Kalyani Forge Auditors Report


To the Members of Kalyani Forge Limited Report on the Audit of Financial Statements Qualified

Opinion

We have audited the accompanying financial statements of Kalyani Forge Limited, which comprise the balance sheet as at 31st March, 2023, and the statement of profit and loss (including other comprehensive income), statement of changes in equity and 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 (herein after referred to as "financial statements")

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified opinion section of our report, the aforesaid financial statements give the information required by the Companies Act, 2013 (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, 2023, and its profit for the year (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion:

1. The Company is in the process of updating inventory records in Materials Module (MM Module) of SAP ERP system and refining its stock valuation process by updating the standard rates of material, labour and overheads based on the current prevailing rates and relevant data. Presently, the inventories have been valued as per the values as appearing in Finance Module (FI Module) of SAP ERP which is not matching with the Materials Module (MM Module) of SAP ERP. As the said process is not completed as at year end, consequential financial impact, if any, arising on updating of the inventory records and its valuation will have to be given in the books of accounts after its completion. Management has carried out a physical verification of inventory as at 31st March, 2023 and discrepancies of Rs.641.37 Lakhs (Net of provision already made as per management estimate and judgement) have been observed.

2. Trade Receivables include certain old and disputed receivables of Rs.641.33 Lakhs.

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 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.

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. There are no Key Audit Matters to be reported.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the 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 identified above when it becomes available and in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

The other information is expected to be made available to us after the date of this auditors report and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of the Management for the Financial Statements

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 financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with the rules made thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

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.

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

• 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 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 financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)0) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has internal financial controls with reference to financial statements in place and the operating effectiveness of such controls. Refer to our separate report in Annexure B.

• 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2020 (the Order) issued by the Government of India - Ministry of Corporate Affairs, in terms of sub-section (11) of section 143 of the Act, we enclose in the "Annexure A", a statement on the matters specified in paragraphs 3 and 4 of the said Order.

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

a. 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 except what is stated at Para above on Qualified Opinion.

b. Except for the possible effects of the matters described in the Basis for Qualified 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) and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d. In our opinion, the aforesaid financial statements comply with Accounting Standards specified under Section 133 of the Act to the extent applicable and read with Companies (Indian Accounting Standards) Rules, 2015, as amended.

e. On the basis of the written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 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 with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

g. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended:

h. In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

i. The matters described at Paragraph on Qualified Opinion above may have some adverse impact on the relevant amounts disclosed in these Financial Statements.

j. 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 financial statements - Refer note 30.1 to Financial Statements;

ii. The Company doesnt have any long-term contracts including derivative contracts requiring provision for material foreseeable losses.

iii. During the year, no amounts were required to be transferred to the Investor Education and Protection Fund by the Company on account of unpaid dividend.

iv.

a. The Management has represented that, to the best of its knowledge and belief, 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 Management has represented, that, to the best of its knowledge and belief, 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. Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come 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. As stated in Notes to the financial statements:

The dividend proposed in the previous year i.e., year ended on 31st March, 2022 was declared and paid by the Company during the current financial year is in accordance with Section 123 of the Act, as applicable. (Refer Note 14)

The Board of Directors of the Company have proposed final dividend for the current financial year i.e., year ended on 31st March, 2023, which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable. (Refer Note 13)

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 only with effect from April 01, 2023, and accordingly, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For K. S. Aiyar& Co.
Chartered Accountants
ICAI Firm Registration No. 100186W
Rajesh S. Joshi
Partner
Place: Mumbai Membership No.: 038526
Date: 30th May, 2023 UDIN: 23038526BGWQDI2235

Annexure A to the Auditors Report

(Referred to in paragraph 1 under the heading Report on Other Legal and Regulatory Requirements of our Report of even date on the financial statements for the year ended on March 31, 2023, of Kalyani Forge Limited)

(i)(a) A. The Company is maintaining proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment;

(i)(a) B. The Company is maintaining proper records showing full particulars of intangible assets.

(i)(b) As per information and explanations given to us, these Property, Plant and Equipment have not been physically verified during the year by management.

