audit Matters:

4. Key audit matters are those matters that, in my professional judgment, were of the most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters:

S.No. Key Audit Matter	Auditors Response
1. Assessment of carrying value of investment and Loans & Advances given to the overseas subsidiaries (Refer Note 8 and 9 to the Standalone Financial Statements)	My audit procedures included the following:
As at March 31, 2024, the Company has equity investments of Rs 859.55/- million in its subsidiaries and Loans & advances aggregating to Rs 1361.37/- million in the aforesaid subsidiaries.	Understood and performed procedures to assess the design and tested the operating effectiveness of relevant controls related to the annual evaluation on assessment of the carrying value of investments and their recoverability of the Loans & Advances.
I considered the assessment of carrying value of investments and the recoverability of the Loans & Advances as a key audit matter, considering its significance to the Standalone Financial Statements, and where applicable, the judgement involved in estimating future cash flows, cash flow projections and terminal growth rates.	Tested the Companys assessment with regard to key financial indicators including net worth of those respective subsidiaries with the carrying value of the investments made in those entities.
	Where future cash flow projections were prepared, evaluated the reasonableness of these projections by checking the mathematical accuracy, and discussing with the management to understand the assumptions involved and my knowledge and understanding of the current business conditions. Evaluated, the key assumptions such as discount rate and growth rate used in the preparation of the cash flow projections.
	Evaluated the adequacy of the disclosures made in the Standalone Financial Statements.
	Based on the above procedures performed, the managements assessment of the carrying value of investments in subsidiaries was reasonable and the managements assessment on recoverability of the Loans & advances for the aforesaid subsidiaries are considered to be reasonable.
2. Evaluation of uncertain tax positions	My audit procedures included the following:
The Company has uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes (Refer note 46 to standalone financial statements).	Obtained details of completed tax assessments and demands received upto the end of the financial year and till the date of finalisation of our report, from management.
I considered the evaluation of uncertain tax positions as a key audit matter, considering its significance of its impact to the Standalone Financial Statements, and where applicable, the judgement involved in evaluating the uncertain tax positions.	Analysed the managements underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Considered legal precedence and other rulings in evaluating managements position on these uncertain tax positions.
	Additionally, I considered the effect of new information in respect of uncertain tax positions to evaluate whether any change was required to managements position on these uncertainties.

Information Other than the standalone Financial Statements and Auditors Report Thereon

5. The Companys Management and Board of Directors are responsible for the other information. The other information comprises the Boards Report and the Corporate Governance Report but does not include the standalone financial statements and my auditors report thereon.

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

In connection with my audit of the standalone financial statements, my 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 my knowledge obtained during the course of my audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information; I am required to report that fact. I have nothing to report in this regard.

Responsibilities of Management and those charged with governance for the standalone Financial Statements

6. The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("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, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting standards specified under section 133 of the Act, read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for the 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 of the financial statement that gives a true and fair view and are free from material misstatement, whether 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.

Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

7. My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material 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 financial statements.

I give in "Annexure A" a detailed description of Auditors; responsibilities for the Audit of the Standalone Financial Statements.

Report on Other Legal and Regulatory Requirements

8. As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub- section (11) of section 143 of the Companies Act, 2013, I give in the "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

9. As required by Section 143(3) of the Act, I report that:

(a) I have sought and obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purposes of my audit.

(b) In my opinion, proper books of account as required by law have been kept by the Company so far as it appears from my examination of those books.

(c) The standalone balance Sheet, the standalone statement of Profit and Loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of Cash Flows dealt with by this Report are in agreement with the books of account.

(d) In my opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31st March 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2024 from being appointed as a director in 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 and the operating effectiveness of such controls, refer to my separate Report in "Annexure C".

(g) 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, in my opinion, and to the best of my information and according to the explanations given to me:

• The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 46 to the financial statements;

• The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

• There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

(h) (A) The management has represented that, to the best of its knowledge and belief, no funds 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 persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:

o directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company or

o provide any guarantee, security, or the like to or on behalf of the Ultimate Beneficiaries.

