Encompass Design India Ltd Auditor Reports

To The Members of ENCOMPASS DESIGN INDIA LIMITED (Formerly Encompass Design India Private Limited)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

1. Opinion

We have audited the accompanying financial statements of M/s. ENCOMPASS DESIGN INDIA LIMITED (Formerly Encompass Design India Private Limited) (the Company), which comprise the Balance Sheet as at 31st March 2026, and the Statement of Profit and Loss, the statement of Cash Flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by 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 31st March 2026, and its financial performance for the year ended on that date.

2. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the 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 Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Key Audit Matters

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

KAM 1: REVENUE RECOGNITION AND COMPLETENESS ACROSS CHANNELS

The Company recorded total revenue from operations of Rs. 6,812.01 lakhs for the year ended 31st March 2026, comprising Sale of Products (Domestic and Export), Trading Sales, and Sale of Services. Given the complexity of multiple channels — domestic sales, trading sales, export sales, marketplace platforms (Amazon, Myntra, Flipkart, Nykaa, Blinkit, etc.) and service revenue — revenue recognition was identified as a key area of audit focus.

Auditors Response: Our procedures included: (i) Assessing the design and operating effectiveness of key internal controls over revenue recognition and customer invoicing; (ii) Testing end-to-end reconciliation between orders, dispatch notes, electronic marketplace settlement reports, and collections; (iii) Performing analytical review of channel-level realization trends; (iv) Verifying cut-off procedures around 31 March 2026; and(v) Reconciling sales in the books of accounts with GST returns and bank receipts. We found revenue to be appropriately recognized.

KAM 2: VALUATION AND EXISTENCE OF INTANGIBLE ASSETS (BRANDS)

As at 31st March 2026, the net carrying value of Intangible Assets is Rs. 2,305.62 lakhs, primarily comprising Brand assets (Bed Bath More Brands) of Rs. 2,291.94 lakhs. Given the significant materiality of the balance and the management judgments involved in assessing the economic useful life and testing for impairment, this was identified as a key audit matter.

Auditors Response: Our audit procedures included: (i) Reviewing the Management Resolution Letter (MRL) and board approvals for capitalization of Brand expenses; (ii) Verifying the underlying acquisition agreements, trademark assignment deeds, and proof of legal title; (iii) Evaluating managements annual impairment assessment, including projected revenue streams and brand contribution margins; (iv) Verifying that amortisation is computed on a straight-line basis over the estimated 10-year useful life in accordance with AS 26. We found the valuation and disclosures to be appropriate.

4. OTHER INFORMATION & MANAGEMENTS RESPONSIBILITIES

The Companys Board of Directors is responsible for the other information. The other information comprises the Directors Report and Management Discussion & Analysis, but does not include the financial statements and our auditors report thereon. Our opinion does not cover the other information and we do not express any form of assurance conclusion thereon.

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act.

5. AUDITORS RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our 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 our 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 STATUTORY AUDIT ANNEXURE

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

Referred to in Paragraph 1 under Report on Other Legal and Regulatory Requirementsof our report to the Members of Encompass Design India Limited of even date

On the basis of such checks as we considered appropriate and according to information and explanations given to us:

(i) Property, Plant & Equipment and Intangible Assets: (a)(A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment. (B) The Company has maintained proper records showing full particulars of intangible assets, (b) All PPEhave been physically verified by management in accordance with a phased programme. No material discrepancies were noticed, (c) Title deeds of immovable properties are held in the name of the Company, (d) No revaluation of PPE or intangible assets was conducted during the year, (e) No proceedings are initiated or pending against the Company for holding benami property.

(ii) Inventory: (a) The inventory has been physically verified during the year by management at reasonable intervals. In our opinion, coverage and procedure of such verification is appropriate. Discrepancies noticed were less than 10% in aggregate and have been properly dealt with in books, (b) The Company has been sanctioned working capital limits in excess of Rs. 5 crores from banks on the basis of security of current assets; quarterly statements filed with banks are in agreement with books of accounts.

(iii) Investments, Guarantees & Loans: The Company has not made investments in, provided any guarantee or security, or granted any advances in the nature of loans to companies, firms, LLPs or other parties during the year.

(iv) Compliance with Sections 185 & 186: In respect of loans, investments, guarantees and security, provisions of section 185 and 186 of the Companies Act, 2013 have been complied with.

(v) Public Deposits: The Company has not accepted any deposits or amounts which are deemed to be deposits under sections 73 to 76 of the Act.

(vi) Cost Records: Maintenance of cost records has not been specified by the Central Government under Section 148(1) of the Act for any of the products of the Company.

(vii) Statutory Dues: (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Goods and Services Tax, Customs Duty, and other statutory dues. No undisputed arrears were outstanding as on 31 March 2026 for a period exceeding six months, (b) There are no dues of income tax, sales tax, GST, or customs duty that have not been deposited on account of any dispute.

(viii) Unrecorded Income: No transactions have been surrendered or disclosed as income during the year in tax assessments underthe Income Tax Act, 1961.

(ix) Default in Repayment: The Company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender.

(x) IPO Proceeds Utilisation: The Company raised Rs. 40.21 crores through Initial Public Offer of 37,58,400 equity shares during the year. The funds raised have been applied for the purposes for which they were raised, with no deviations or variations.

I STATUTORY AUDIT ANNEXURE

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT

Report on the Internal Financial Controls with reference to Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

We have audited the internal financial controls with reference to financial statements of ENCOMPASS DESIGN INDIA LIMITED as of 31st March 2026 in conjunction with our audit of the standalone 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 with reference to financial statements 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 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 underthe Companies Act, 2013.

AUDITORS RESPONSIBILITY & INHERENT LIMITATIONS

Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting and the Standards on Auditing. Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected.

OPINION

In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at 31st March 2026, based on the internal control with reference to financial statements 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.

ForV.K. BESWAL& ASSOCIATES

CHARTERED ACCOUNTANTS Firm Regn. No. 101083W

Sd/- CA Kunal V. Beswal (Partner) Membership No. 131054 Place: Mumbai Date: 20/05/20261UDIN: 26131054JSKWHJ5079

ENCOMPASS DESIGN INDIA LIMITED

(Formerly Encompass Design India Private. Limited) CIN: L74210MH2010PLC200672