(i) (c)According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the Company.

(i)(d) As per the information obtained and explanations given to us, the Company has not revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year.

(i) (e) As per the information obtained and explanations given to us, no proceedings have been 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.

(ii) (a) We are informed that Physical verification of the inventory (excluding stocks with third parties and goods in transit) has been conducted at reasonable intervals by the Management during the year. As at the year-end physical verification of inventories, management has observed a difference of Rs.641.37 Lakhs (Net of provision made as per management estimate and judgement) between SAP value and Physical Value. In respect of inventory lying with third parties, some confirmations were received having differences that need to be reconciled. In our opinion, the coverage and procedure of physical verification and valuation needs to be strengthened considering the size and nature of the business of the Company. As per the information and explanations given to us, based on the stock take report of the management as at year end, material discrepancies of 10% or more in the aggregate, were noticed in some class of the inventories;

(ii) (b) The Company has been sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets.

We are not provided with the quarterly returns or statements filed by the Company with such banks and financial institutions. Therefore, whether they are in agreement with the books of account or not cannot be commented upon by us.

(iii) (a) During the year the company has not made any investments in, not provided any guarantee or security or not granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties except for Rs.35.30 Lakhs given as other advance (not considered in the nature of loan) by the management to a related party as disclosed in Note No. 30.7)

As there are no investments made, no guarantees provided, no security given or no loans or advances in the nature of loans are given clause 3(iii) (b, c, d, e and f) are not applicable to the Company.

(iv) As there are no loans, investments, guarantees, and security, the compliance requirement of the provisions of section 185 and 186 of the Companies Act is not applicable to the Company.

(v) There are no deposits accepted by the company or amounts which are deemed to be deposits from public, consequently the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules made are not applicable to the Company;

(vi) Maintenance of cost records have been specified by the Central Government under sub-section (1) of section 148 of the Companies Act in respect of products manufactured by the Company such accounts and records have been so made and maintained by the Company;

(vii) (a) The Company is generally 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. No undisputed statutory dues were in arrears as on the last day of the financial year for a period of more than six months from the date they became payable.

(vii)(b) Statutory dues referred to in sub-clause (a) which have not been deposited on account of any dispute are as per the details given below.

Name of the Statute Nature of the dues Amount

(lacs.)

Period to which the amount relates Forum where dispute is pending Remarks, if any.
Central Excise Act, 1944 Interest on supplementary Invoices 4,25,113 From 2001-02 to 2004-05 High Court of Bombay, Mumbai.
Central Excise Act, 1944 Cenvat Credit on Rejection Received from customer 2,44,406 From 2008-09 to 2011-12 CESTAT Mumbai
Goods And Services Tax Act, 2017 E way bill expired 3,01,400 Y2018-19, From 22-10- 2018 to 15-11-2018 Additional Commissioner of GST and Central Excise, (Appeals) Coimbatore
Central Goods and Service Tax 2017 Excess outward Tax in e-way Bills Excess ITC claimed 1,35,50,267 2018-19 Deputy / Joint Commissioner of GST, Pune (Appeals)
Income Tax Act, 1961 Disallowance of Expenditure on expansion / upgradation of projects 6,95,976 AY 1992-93 High Court of Bombay, Mumbai.
Income Tax Act, 1961 Loss on options settled. 23,24,857 AY 2008-09 Commissioner of Income Tax (Appeals) Pune.
Income Tax Act, 1961 Expenditure incurred Bad debts and other expenses 22,93,529 AY 2011-12 Commissioner of Income Tax (Appeals) Pune.
Income Tax Act, 1961 Assessment Order received with demand for disallowance of late payment of TDS, Additional Depreciation, Stock Value 7,76,426 AY 2013-14 Commissioner of Income Tax (Appeals) Pune.
Income Tax Act, 1961 Disallowance of Additional Depreciation on electrical installations 3,09,074 AY 2016-17 Commissioner of Income Tax (Appeals) Pune.
Income Tax Act, 1961 Disallowance of Liabilities Written Back u/s 41(1) (a) of the Act 21,00,172 AY 2021-22 Commissioner of Income Tax (Appeals) Pune.