(B) The management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall:

• directly or indirectly, lender invest in other persons or entities identified in any manner whatsoever("Ultimate Beneficiaries") by or on behalf of the Funding Party or

• provide any guarantee, security, or the like from or on behalf of the Ultimate Beneficiaries; and

(C) Based on such audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to my notice that has caused me to believe that the representations under subclause (i) (A) and (i) (B) contain any material misstatement

(i) The Company has not declared or paid any dividend during the year and has not proposed final dividend for the year.

(j) Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software.

Further, during the course of my audit, I did not come across any instance of the audit trail feature being tampered with, in respect of accounting software for the period for which the audit trail feature was operating.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1,2023, reporting under Rule 11 (g) of the Companies (Audit and Auditors) Rules, 2014 on the preservation of audit trail as per the statutory requirements for record retention is not applicable for the year ended March 31,2024.

(k) With respect to the matter to be included in the Auditors Report under Section 197(16) of the Act:

In my opinion and according to the information and explanations given to me, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which is required to be commented upon by me.

Annexure - A to the Independent Auditors Report

(Referred to in Auditors Responsibilities for the Audit of the Standalone Financial Statements section of my report to the members of Elgi Rubber Company Limited of even date)

Auditors Responsibilities for the Audit of the Financial Statements:

As part of an audit in accordance with SAs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:

I. Identify and assess the risks of material misstatement of the 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 my 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.

II. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, I am also responsible for expressing my opinion on whether the company has an adequate internal financial controls system in place and the operating effectiveness of such controls.

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

IV. 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 I conclude that a material uncertainty exists, I am required to draw attention in my auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit report. However, future events or conditions may cause the company to cease to continue as a going concern.

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

VI. Obtain sufficient appropriate audit evidence regarding the financial information of the Company to express an opinion on the Standalone Financial Statements. I am responsible for the direction, supervision, and performance of the audit of the financial statements of the Company of which I are the independent auditors. I remain solely responsible for my audit opinion.

Materiality is the magnitude of misstatements in the financial statements that individually or in aggregate, make it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. I consider quantitative materiality and qualitative factors in (i) planning the scope of my audit work and in evaluating the results of my work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

I 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 I identify during my audit.

I also provide those charged with governance with a statement that I 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 my independence, and where applicable, related safeguards.

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

Annexure "B" to the Independent Auditors Report

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of my report to the members of Elgi Rubber Company Limited of even date)

1. (a) In my opinion and according to the information and explanations given to me, the Company is maintaining proper records showing full particulars, including quantitative details and the situation of property, plant and equipment and intangible assets.

(b) The Company has a program of verification to cover all items of property, plant and equipment in a phased manner over a period of three years, which, in my opinion, is reasonable having regard to the size of the Company and the nature of its assets.

Pursuant to the program, certain property, plant and equipment were physically verified by the management during the year. According to the information and explanations given to me, no material discrepancies were noticed on such verification.

(c) In my opinion and according to the information and explanations given to me and based on the examination of the conveyance deeds provided to me, I report that the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date.

In respect of immovable properties given as collateral for loans from banks and financial institutions, the title deeds were deposited with the said banks/ financial institutions, and based on the declaration from the company that the title deeds are in the name of the Company.

(d) The Company has not revalued its property, plant and equipment (including right of use asset) during the year. Accordingly, paragraph 3 (i) (d) of the Order is not applicable.

(e) In my opinion and according to the information and explanations given to me, there are no proceedings initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder. Accordingly, paragraph 3 (i) (e) of the Order is not applicable.

2. (a) As explained to me, the inventories have been physically verified by the management during the year. In my opinion, the coverage

and procedure of such verification by the management is appropriate and no discrepancies of 10% or more in the aggregate for each class of inventory were noticed on such verification.

