Kanel Industries Ltd Auditor Reports

To

The Members of

KANEL INDUSTRIES LIMITED

Report on the audit of the Standalone Financial Statements

Opinion

1. I have audited the accompanying Ind AS standalone financial statements of KANEL INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2025, 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 standalone financial statements, including a summary of significant accounting policies and other explanatory information ("the Financial Statements").

2. In my opinion and to the best of my information and according to the explanations given to me, the aforesaid Financial Statements give the information required by the Companies Act,

2013 ("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 2025, and its loss 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 Act. My responsibilities under those SAs are further described in the Auditors

Responsibilities for the Audit of the 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 ("ICAI") together with the ethical requirements that are relevant to my audit of the Financial Statements under the provisions of the Act, 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 on the Financial Statements.

Key Audit Matters

4. Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the Financial Statements of the current year. 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.

A. Approval of Resolution Plan:

The National Company Law Tribunal (NCLT), Ahmedabad Bench, vide its order under Section 30(6) read with Section 31(1) of the Insolvency and Bankruptcy Code, 2016 and Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, has approved a Resolution Plan submitted for the Company. The Resolution Plan inter alia provides for:

a) waiver of liabilities by secured and unsecured creditors,

b) partial debt restructuring including conversion of loan into equity shares,

c) cancellation of certain equity shares,

d) revaluation of fixed assets at fair market value, and

e) writing off losses relating to current assets and investments.

The Company has accounted for the above impacts in accordance with the approved Resolution Plan, applicable requirements of Ind AS and the NCLT order. These transactions are significant in terms of their size and nature, and required considerable audit attention due to the complexity of accounting, judgments involved in valuation and classification, and extensive disclosures.

Auditors Response:

My audit procedures included, among others:

a) Reading and evaluating the NCLT Order approving the Resolution Plan;

b) Assessing managements process for implementing the accounting effects of the Resolution Plan;

c) Evaluating the appropriateness of accounting treatment for waiver of liabilities, restructuring of borrowings, issue of equity shares, cancellation of shares and write-off of current assets and investments in accordance with applicable Ind AS;

d) Assessing the basis of revaluation of fixed assets including involvement of independent valuer and assumptions used;

e) Verifying necessary approvals, resolutions and supporting documentation relating to the implementation of the Resolution Plan; and

f) Evaluating the adequacy of related disclosures made in Note 49 of the financial statements. Based on the above procedures, I found managements accounting and disclosures in respect of the Resolution Plan to be reasonable and in accordance with the applicable financial reporting framework.

B. Revaluation of Assets:

I draw attention to Note 49 of the financial statements, which describes that, pursuant to approval of the Resolution Plan by the Honble NCLT, Ahmedabad Bench, the Company has revalued its fixed assets at fair value based on valuation carried out by an independent valuer.

The resultant revaluation impact has been accounted for in the books of account in accordance with the Resolution Plan and applicable Ind AS. My opinion is not modified in respect of this matter.

Auditors Response:

In addressing the above Key Audit Matter, my procedures included, among others:

a) Understanding and evaluating the terms of the approved Resolution Plan with respect to revaluation of fixed assets.

b) Assessing the competence, independence and objectivity of the independent valuer engaged by the Company.

c) Evaluating the valuation methodology, assumptions and inputs adopted by the valuer for reasonableness and consistency with Ind AS 16 requirements.

d) Reconciling the revalued amounts with the valuation report and ensuring appropriate accounting treatment of the resultant revaluation reserve in the books of account.

e) Reviewing disclosures made in the financial statements, particularly Note 49, for compliance with Ind AS and Schedule III requirements.

Based on the procedures performed, we found the managements accounting and disclosure for revaluation of fixed assets to be reasonable and in line with the applicable financial reporting framework.

C. Conversion on Loan into Equity:

The Honble National Company Law Tribunal (NCLT), Ahmedabad Bench, vide its order underSection 30(6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, approved the Resolution Plan of the Company. The Resolution Plan inter alia provided for:

a) Waiver of secured and unsecured debt aggregating to 1575.84 lakhs;

b) Conversion of balance debt of 1496.25 lakhs into 1,49,62,500 equity shares of 10 each at par; and

c) Extinguishment of existing liabilities in accordance with the approved Resolution Plan.