(viii) There are no transactions which were not recorded in the books of account and have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961);

(ix) (a) The company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender.

(ix)(b) The company is not a declared wilful defaulter by any bank or financial institution or other lender;

(ix)(c) The Term loans were applied for the purpose for which the loans were obtained;

(ix)(d) On an overall examination of the financial statements of the Company, Funds raised on short term basis have, prima-facie, been not utilized during the year for long term purposes.

(ix)(e) The Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.;

(ix) (f) The Company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies.;

(x) (a) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. Therefore, the question of reporting of its application, delays or default and subsequent rectification, if any, does not arise;

(x) (b) According to the information and explanations given to us and based on our examination of the books and records, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year. Therefore, the question of complying with section 42 and section 62 of the Companies Act, 2013 and reporting on its utilization does not arise.;

(xi) (a) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information obtained and explanations given to us, no instances of fraud by the Company or any fraud on the Company has been noticed or reported during the year.

(xi)(b) We, have not filed any report under sub-section 12 of section 143 of the Companies Act, 2013 in Form ADT-4 as prescribed under rule 13 of the Companies (Audit and Auditors) Rules, 2014 with the Central Government.

(xi) (c) As per the information and explanation given by the Company, no whistle blower complaint is received by the company.

(xii) (a) In our opinion and according to the information obtained and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) (b and c) of the Order is not applicable to the Company;

(xiii) According to the information obtained and explanations given to us and based on our examination of the records of the Company, all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Financial Statements, as required by the applicable Indian Accounting Standards;

(xiv) (a) The Company has an internal audit system, wherein an external consulting firm is carrying out the internal audit work. The internal auditor has stated that their engagement with the Company is advisory in nature and is not subjected to any Assurance or other Standards issued by Institute of Chartered Accountants of India. In our opinion, its scope and coverage need to be increased so as to be commensurate with the size and nature of the business of the Company. During financial year 2022-23, Quarterly report of internal auditors for Sept 2022 was not provided to us.

(xiv) (b) We have considered, the internal audit reports that were issued to the Company and provided to us.

(xv) According to the information obtained and explanations given to us and based on our examination of the records, the Company has not entered during the year into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable;

(xvi) (a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) (b, c and d) of the Order is not applicable.

(xvii) The Company has not incurred cash losses in the current financial year and in the immediately preceding financial year.

(xviii) There has not been any resignation of the statutory auditors during the year.

(xix) According to the information obtained and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and management plans, we are of the opinion that no material uncertainty exists as on the date of the audit report that Company is capable of meeting its liabilities existing as at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

(xx) (a) There is no unspent amount towards Corporate Social Responsibility (CSR) requiring a transfer to a Fund specified in Schedule VII to the Act within a period of six months of the expiry of the financial year in compliance with second proviso to sub-section (5) of section 135 of the said Act;

For K. S. Aiyar& Co.
Chartered Accountants
ICAI Firm Registration No. 100186W
Rajesh S. Joshi
Partner
Place: Mumbai Membership No.: 038526
Date: 30th May, 2023 UDIN: 23038526BGWQDI2235

Annexure - B to the Independent Auditors Report of even date on the Financial Statements of Kalyani Forge Limited.

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

We have audited the internal financial controls with reference to financial statements of Kalyani Forge Limited ("the Company") as of March 31, 2023 in conjunction with our 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 (ICAI). 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 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 (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. 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 internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system with reference to financial statements.

Meaning of Internal Financial Controls with refence to financial statements

A companys internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control with reference to financial statements 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 Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the Ind AS 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 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 with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

Except for consequences of

i. Company not having a CFO during the last quarter (CFO resigned on 6th January, 2023);

ii. the required accounting staff;

iii. the possible effects of the matters described in the Qualified Opinion Paragraph of our main audit report on these Financial Statements, and

iv. related weaknesses in internal control systems over financial reporting, 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 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 Institute of Chartered Accountants of India. We have considered the above in expressing our Qualified Opinion on these Financial Statements of the Company for the year ended on Mar 31, 2023.