(b) According to the information and explanations given to me, the Company has been sanctioned working capital limits in excess of five Crores, in aggregate, at points of time during the year, from banks on the basis of security of current assets. In my opinion and according to the information and explanations given to me, the differences between quarterly returns and statements comprising (stock statements, book debt statements, and statements on ageing analysis of the debtors) filed by the Company with such banks and unaudited books of account of the Company are as under:

For the Quarter	Nature of Current assets	Amount as per quarterly returns & statements (Rs in Millions)	Amount as per books of account (Rs in Millions)	Difference (Rs in Millions)	Remarks including subsequent rectification, if any
Jun-23	Inventory	485.32	485.32	-	NA
Jun-23	Trade receivable	444.10	448.85	(4.75)	Exchange Gain on reinstatement of Export debtors has not been considered in bank statement.
Sep-23	Inventory	483.31	483.38	(0.07)	Corrected due to production loss
Sep-23	Trade receivable	487.51	491.07	(3.56)	Exchange Gain on reinstatement of Export debtors has not been considered in bank statement.
Dec-23	Inventory	499.83	500.25	(0.42)	Corrected due to production loss
Dec-23	Trade receivable	490.55	490.80	(0.25)	Exchange Gain on reinstatement of Export debtors has not been considered in bank statement.
Mar-24	Inventory	483.04	483.21	(0.17)	Corrected due to production loss
Mar-24	Trade receivable	504.12	509.14	(5.02)	Exchange Gain on reinstatement of Export debtors has not been considered in bank statement.

3. (a) In my opinion and according to information and explanation given to me, the Company has not made investments during the year, however provided loans to a subsidiary and guarantees to various subsidiaries, as under.

Particulars	Guarantees	Loans
Aggregate amount during the year
Subsidiaries	773.67	178.31
Associates	-	-
Others	-	-
Balance outstanding as on the balance sheet date
Subsidiaries	1660.97	1,236.31
Associates	-	-
Others	-	-

(b) Considering the reversal of interest charged for the year 2023-24, the terms and conditions of the grant of all loans and guarantees provided are considered as, prima facie, prejudicial to the Companys interest.

(c) In respect of loans granted by the Company, the schedule of repayment of principal and payment of interest has been stipulated.

(d) There are no overdue amounts in respect of loans granted to such companies or other parties

(e) The Company had granted loans which have fallen due during the year and were repaid on or before the due date. Further, no fresh loans were granted to any party to settle the overdue loans.

(f) The Company has not granted any loan, which is repayable on demand or without specifying any terms or period of repayment.

4. In my opinion and according to the information and explanation given to me, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees, and security, as applicable, subject to the following. During the year, the company had reversed Rs 84.80 million relating to the financial year 2023-24 payable by the various overseas subsidiaries to the company.

5. In my opinion and according to the information and explanations given to me, the Company has complied with provisions of Section 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014 as amended with regard to deposit accepted by the Company from the public.

6. I have broadly reviewed the cost records maintained by the company specified by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013, as applicable to the company, and are of the opinion that prima facie the specified cost records have been maintained. I have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. In my opinion and according to the information and explanations given to me:

(a) Amounts deducted/ accrued in the books of account in respect of 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 other material statutory dues have been generally regularly deposited by the Company with the appropriate authorities.

(b) No undisputed amounts payable in respect of 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 other material statutory dues were in arrears as at March 31,2024 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to me, the details of disputed statutory dues that have not been deposited on account of dispute are as under.