The accounting treatment of waiver of debt and conversion of debt into equity has been carried out in accordance with the provisions of applicable Ind AS, particularly Ind AS 32

Financial Instruments: Presentation, Ind AS 109 Financial Instruments and Ind AS 107 Financial Instruments: Disclosures. Given the materiality of the transaction and significant impact on the financial statements, this matter has been identified as a Key Audit Matter.

Auditors Response:

I have performed the following audit procedures:

a) Verified the NCLT order approving the Resolution Plan.

b) Evaluated the accounting treatment of waiver of debt and debt-to-equity conversion with reference to Ind AS 32/109 requirements.

c) Checked the computation of equity shares issued against the converted debt.

d) Ensured appropriate disclosure has been made in the Notes to Accounts (Refer Note 49).

e) Based on the above procedures, I found the accounting and disclosure of debt waiver and debt-to-equity conversion to be appropriate.

Other Information

5. The Companys Board of Directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the Financial Statements and my auditors report thereon.

6. My opinion on the Financial Statements does not cover the other information and I do not express any form of assurance conclusion thereon.

7. In connection with my audit of the Financial Statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or my knowledge obtained in the 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.

Managements responsibility for the Financial Statements

8. The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these Financial Statements that give a true and fair view of the state of affairs, profit and 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

9. In preparing the Financial Statements, the 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 the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors responsibilities for the audit of the Financial Statements

11. 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.

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

12.1. 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. 12.2. 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) the Act, I am also responsible for expressing my opinion on whether the Company has adequate internal financial controls with reference to Financial Statements in place and the operating effectiveness of such controls. 12.3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by themanagement. 12.4. Conclude on the appropriateness of the 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. The company has suffered huge losses in past and its net worth has been eroded. The management has produced detailed plan for revival. This includes efforts to increase sales and cash flow, negations with the banking institution of finance and redrafting of its credit policy. Company has not incurred cash lose in the current year. The profitability shows upward trend. This evidence justifies managements conclusion of companys ability to continue as going concern. My conclusions are based on the audit evidence obtained up to the date of my auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern. 12.5. 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. 13. 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.

14. 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.

15. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the Financial Statements of the current year 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 a 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.

Report on Other Legal and Regulatory Requirements

16. 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 Act, I give in the "Annexure A"a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

17.1. 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.

17.2. 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 for the matters stated in the paragraph 18.8 below, on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

17.3. The balance sheet, the statement of profit and loss including other comprehensive income, the statement of changes in equity and the cash flow statement dealt with by this Report are in agreement with the books of account.

17.4. In my opinion, the aforesaid Financial Statements comply with the Ind AS specified under Section 133 of the Act.

17.5. On the basis of the written representations received from the directors as on 31 March 2025 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2025 from being appointed as a director in terms of Section 164(2) of the Act.

17.6. 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 my separate Report on internal financials control over financials reporting as per Annexure-2; and 17.7. In my opinion and according to the information and explanations given to me, Company has not paid remuneration to directors.

17.8. The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 17.2 above on reporting under section 143(3)(b) of the Act and paragraph 18.8 below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

18. 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:

18.1. The Company does not have any pending litigations which would impact its financial position.

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

18.3. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

18.4. The management has represented that 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 person(s) or entity(ies), including foreign entities

("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. Based on reasonable audit procedures adopted by me, nothing has come to my notice that such representation contains any material misstatement.

18.5. The management has represented that no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("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. Based on reasonable audit procedures adopted by me, nothing has come to my notice that such representation contains any material misstatement.

18.6. Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to my notice that has caused me 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.

18.7. In my opinion and according to the information and explanations given to me, no dividend has been declared and / or paid during the year by the Company.

18.8. Based on my examination which included test checks and information given to me, the

Company has used accounting software for maintaining its books of account, which has a feature of recording audit trail (edit log) facility 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 audit trail feature being tampered with.

Further, the audit trail, to the extent maintained in the prior year, has been preserved by the Company as per the statutory requirements for record retention.

