Kernex Microsystems (India) Ltd Auditor Reports

To The Members of

Kernex Microsystems (India) Limited,

Hyderabad.

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Qualified Opinion

We have audited the accompanying Standalone Financial Statements of Kernex Microsystems (India) Limited (the "Company"), which comprise the Balance Sheet as at March 31, 2025, Profitand Loss theStatement (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year ended on that date, and notes to the financial statements, including material accounting policies and other explanatory information. (hereinafter referred to as "Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us,except for the effects of the matter described QualifiedOpinion" paragraph below, the"Basisfor the aforesaid Stand-alone 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 Indian Accounting Standards prescribed under section 133 of the Act, ("Ind AS") and other accounting principles generally accepted in India, of the state of of the Company as at March 31, 2025 and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified opinion

We draw attention to the matters described below, the effect of which, individually or in aggregate, are material but not pervasive to the Standalone Financial Statements. The effects of matters described below, which could be reasonably determined, are quantified and given therein. a. The Company has a Wholly owned subsidiary namely Avant-Garde Infosystems Inc in USA which is presently supporting the business of the Company by identifying the sources, negotiating for and procuring electronic components from outside India. The subsidiary in the past, was involved in the trading of goods.

b. As per the latest unaudited financialsof the subsidiary available as on 31^st March 2025, the accumulated loss of the subsidary company for the period ended 31^st March 2025 is USD 1.894 million (the equivalent Indian Rupees being Rs. 1,617.84 lakhs as per prevailing exchange rate), Which is exceeding the cost of investment made USD 1.822 million (Rs. 1,275.97 lakhs (at Cost)). As a result, the carrying amount of the investment in the equity of subsidiary in the books of account of the Company amounting to Rs. 1,275.97 lakhs (at Cost) stands impaired fully. Ind AS 36, requires the company to provide for impairment in respect of diminution in the value of investments by charging the amount of impairment to the Profit & Loss Account.

c. The Company made an investment of Rs. 8.00 lakhs in KERNEX TCAS JV - a controlled entity (subsidiary) formed to execute a railway safety project, in which the Company has 80% share in the profits and losses. In addition, the Company has also provided the long-term advance of Rs. 575.89 lakhs (Including interest amount). As per the latest audited financials of KERNEX TCAS JV as on 31^st March 2025, the JV has total assets of Rs 718.55 lakhs and outside liabilities (other than the advance due to the company) is Rs. 442.94 lakhs. Thus, the net assets available amounting to Rs 275.61 lakhs are not sufficientto recover the advance given to KERNEX-est amount) as on 31^st March 2025. Accordingly in our opinion the same investments and the advance are subject to impairment in standalone financial statements to the extent of Rs 308.28 lakhs Since the Company has not impaired the cost of investments in the equity of subsidiary and the advance granted to KERNEX TCAS JV to an extent of Rs. 1,584.25 lakhs (Rs. 1,275.97 lakhs on account of diminution in the value of the investment in equity of the wholly owned subsidiary & Rs. 308.28 lakhs on account of insufficient funds available in KERNEX TCAS JV), the profit and other Comprehensive Income for the year ended are overstated by the said amount. The Other Equity in the balance sheet for the year ended is overstated by Rs.1, 584.25 lakhs.

Our conclusion on the standalone financial statements is qualified in respect of the above matters.

We conducted our audit of the Standalone Financial Statements 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 Responsibility for the Audit of the Standalone 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 ("ICAI") together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

Emphasis of Matter

We draw attention to Note 12 and 14 of the Standalone Financial Statements, which describes the companys assessment towards the recoverability of the following financial assets which are outstanding for long period of time: a. Trade Receivables from customers Rs. 422.10 Lakhs (PY 418.34 Lakhs) and respective Expected Credit Loss (ECL) provision for the CY Rs. 211.67 Lakhs (PY Rs.183.58 Lakhs). The said receivable is outstanding for more than 3 years. b. Margin money deposits with banks of Rs. 1,905.12 Lakhs (PY 1,513.31 Lakhs) provided for customer guarantees of Rs. 3,521.18 Lakhs (PY 2,161.71Lakhs) and under arbitration / negotiation.

