Karbonsteel Engineering Ltd Auditor Reports

on Restated Financial Statements

To,

The Board of Directors,

Karbonsteel Engineering Limited,

B-8, Ratnadeep Cosmopolitan CHS Ltd,

140-141 S.V. Road, Nr. Shoppers Stop, Andheri (W),

Mumbai, Maharashtra - 400058

Dear Sir/Maam

1. We have examined the attached Restated Financial Information of Karbonsteel Engineering Limited (formerly known as Karbonsteel Engineering Private Limited), comprising the Restated Statement of Assets and Liabilities as at March 31, 2025, March 31,2024 and March 31, 2023 the Restated Statements of Profit and Loss, the Restated Cash Flow Statement for the year ended March 31, 2025, March 31, 2024 and March 31, 2023 the Summary Statement of Significant Accounting Policies, and other explanatory information (collectively, the Restated Financial Information), as approved by the Board of Directors of the Company at their meeting held on 14 th August, 2025 for the purpose of inclusion in the Red Herring Prospectus (RHP), Red Herring Prospectus (RHP) and Prospectus (cumulatively hereinafter referred to as Offer Document) prepared by the Company in connection with its proposed Initial Public Offer of equity shares (SME IPO) prepared in accordance with the requirements of:

a) Section 26 and 32 of Part I of Chapter III of the Companies Act, 2013 (the Act)

b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (ICDR Regulations); and related amendments / clarifications from time to time issued by the Security and Exchange Board of India (SEBI).

c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) (as amended) issued by the Institute of Chartered Accountants of India (ICAI), as amended from time to time (the Guidance Note).

Managements Responsibility for the Restated Financial Information

2. The Companys Board of Directors is responsible for the preparation of the Restated Financial Information for the purpose of inclusion in the Red Herring Prospectus /Prospectus to be filed with Securities and Exchange Board of India, Registrar of Companies, Mumbai and the SME Platform of Bombay Stock Exchange (BSE) in connection with the proposed IPO. The Restated Financial Information have been prepared by the management of the Company on the basis of preparation stated in Annexure 4 to the Restated Financial Information. The Board of Directors responsibility includes designing, implementing and maintaining adequate internal control relevant to the preparation and presentation of the Restated Financial Information. The Board of Directors are also responsible for identifying and ensuring that the Company complies with the Act, ICDR Regulations and the Guidance Note.

Auditors Responsibilities

3. We have examined such Restated Financial Information taking into consideration:

a. The terms of reference and terms of our engagement agreed upon with you in accordance with our engagement letter dated 11 th September, 2024 in connection with the proposed IPO of equity shares of the Company;

b. The Guidance Note also requires that we comply with the ethical requirements of the Code of Ethics issued by the ICAI;

c. Concepts of test checks and materiality to obtain reasonable assurance based on verification of evidence supporting the Restated Financial Information; and

d. The requirements of Section 26 of the Act and the ICDR Regulations.

Our work was performed solely to assist you in meeting your responsibilities in relation to your compliance with the Act, the ICDR Regulations and the Guidance Note in connection with the proposed SME IPO of the equity shares of the Company.

4. These Restated Financial Information have been compiled by the management from: -

a. Audited financial statements of the company as at and for March 31 st 2025, March 31 st 2024 and March 31 st 2023 prepared in accordance with the applicable Accounting Standards notified under Section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts Rules), 2014, which has been approved by the Board of Directors at their meeting held on 14 th August, 2025, 10 th September, 2024 and 3 rd September, 2023 respectively.

5. For the purpose of our examination, we have relied on:

a. Auditors Report issued by us dated 14 th August, 2025 and 10 th September, 2024 on the financial statements of the Company as at and for the year ended March 31, 2025, and as at and for the year ended on March 31 st , 2024, respectively as referred in paragraph 4 above.

b. Auditors Report issued by previous auditors dated 3 rd September 2023 on the financial statements of the company as at and for the year ended on March 31 st 2023 respectively as referred in Paragraph 4(b) above

6. Based on our examination and according to the information and explanations given to us, we report that:

a. The Restated Summary Statement of Assets and Liabilities as set out in Annexure I to this report, of the Company as at and for the year ended on March 31,2025, as at and for the year ended on March 31, 2024 and March 31, 2023 are prepared by the Company and approved by the Board of Directors. These Restated Summary Statement of Assets and Liabilities have been arrived at after making such adjustments and regroupings to the individual financial statements of the Company, as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to Accounts as set out in Annexure IV and Annexure V to this Report.

b. The Restated Summary Statement of Profit and Loss as set out in Annexure II to this report, of the Company as at and for the year ended on March 31, 2025, as at and for the year ended on March 31, 2024 and March 31, 2023 are prepared by the Company and approved by the Board of Directors. These Restated Summary Statement of Profit and Loss have been arrived at after making such adjustments and regroupings to the individual financial statements of the Company, as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to Accounts as set out in Annexure IV and Annexure V to this Report.

c. The Restated Summary Statement of Cash Flow as set out in Annexure III to this report, of the Company as at and for the year ended on March 31, 2025, as at and for the year ended on March 31, 2024 and March 31, 2023 are prepared by the Company and approved by the Board of Directors. These Restated Summary Statement of Cash Flow have been arrived at after making such adjustments and regroupings to the individual financial statements of the Company, as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to Accounts as set out in Annexure IV and Annexure V to this Report.

d. The Restated Summary Statement have been prepared in accordance with the Act, ICDR Regulations and the Guidance Note.