	For N.S. NANAVATI & CO.
	Chartered Accountants
	FRN: 134235W
	(CA NITESH SHIRISHCHANDRA NANAVATI)
	Proprietor
Date: 29.05.2025	Membership No.: 143769
Place: Ahmedabad	UDIN: 25143769BMSBXO1051

Annexure - A to the Auditors Report

The Annexure as referred to in Independent Auditors Report to the members of the Company on the financial statements for the year ended 31 March 2025, I report that:

I. In respect of Fixed Assets: a. The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment and relevant details of right-of-use assets. The depreciation is provided at the rate prescribed under Companies Act, 2013. b. The Company has maintained proper records showing full particulars of intangible assets. c. As per the information and explanations given to me, all the assets have been physically verified by the management during the year and there is a regular program of verification which, in my opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies are noticed on such verification. d. The title deeds of all the immovable properties disclosed in the financial statements are held in the name of the company. e. No proceedings were initiated/not pending against the company for holding Benami properties under the "Benami Transactions (Prohibition) Act, 1988 and Rules" made there under. f. The Company has revalued its fixed assets at fair value based on valuation carried out by an independent valuer. The revaluation was carried out pursuant to approval of the Resolution

Plan by the Honble NCLT, Ahmedabad Bench. The details of the revaluation are as under:

(Rs. In Lakhs)

Particulars	Book Value ( )	Revised Value ( )	Increase on Revaluation ( )
Freehold Land	37.97	1460.45	14224.49
Factory Building	08.09	10.00	01.91
Office Building	08.00	173.00	165.00
Office Equipment	00.26	00.26
Total	54.32	1643.71	1589.39

The net increase on account of revaluation amounting to 1589.39 lakhs has been credited to Other Comprehensive Income (OCI) and accumulated under Revaluation Reserve in Equity in accordance with Ind AS requirements.

II. In respect of Inventory: a. The Company does not have inventories and thus this reporting clause is not applicable. b. The company has not been sanctioned working capital limits in excess of five crore rupees at any point of time during the year accordingly this clause is not applicable to the company.

c. Based on information and explanations provided to us, the Company had defaulted in repayment of borrowings prior to commencement of the Corporate Insolvency Resolution

Process (CIRP). Pursuant to approval of the Resolution Plan by the Honble NCLT, Ahmedabad Bench, certain secured and unsecured borrowings have been waived/settled and part of the debt has been converted into equity shares in accordance with the approved plan. d. As part of implementation of the Resolution Plan, the Company has written off certain current assets, including investments and trade receivables, which were not recoverable. These write-offs have been accounted for as per the Resolution Plan approved by the Honble NCLT. e. Consequently, the outstanding borrowings as at the Balance Sheet date are in line with the terms of the approved Resolution Plan and no further defaults in repayment were observed during the year. III. The Company has not made investments in, provided guarantee or security and granted loans or advances in the nature of loans, secured or unsecured, to companies, firms, limited liability partnerships or any other parties during the year. Thus, this reporting clause is not applicable.

IV. The Company has not granted loans or provided guarantees or securities to parties covered under

Section 185 of the Companies Act, 2013 (“the Act”). The Company has complied with the provisions of section 186 of the Act in respect of loans granted, investments made and guarantees and securities provided, as applicable.

V. According to the information and explanation given to me, the Company has not accepted any deposits from the public in accordance with the provisions of Section 73 to 76 of the Act or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable to the company.

VI. According to the information and explanation given to me, the maintenance of cost records under sub-section 1 of section 148 of the Companies Act 2013 is not mandatory to the company.

VII. a. According to the records of the Company and information and explanations given to me, the

Company was generally not regular in depositing undisputed statutory dues including Goods and Services Tax, Value Added Tax, Sales Tax, and other statutory dues with the appropriate authorities prior to the commencement of the Corporate Insolvency Resolution Process (CIRP). The Company had certain statutory dues which were disputed and remained unpaid. However, pursuant to the Resolution Plan approved by the Honble National Company Law Tribunal

(NCLT), Ahmedabad Bench, vide order dated23.10.2024, such statutory liabilities have been settled/waived as under:

			(Rs. In Lakhs)
Nature of Dues	Total Debt ( )	Final Claim Accepted ( )	Waived ( )
Gujarat VAT Dues	67.72	32.98	34.74
Assistant Sales Tax Comm.	88.04	00.18	87.86
Commercial Sales Tax	2477.70	04.95	2472.75