Such assessments are based on current facts and circumstances and may not necessarily reflect future uncertainties and events and the final recoverable amounts may vary for the reasons mentioned therein. Our conclusion on the statement is not qualified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter	Auditors Response
1. Revenue recognition from Engineering, Procurement and Construction (EPC) contracts
In the Financial Year 2022-23, the Company, acting as the lead member of a consortium (Joint and several liability) with another third-party partner, commenced execution of Engineering,	We obtained and examined the EPC contract entered into with the customer and the inter se agreement between the consortium partners to understand the respective scope of work and the basis for sharing of revenue.
Procurement and Construction (EPC) contracts for the provision of railway safety equipment.	We evaluated the Companys accounting treatment under Ind AS 115 and noted that the Company has recognised revenue only to the extent of its own share of work as per the consortium arrangement, rather than the gross billing made to the customer, which aligns with the principles of control and performance obligations under the standard.
Although the Company, as lead member, raised the entire invoices to the customer, the revenues were shared between the consortium partners based on an inter se agreement that allocates scope of work and related consideration between the parties and the consideration was deposited into an escrow account, from which funds are withdrawn by the respective consortium partners based on mutual approval as per the inter se agreement.	We reviewed the agreements and work orders entered by the company with various customers and we have examined various terms and conditions relating to the scope of work to be executed by the company as per various agreements to understand the performance obligations and the activities to be carried out to achieve those performance obligations. on the customer and matched them with the corresponding invoices raised by the third-party consortium partner on the Company (refer Note 25 of the standalone financial statements). We also examined the basis of managements certification of the quantum of work executed by the consortium partner against agreed milestones and verified that the deductions made from gross invoicing were supported by contractual terms and milestone achievements.
In accordance with the terms of the consortium arrangement, the Company recognized revenue only to the extent of its share of work, after excluding the portion attributable to the other consortium partner. Given the significance of these contracts to the Companys operations, the complexity involved in determining the appropriate revenue share, and the judgment required in applying Ind AS 115	We further verified the remittances made to the consortium partner and traced them to supporting documents and bank statements. We obtained and reconciled the balance confirmation received from the third-party consortium partner, which supported the accuracy and completeness of the amounts accounted for by the Company in respect of the consortium arrangement.
Revenue from Contracts with Customers, this matter was considered to be of most significance in our audit and hence identified as a Key Audit Matter.

 

Key Audit Matter	Auditors Response
2. Existence and valuation of inventories
As at 31st March 2025, the Company has reported inventories amounting to 5,179.82 lakhs (Refer Note 10 of the Standalone Financial Statements), comprising raw materials and work-in-progress. Given the materiality of this balance and the complexities involved in physical verification and valuation of inventories across various locations and stages of production, this matter has been identified as a Key Audit Matter.	The physical verification of raw material stocks held in stores was conducted by the management. We reviewed the verification records and applied rollback procedures to reconcile the verified quantities to the balances as at 31st March 2025 based on inventory movement data.
	Inventories held at project sites and were physically verified by the respective site in-charge in coordination with the management ,we have reviewed the physical verification report and confirmation submitted by the site in-charge and reconciliations were made in respect of the materials delivered from Head Office to project sites and materials invoice from project site to customers
	Work-in-progress was examined based on the records maintained through the Companys inventory records and related registers maintained in the accounting system . The Value of the Work in progress is evaluated with reference to the material cost available in the accounting system and allocation of overheads with reference to the various stages of production of the items
	We examined the Stores records ,inventory records maintained in the accounting system and the cost allocation procedures implemented in the company to understand and assess the movement of inventory transactions, including receipts from purchases, issues for production, and stock transfers. We also evaluated the valuation methodology applied by the Company in accordance with its accounting policy and Ind AS 2 Inventories, and performed material reconciliation procedures to verify the accuracy of the closing stock balances.