For K. S. Aiyar& Co.
Chartered Accountants
ICAI Firm Registration No. 100186W
Rajesh S. Joshi
Partner
Place: Mumbai Membership No.: 038526
Date: 30th May, 2023 UDIN: 23038526BGWQDI2235

ANNEXURE I

Statement on Impact of Audit Qualifications (for audit report with modified opinion) submitted along-with Annual Audited Financial Results - (Standalone and Consolidated separately)

Statement on Impact of Audit Qualifications for the Financial Year ended March 31, 2023

[See Regulation 33 / 52 of the SEBI (LODR) (Amendment) Regulations, 2016]

Sl. No. Particulars Audited Figures (In Lakhs) (as reported before adjusting for qualifications) Adjusted Figures(In Lakhs) (audited figures after adjusting for qualifications)
1. Turnover / Total income 27,366.11 Not Applicable Refer Item II(d) below
2. Total Expenditure 26,677.40
3. Net Profit/(Loss) 360.84
4. Earnings Per Share 9.92
5. Total Assets 20,580.91
6. Total Liabilities 10,033.05
7. Net Worth 10,547.86
8. Any other financial item(s) (as felt appropriate by the management)

II. Audit Qualification (each audit qualification separately):

Details of Audit Qualification: The Company is in the process of updating inventory records in Materials Module (MM Module) of SAP ERP system and refining its stock valuation process by updating the standard rates of material, labour and overheads based on the current prevailing rates and relevant data. Presently, the inventories have been valued as per the values as appearing in Finance Module (FI Module) of SAP ERP which is not matching with the Materials Module (MM Module) of SAP ERP. As the said process is not completed as at year end, consequential financial impact, if any, arising on updating of the inventory records and its valuation will have to be given in the books of accounts after its completion. Management has carried out a physical verification of inventory as at 31st March, 2023 and discrepancies of Rs.641.37 Lakhs (Net of provision already made as per management estimate and judgement) have been observed.
Trade Receivables include certain old and disputed receivables of Rs.641.33 Lakhs.
Type of Audit Qualification: Qualified Opinion
Frequency of qualification: First time
For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views: Not Applicable
For Audit Qualification(s) where the impact is not quantified by the auditor:
Managements estimation on the impact of audit qualification: Not Ascertainable
If management is unable to estimate the impact, reasons for the same 1. Managements views to Audit Qualification 1 of the Audit Report:
With reference to para 1 of that section, regarding Inventory Accounting, the company has completed a comprehensive inventory revaluation exercise, using updated rates for materials and overheads. This exercise increases the inventory value compared to the figures SAP (which have not been updated due to operational constraints) by at least Rs. 5 cr. The reflection of the results of this exercise in SAP will be completed by Q1 of FY24, to bring the records completely up to date and incorporating residual shortfall if any
2. Managements views to Audit Qualification 2 of the Audit Report:
With reference to para 1 on receivables. In Q4 FY23, the company has written off bad debts of old dues of 8 major customer accounts amounting to Rs. 1.2 cr based on clear reconciliation exercises with its customers. It has utilized existing provisions taken during previous quarters of FY23 to give final effect and therefore improve the balance sheet with more current items. For one debtor accounts, the company has initiated legal recourse and has been advised that there is a strong case of recovery of those dues, this amounts to around Rs. 2.9 cr. The debtor in question has responded and admitted to their dues and asked for a settlement which is being pursued. For the remaining accounts, the company is in discussion with its customers and is on track for recovering and reconciling the dues. The overall ageing of overdue receivables therefore has significantly improved in Q4 FY23 and management is confident of recovery/settlement.
Auditors Comments on (i) or (ii) above: No additional comment required.

III. Signatories:

ROHINI G. KALYANI

Executive Chairperson

ABHIJIT SEN

Audit Committee Chairman

CA. RAJESH JOSHI

Statutory Auditor

Place: Pune

Date: 30th May, 2023