Accordingly, as on the balance sheet date, no disputed statutory dues remain payable. b. According to the information and explanations given to me and documents provided to me, except mentioned otherwise there are no other disputed dues of Goods and Service Tax, income tax, sales tax, duty of excise, service tax and value added tax, duty of customs, duty of Excise, value added tax, cess and any other statutory, which have not been deposited with the appropriate authorities on account of any dispute. c. Details of statutory dues referred to in sub-clause (a) above which have not been deposited as on 31st March, 2025 on account of any dispute is Nil.

VIII. According to the information and explanations given to me, no such transactions were observed which were not recorded in books of accounts but have been surrendered or disclosed as income during the year in the tax assessment under Income Tax Act, 1961 and there is no previously unrecorded income in the books of account of the company.

IX. According to the information and explanations given to me, I am of the opinion that: a. The Company had defaulted in repayment of dues to banks/financial institutions prior to the commencement of the Corporate Insolvency Resolution Process (CIRP). However, The National Company Law Tribunal (NCLT), Ahmedabad Bench, vide its order under Section 30(6) read with Section 31(1) of the Insolvency and Bankruptcy Code, 2016 and Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, has approved a Resolution Plan submitted for the Company. The resolution plan provides for waiver of loan and interest liability against issue of equity shares to lender. The Resolution Plan inter alia provided for:

a) Waiver of secured and unsecured debt aggregating to 1575.84 lakhs; b) Conversion of balance debt of 1496.25 lakhs into 1,49,62,500 equity shares of 10 each at par; and c) Extinguishment of existing liabilities in accordance with the approved Resolution Plan.

Necessary accounting adjustments for waiver of debt, issue of equity shares in settlement of debt, and revaluation of assets have been given effect to in the financial statements, in compliance with the approved Resolution Plan and applicable Ind AS requirements.

b. The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority. c. The company has not availed any term loan therefore question of application of term loan does not arise. d. The company has not raised any short-term fund therefore question of utilisation of short-term fund does not arise. e. The company has not taken any funds from any entity or person on account of to meet the obligations of its subsidiaries, Joint Venture, Associates Companies. f. The Company has not raised any loans during the year on the pledge of securities held in its

subsidiaries, Joint Venture, Associates Companies.

X. a. The Company has not raised any money by way of initial public offer or further public offer

(including debt instruments) during the year. Hence question of application of fund does not arise.

However, pursuant to approval of Resolution Plan by Honble NCLT, company has issued new equity shares of Rs. 1496.25 Lakhs i.e. 1,49,62,500 equity shares of 10 each at par against conversion of total debt of Rs. 3072.08 Lakhs. This is no cash transaction and company has adjusted secured debt against issue of these shares. This accounting treatment is per Ind AS. b. During the year, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) and hence reporting under clause 3(x) (b) of the Order is not applicable. XI. a. According to the information and explanations given to me, no material fraud by the Company or on the Company has been noticed or reported during year. b. No report under sub-section (12) of section 143 of the Companies Act has been filed by me in

Form ADT4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government. c. As represented to me by the management, there are no whistle blower complaints received by the company during the year. XII. The Company is not a Nidhi Company as per the provisions of the Companies Act, 2013. Therefore, the requirement to report on clause 3(xii)(a),(b) and (c) of the Order is not applicable to the Company. XIII. Transactions with the related parties are in compliance with sections 177 and 188 of Companies Act,

2013 where applicable and the details have been disclosed in the notes to the standalone financial statements, as required by the applicable accounting standards. XIV. a. In my opinion and based on my examination, the company is required to have an internal audit system under section 138 of the Act, and Company has adequate internal financial controls with reference to Financial Statements in place and the operating effectiveness of such controls. . b. Internal audit under section 138 of Companies Act, 2013 is applicable. I have considered Internal auditors report. XV. In my opinion, during the year, the Company has not entered into any non-cash transactions with its directors or persons connected with its directors and hence provisions of Section 192 of the Act are not applicable to the Company. The conversion of loan into equity shares pursuant to the Resolution

Plan approved by the Honble NCLT in favor of an LLP having common directors/partners with the

Company does not fall within the scope of Section 192.