 

3. Balances with statutory and government authorities
As at 31st March 2025, the Company has reported balances amounting to 912.96 lakhs lying with statutory and government authorities (Refer Note 16 of the Standalone Financial Statements).	This balance primarily comprises Input Tax Credit (ITC) and GST TDS receivable, which the Company intends to avail or set off against future tax liabilities arising from sales.
Considering the materiality of the amount and the nature of regulatory compliances involved, this matter has been identified as a Key Audit Matter.	We have verified these balances against the returns filed by the Company under the applicable GST laws.
	We also corroborated the reported balances with data available on the relevant government portals (i.e. GST portal) to ensure accuracy and recoverability. Based on our procedures, we assessed the appropriateness of the recognition and presentation of these balances in the financial statements.

Information Other than the Financial Statements and Auditors Report Thereon ("Other Information")

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Report of the Board of Directors including Annexures thereto, Management Discussion and Analysis Report but does not include the Consolidated Financial Statements, Standalone Financial Statements and our auditors report thereon.

Our opinion on the Standalone 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 Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the Standalone Financial Statements

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 Standalone Financial Statements that give a true and fair view ofthefinan -performance including other comprehensive income, cash flows and changes in equity cialposition,financial of the Company in accordance with the accounting principles generally accepted in India, including 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 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 internalfinancialcontrols,thatwereoperatingeffectivelyfor 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 Standalone Financial Statements, Management and Board of Directors are 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 intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone 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 Standalone

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 Standalone 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 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)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial -con trols with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

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 we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial results 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 Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represents the underlying transactions and events in a manner that achieves fair presentation. Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the We consider quantitative StandaloneFinancialStatementsmaybeinfluenced. materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Standalone Financial Statements We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the auditand significantdeficiencies in internal financialauditfindings,includingany controls 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. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our 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

1. As required by Section 143(3) of the Act, based on our audit we report that: i. 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. ii. In our opinion, except for the matters described in the "Basis of Qualified Opinion" paragraph, 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. iii. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account. iv. In our opinion, except for the matters described in the "Basis of Qualified Opinion" paragraph, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act. v. On the basis of the written representations received from the directors as on March 31, 2025 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2025 from being appointed as a director in terms of Section 164(2) of the Act. vi. With respect to the adequacy of the internal financialcontrols with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Companys internal financial controls with reference to Standalone Financial Statements. vii. 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, 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. viii. 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 itsfinancialposition in its Stand -alone Financial Statements;

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

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

iv. a. The Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or enti-ty(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 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, 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 performed 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. The Company has not declared or paid any dividend during the year. vi. Based on our examination, which included test checks, the Company has used accounting software systems for maintaining its books of account for the financial year ended March 31, 2025 which have the feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software systems. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with and the audit trail has been preserved by the Company as per the statutory requirements for record retention.

2. As required by the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

Annexure – "A" to the Independent Auditors Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date) Report on the Internal Financial Controls with reference to Standalone Financial Statements under Clause (i) of Sub- section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls withreference to Kernex Microsystems (India) Limited (the "Company") as of 31 March 2025 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

Managements and Board of Directors Responsibility for Internal Financial Controls

The Companys management and Board of Directors are responsible for establishing and maintaining internal financial controls with reference to Standalone Financial Statements based on the internal control with reference to Standalone Financial Statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to Standalone Financial Statements of the Company 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") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls with reference to Standalone Financial Statements. 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 adequate internal financial controls with reference to Standalone 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 with reference to Standalone Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to Standalone Financial Statements included obtaining an understanding of internal financial controls with reference to Standalone 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 judgement, including the assessment of the risks of material misstatement of the 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 controls with reference to auditopinionontheCompanys internalfinancial Standalone Financial Statements.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control with reference to Standalone Financial Statements 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 with reference to Standalone 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 necessarytopermitpreparationoffinancialstatements 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 unauthorised 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 with reference to Standalone 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 financialcontrols with reference to Standalone Financial Statements to future periods are subject to the risk that the internal financial control with reference to Standalone Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial control with reference to Standalone Financial Statements and such internal financial controls with reference to Standalone Financial Statements were on the criteria for internal financial control with reference operatingeffectively to Standalone Financial Statements 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.