S.No Name of the statute	Nature of Dues	Amount (Rs In million)	Financial year	Forum where the dispute is pending
1. Income Tax (Erstwhile Treadsdirect Ltd)	Dispute towards import machinery	39.51	2014-15	CIT Appeals, NFAC Delhi
2. Excise Duty (Erstwhile Treadsdirect Ltd)	Differential Duty on Own Consumption	10.54	2006-07	CESTAT, Bangalore
3. Excise Duty ((Erstwhile Treadsdirect Ltd))	Valuation dispute	0.41	2006-07 to 2009-10	CESTAT, CHENNAI
4. Excise Duty (Erstwhile Treadsdirect Ltd)	Valuation dispute	4.14	2009-14	CESTAT, Bangalore
5. Excise Duty (Erstwhile Treadsdirect Ltd)	Valuation dispute	1.28	2014-15	CESTAT, Bangalore
6. Excise Duty (Erstwhile Treadsdirect Ltd)	Valuation dispute	0.56	2015-16	CESTAT, Bangalore
7. Excise Duty (Erstwhile Treadsdirect Ltd)	Valuation dispute	0.15	2016-17	Commissioner (Appeals), Cochin.
8. Service tax (Erstwhile Titan Tyre Care Products Ltd)	Service Tax on Know how	1.47	2008- 09	CESTAT - Chennai
9. VAT (Erstwhile Treadsdirect Ltd)	Levy of Entry Tax on Rubber Products	0.08	2004-05	Deputy Commissioner, Bhopal.
10. VAT (Erstwhile Treadsdirect Ltd)	Dispute on rate of tax	4.17	2008-09 to 2010- 2011	Appellate Tribunal , Hyderabad
11. VAT (Erstwhile Treadsdirect Ltd)	Dispute on rate of tax penalty levied	1.04	2008-2009 to 2010- 11	Appellate Tribunal , Hyderabad
12. VAT (Erstwhile Treadsdirect Ltd)	Non submission of documents	25.24	2009- 2010	Assistant Commissioner, Special Circle, Palakkad
13. VAT (Erstwhile Treadsdirect Ltd)	Levy of Tax on Labor Charges on Works Contract	4.60	2010- 11 to 2012-13	High Court Chennai
14. VAT(Erstwhile Treadsdirect Ltd)	Sales / Purchase effected after RC cancellation	20.54	2010-11	High Court -Kerala
15. VAT (Erstwhile Treadsdirect Ltd)	Non submission of documents	2.34	2011-12	Sales Tax officer (STO) Kolkatta
16. CST (Erstwhile Treadsdirect Ltd)	Dispute on C-Forms submitted	0.89	2010-11	Deputy Commissioner Appeals, Palakkad
17. CST (Erstwhile Treadsdirect Ltd)	Non submission of Forms	4.26	2015-16	Deputy Commissioner Appeals, Palakkad

8. In my opinion and according to the information and explanations given to me, there are no transactions not recorded in the books of account that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961). Accordingly, paragraph 3 (viii) of the Order is not applicable.

9. (a) In my opinion and according to the information and explanations given to me, the Company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender during the year.

(b) In my opinion and according to the information and explanations given to me, the Company is not declared as a wilful defaulter by any bank or financial institution or other lender.

(c) In my opinion and according to the information and explanations given to me, the term loans obtained during the year were applied for the purpose for which they were availed.

(d) In my opinion and according to the information and explanations given to me, funds raised on short term basis have not been utilised for long term purposes.

(e) According to the information and explanations given to me and on an overall examination of the financial statements of the Company, I report that during the year the Company has not taken any funds from an entity or person, on account of or to meet the obligations of its subsidiaries or associate companies.

(f) According to the information and explanations given to me and procedures performed by me, the Company has not raised any loans during the year on the pledge of securities held in its subsidiaries or associate companies.

10. (a) In my opinion and according to the information and explanations given to me, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, paragraph 3 (x) (a) of the Order is not applicable.

(b) In my opinion and according to the information and explanations given to me, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year. Accordingly, paragraph 3 (x) (b) of the Order is not applicable.

11. (a) To the best of my knowledge and according to the information and explanations given to me, no fraud by the Company or no material fraud on the Company by any person has been noticed or reported during the year. Accordingly, paragraph 3 (xi) (a) of the Order is not applicable.