XVI. a. The provisions of Section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934) are not applicable to the Company. Accordingly, the requirement to report on clause 3(xvi)(a) of the Order is not applicable to the Company.

b. The Company has not conducted any Non-Banking Financial or Housing Finance activities and is not required to obtain Certificate of Registration (CoR) for such activities from the Reserve Bank of India as per the Reserve Bank of India Act, 1934.

c. The Company is not a Core Investment Company as defined in the regulations made by Reserve Bank of India. Accordingly, the requirement to report on clause 3(xvi)(c) of the Order is not applicable to the Company. XVII. According to the information and explanations given to me and based on my examination of the records of the Company, the Company has incurred cash losses of 4.52 lakhs during the financial year under report. The Company had also incurred cash losses in the immediately preceding financial years prior to commencement of Corporate Insolvency Resolution Process (CIRP).

XVIII. There has been no resignation of the statutory auditors during the year accordingly this clause is not applicable to the company. XIX. According to the information and explanations given to me and on the basis of financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, my knowledge of the Board of Directors and management plans, I am of the opinion that there is no material uncertainty exists as on the date of audit report, and I am also of the opinion that the Company is capable of meeting its liabilities existed 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.

XX. Provisions of section 135 (1) of Companies Act, 2013 is not applicable to the company accordingly this clause is not applicable to the company.

XXI. The company is not a holding company and also not required to prepare consolidated financial statements as per the provisions of the Act accordingly this clause is not applicable to the company. XXII. According to the information and explanations given to us and as per the records of the Company, the Honble National Company Law Tribunal (NCLT), Ahmedabad Bench, vide its order dated

23.10.2024, has approved the Resolution Plan under section 31 of the Insolvency and Bankruptcy Code, 2016. Pursuant to the said Resolution Plan: a. Total claims filed with the Resolution Professional amounted to Rs. 3845.48 Lakhs b. Final claims admitted and settled amounted to 1535.01 Lakhs c. Balance Claim of Rs. 2310.32 Lakhs were waived in accordance with the Resolution Plan. d. Provision for CIRP Expenses made Rs. 10 Lakhs.

The Company has accounted for the waiver of liabilities, debt-to-equity conversion, and revaluation/write-off adjustments in its books in compliance with applicable Ind AS and the approved Resolution Plan.

XXIII. Pursuant to the approval of the Resolution Plan by the Honble National Company Law Tribunal ("NCLT"), Ahmedabad Bench, under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, significant changes have been made in the capital structure, liabilities, and assets of the Company. These changes include waiver of certain debts, conversion of debt into equity, cancellation of shares, revaluation of fixed assets, and write-off of certain current assets and investments. Accordingly, the financial statements for the year ended March 31, 2025 are not comparable with those of previous years.

	For N.S. NANAVATI & CO.
	Chartered Accountants
	FRN: 134235W
	(CA NITESH SHIRISHCHANDRA NANAVATI)
	Proprietor
Date: 29.05.2025	Membership No.: 143769
Place: Ahmedabad	UDIN: 25143769BMSBXM2304

Annexure - B to the Auditors Report

Report on the Internal Financial Controls 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 KANEL INDUSTRIES LIMITED ("the Company") as of 31 March, 2025 in conjunction with my audit of the Ind AS 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

My responsibility is to express an opinion on the Companys internal financial controls over financial reporting 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") 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 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 judgment, including the assessment of the risks of material misstatement of the Ind AS 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 controls system over financial reporting.

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 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 financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, 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 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, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2025, 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.

	For N.S. NANAVATI & CO.
	Chartered Accountants
	FRN: 134235W
	(CA NITESH SHIRISHCHANDRA NANAVATI)
	Proprietor
Date: 29.05.2025	Membership No.: 143769
Place: Ahmedabad	UDIN: 25143769BMSBXO1051

KANEL INDUSTRIES LTD

Reg. Off.:1503, WESTPORT, SINDHU BHAVAN ROAD, NR. S P RING ROAD, AHMEDABAD, SHILAJ, AHMEDABAD, DASKROI, GUJARAT, INDIA, 380059

(CIN- L15140GJ1992PLC017024)