Annexure – "B" to the Independent Auditors Report

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)

In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that: i. In respect of the Companies property, plant and equipment and intangible assets: (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

(B) The Company has maintained proper records showing full particulars of intangible assets.

(a) The Company has a regular program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No physical verification of assets has been carried out during the year under Audit.

(b) Based on our examination of the registered sale deed / transfer deed / conveyance deed provided to us, we report that, the title deeds of all the immovable properties, (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the financial statements included in (property, plant and equipment, capital work-in progress and investment property and non- current assets held for sale) are held in the name of the Company as at the balance sheet date.

(c) The Company has not revalued any of its property, plant and equipment (including right of use assets) and intangible assets during the year.

(d) According to information and explanations given to us and on the basis of our examination of the records of the Company, there are no proceedings initiated or pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

ii. (a) The inventories ie; finished goods , work in progress and raw materials have been physically verified during the year by the Management at reasonable intervals. In our opinion and according to the information and explanations given to us, the coverage and procedure of such verification by the Management is appropriate having regard to the size of the Company and the nature of its operations. No discrepancies of 10% or more in the aggregate for each class of inventories were noticed on such physical verification of inventories when compared with books of account.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, 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. In our opinion, the quarterly returns or statements filed by the Company with such banks or financial institutions are in agreement with the books of account of the Company except as follows.

		Receivables & Inventories
Name of the Bank(s)	Quarter ended	Per statements filed with banks	Per books of account	Difference (Excess)/ Shortfall (Lakhs)
	30-06-2024	6,441.97	7,092.00	650.27
State Bank of	30-09-2024	9,678.99	10,063.86	384.87
India	31-12-2024	6,986.48	9,409.79	2,423.31
	31-03-2025	7,152.45	7,080.61	(71.84)
	30-06-2024	10,069.66	7,092.24	(2,977.42)
	30-09-2024	9,817.46	10,063.86	246.40
HDFC Bank
	31-12-2024	8,537.56	9,409.79	872.23
	31-03-2025	8,571.85	7,080.61	(1,491.24)
ICICI Bank	31-03-2025	8,326.69	7,080.61	(1,246.08)

Note: The company States that it submitted statements to the bank without deducting the provisions carried in the books of account.

iii. a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any investments, provided guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, limited liability partnerships or any other parties during the year. Accordingly, provisions of clauses 3(iii) (a) to 3(iii)(f) of the Order are not applicable to the Company.

(Amount in Lakhs)

Particulars	Financial Year 2024- 25	Previous Year 2023-24
I. Aggregate amount invested / granted/ provided during the year
(a) Joint venture 80% share to Company per Partnership dt. 15-04- 2019 (net of repayments)	19.75	92.97
(b) Overseas 100% subsidiary (Avant Garde Infosystems Inc, USA	NIL	NIL
II. Balance outstanding as at balance sheet date in respect of above case including opening balance outstanding
(a) (i) Joint venture loan / advance	575.89	489.7
(ii) Bank Guarantee for Contract performance provided to Customer	121.11	121.11
(iii) Investment in the capital of the JV	8.00	8.00
(b) Investment in 100% Subsidiary	1,275.97	1,275.97
III. Aggregate amount of Loans where any terms & period for repay- ment are not mentioned & % age thereof (Related Parties)
- Agreement does not specify any terms or period of repayment	575.89	489.7
Percentage of loans/ advances in nature of loans to the total loans	100%	100%

b) The investments made, guarantees provided, security given and the terms and conditions of grant of all the above-mentioned loans and advances in the nature of loans during the year are, in our opinion, prima facie, not prejudicial Companys interest.