e. The Restated Summary Statements have been made after incorporating adjustments for the changes in accounting policies retrospectively in respective financial period/years to reflect the same accounting treatment as per the changed accounting policy for all reporting periods, if any;

f. The Restated Summary Statements have been made after incorporating adjustments for prior period and other material amounts in the respective financial years/period to which they relate, if any and there are no qualifications which require adjustments;

g. Extra-ordinary items that need to be disclosed separately in the accounts has been disclosed wherever required;

h. There were no qualifications in the Audit Reports issued by the Statutory Auditors as at and for year ended on March 31,2025, as at and for the year ended on March 31, 2024 and March 31,2023, which would require adjustments in this Restated Financial Statements of the Company;

i. Profits and losses have been arrived at after charging all expenses including depreciation and after making such adjustments/restatements and regroupings as in our opinion are appropriate and are to be read in accordance with the Significant Accounting Polices and Notes to Accounts as set out in Annexure IV and Annexure V to this report;

j. There was no change in accounting policies, which needs to be adjusted in the Restated Summary Statements;

k. There are no revaluation reserves, which need to be disclosed separately in the Restated Financial Statements;

l. The Company has not declared dividend during the period.

7. We have also examined the following other financial information relating to the Company prepared by the Management and as approved by the Board of Directors of the Company and annexed to this report relating to the Company as at and year ended on March 31, 2025, March 31, 2024, and March 31, 2023 proposed to be included in the Red Herring Prospectus /Prospectus.

Annexure of Restated Financial Statements of the Company: -

a. Restated Summary Statement of Assets and Liabilities in Annexure I

b. Restated Summary Statement of Profit and Loss in Annexure II

c. Restated Summary Statement of Cash Flows in Annexure III

d. Significant Accounting Policies in Annexure IV

e. Restated Financial Information Material Adjustment (as per ICDR regulation) in Annexure V

f. Details of Share Capital/ Reserve and Surplus as Restated appearing in Annexure A to this report;

g. Details of Long Term/Short Term Borrowings as Restated appearing in Annexure B to this report;

h. Nature of Security and Terms of Repayment for Long term/Short term Borrowings appearing in Annexure B(A) and B(B) to this report;

i. Details of Deferred Tax Assets/Liabilities (Net) as Restated appearing in Annexure C to this report;

j. Details of Long-Term Provisions as Restated appearing in Annexure D to this report;

k. Details of Trade Payables as Restated appearing in Annexure E to this report;

l. Details of Other Current Liabilities/ Short term provision as Restated appearing in Annexure F to this report;

m. Details of Property, Plant Equipment & Intangible Asset Restated appearing in Annexure G to this report;

n. Details of Long-Term Loans and Advances as Restated appearing in Annexure H to this report;

o. Details of Other Non-Current Assets as Restated appearing in Annexure I to this report;

p. Details of Inventories as Restated appearing in Annexure J to this report;

q. Details of Trade Receivables as Restated appearing in Annexure K to this report;

r. Details of Cash and Bank Balances as Restated appearing in Annexure L to this report;

s. Details of Short-Term Loans and Advances as Restated appearing in Annexure M to this report;

t. Details of Other Current Assets as Restated appearing in Annexure N to this report;

u. Details of Revenue from operations as Restated appearing in Annexure O to this report;

v. Details of Other Income as Restated appearing in Annexure P to this report;

w. Details of Cost of Material Consumed and Purchase of Stock in Trade as restated appearing in Annexure Q to this report;

x. Details of Change in Inventories as restated appearing in Annexure R to this Report;

y. Details of Employee Benefit Expense as restated appearing in Annexure S to this report;

z. Details of Finance Cost as restated appearing in Annexure T to this report;

aa. Details of Depreciation and Amortisation Expenses as restated appearing in Annexure U to this report; bb. Details of Other Expense as restated appearing in Annexure V to this report; cc. Details of Accounting and other ratios as restated appearing in Annexure W to this report; dd. Details of Related Parties Transactions as Restated appearing in Annexure X to this report; ee. Details of statement of Capitalization as restated appearing in Annexure Y to this report; ff. Details of Statement of Tax Shelter as Restated appearing in Annexure Z to this report: gg. Details of Statement of Events Occurring after the Balance Sheet Date as Restated appearing in Annexure AA to this report;

hh. Details of Contingent liabilities as restated appearing in Annexure AB to this report; ii. Details of Other Financial Ratios as restated appearing in Annexure AC to this report; jj. Details of Additional notes as restated appearing in Annexure AD to this report;

8. We, M/s. Rao & Shyam Chartered Accountants have been subjected to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold a valid peer review certificate issued by the Peer Review Board of the ICAI which is valid till 31 st July 2028.

9. The Restated Financial Information do not reflect the effects of events that occurred subsequent to the respective dates of the reports on the special purpose financial statements and audited financial statements mentioned in paragraph 4 above.

10. This report should not in any way be construed as a reissuance or re-dating of any of the previous audit reports issued by us, nor should this report be construed as a new opinion on any of the financial statements referred to herein.

11. We have no responsibility to update our report for events and circumstances occurring after the date of the report.

12. Our report is intended solely for use of the Board of Directors for inclusion in the Red Herring Prospectus /Prospectus to be filed with Securities and Exchange Board of India, SME Platform of BSE and Registrar of Companies, Mumbai in connection with the proposed IPO. Our report should not be used, referred to, or distributed for any other purpose except with our prior consent in writing. Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come without our prior consent in writing.

For Rao & Shyam,
Chartered Accountants
Firm\u2019s Registration Number - 006186S
Sd/-
CA Vibhor Kala
Partner
Membership Number - 143553
UDIN - 25143553BMOZME3114
Place: Mumbai
Date: 18 th August, 2025