(b) Since there is no fraud by the Company or no material fraud on the Company by any person has been noticed or reported during the year, paragraph 3 (xi) (b) of the Order is not applicable.

(c) To the best of my knowledge and according to the information and explanations given to me, no whistle-blower complaints, have been received by the Company during the year.

12. The Company is not a Nidhi Company and accordingly, Paragraphs 3 (xii) of the Order is not applicable.

13. In my opinion and according to the information and explanations given to me, the transactions with the related parties are in compliance with sections 177 and 188 of the Act. Where applicable, the details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14. (a) In my opinion and according to the information and explanations given to me, the Company has an internal audit system, commensurate with the size and nature of its business.

(b) The reports of the internal auditors for the year under audit were considered by me, as part of my audit procedures.

15. In my opinion and according to the information and explanations given to me, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3 (xv) of the Order is not applicable.

16. (a) In my opinion and according to the information and explanations given to me, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

(b) In my opinion and according to the information and explanations given to me, the Company has not conducted any Non-Banking Financial or Housing Finance activities without a valid Certificate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act, 1934.

(c) In my opinion and according to the information and explanations given to me, the Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, paragraph 3 (xvi) (c) of the Order is not applicable.

(d) In my opinion and according to the information and explanations given to me, the Company is not a Core Investment Company (CIC) and it does not have any other companies in the Group. Accordingly, paragraph 3 (xvi) (d) of the Order is not applicable.

17. The Company has not incurred cash losses in the financial year and in the immediately preceding financial year.

18. There has been no resignation of the statutory auditors during the year. Accordingly, paragraph 3 (xviii) of the Order is not applicable.

19. In my opinion and according to the information and explanations given to me and on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements, my knowledge of the board of directors and management plans, there are no material uncertainty exists as on the date of the audit report that 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.

I, however, state that this is not an assurance as to the future viability of the Company. I further state that my reporting is based on the facts up to the date of the audit report and I neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

20. In my opinion and according to the information and explanations given to me, there is no unspent amount under sub-section (5) of Section 135 of the Companies Act, 2013 pursuant to any project. Accordingly, clauses 3(xx)(a) and 3(xx)(b) of the Order are not applicable.

21. The Companys wholly owned subsidiary viz. Elgi Rubber Company Holding B.V, Netherlands had availed Euro 2 million from Kotak Mahindra Bank Limited, IBU GIFT City Branch, to meet its principal business requirements, which was secured by Standby Letter of Credit (SBLC) facility availed by the Holding Company (listed entity) from the said Bank. The Subsidiary Company has defaulted in the repayment of an amount of Euro 1.98 million (which includes outstanding principal and interest) and consequently, the Bank has invoked the Standby Letter of Credit (SBLC) on 6th October, 2023.

Annexure - C to the Independent Auditors Report

(Referred to in paragraph 2 (f)under ‘Report on Other Legal and Regulatory Requirements section of my report to the Members of Elgi Rubber Company Limited of even date)

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")

I have audited the internal financial controls over financial reporting of Elgi Rubber Company Limited ("the Company") as of March 31,2024, in conjunction with my audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal 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. 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 the 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

My responsibility is to express an opinion on the internal financial controls over financial reporting of the Company based on my audit. I conducted my audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that I 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.

My audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. My audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error.

I believe that the audit evidence I have obtained, is sufficient and appropriate to provide a basis for my audit opinion on the Companys internal financial control system with reference to financial statements.

Meaning of Internal 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 as necessary 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 standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to Financial Statements, including the possibility of collusion or improper management of override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In my opinion and according to the information and explanations given to me, the Company has, in all material respects, an adequate internal financial control system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2024, 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 issued by the Institute of Chartered Accountants of India.

	for M/s ARUN & CO
	Chartered Accountants
	Firm Registration No.014464S
	CA. A. Arun
	Proprietor
Place : Coimbatore	Membership No. 227831
Date : May 30, 2024	UDIN: 24227831BKCKHM9257