c) In the case of loans given, there is no stipulation of repayment of principal and payment of interest and hence we are unable to make specific comment on the regularity of repayment of principal and repayment of interest. The Applicable interest has been debited to the above loan account.

d) In the case of loans given, as there is no stipulation of repayment of principal and payment of interest and hence, we are unable to comment on overdue amount for more than ninety days in respect of loans given.

e) In the case of loans given, as there is no stipulation of repayment of principal and payment of interest and hence, we are unable to comment if any loan given falling due during the year has been renewed or extended. However, no fresh loans given to settle the overdue of existing loans given to the same party.

f) According to the information and explanations provided to us, the Company has granted loans or advances in the nature of loans for which no specific schedule for repayment of principal or payment of interest has been stipulated. However, it is understood that these loans are repayable on demand.

iv. The Company has not granted any other loans or provide any guarantees or securities to parties covered under Section 185 of the Act other than the book debts of Rs. 422.10 lakhs (excluding ECL provision of Rs. 211.67 lakhs) overdue from a company in which directors are interested. Further, the aggregate of such loans or guarantees have not exceeded the limits specified in Sections 186 of the Companies Act, 2013.

v. The Company has not accepted any deposits or amounts which are deemed to be deposits from the public with the meaning of section 73 to 76 Accordingly, clause 3(v) of the Order is not applicable.

vi. The maintenance of cost records has not been specified by the Central Government under section 148(1) of the Companies Act, 2013 for the business activities carried out by the Company. Thus, reporting under clause 3(vi) of the order is not applicable to the Company. vii. In respect of statutory dues:

(a) The Company has in many cases delayed depositing with appropriate authorities, undisputed statutory due including Goods and Services Tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and any other statutory dues.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of goods and services tax, provident fund, employees state insurance, income-tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, disputed amounts payable in respect of income-tax that were outstanding as at 31 March 2025 as follows.

Name of the statute	Nature of the Dues	Forum where dispute is pending	Period to which the amount relates	Amount in in Lakhs
The Income Tax Act,1961	Income Tax	Commissioner (Appeals)	AY 2019-20	92.36
The Income Tax Act,1961	Income Tax	Commissioner (Appeals)	AY 2020-21	392.29

(viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.

(ix) (a) The Company has not defaulted in repayment of loans or borrowing or in payment of interest thereon to banks. In case of loans from directors and inter corporate loans, the principal including interest are repayable on demand/as may be mutually agreed between the parties. The repayment period for inter-corporate deposits in terms of agreements entered into with the parties has since expired, and therefore classified as payable on demand. The Company has repaid some of the loans including intercorporate loans along with interest during the year.

(b) The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

(c) The Company has not taken any term loan during the year and there are no outstanding term loans at the beginning of the year and hence, reporting under clause 3(ix)(c) of the Order is not applicable.

(d) On an overall examination of the standalone financial statements of the Company, no funds raised on short-term basis have been used for long-term purposes by the Company.

(e) On an overall examination of the standalone financial statements of the has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries and Joint venture. The Company does not have any associate.

(f) The Company has not raised loans during the year on the pledge of securities held in its subsidiaries or associate companies. Hence, the requirement to report on clause (ix)(f) of the Order is not applicable to the Company.

(x) (a) The Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) Accordingly, clause (x)(a) of the Order is not applicable.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, clause 3(x)(b) of the Order is not applicable.

(xi) (a) Based on examination of the books and records of the Company and according to the information and explanations given to us, no fraud by the Company or on the Company has been noticed or reported during the course of the audit.

(b) According to the information and explanations given to us, no report under sub-section (12) of Section 143 of the Act has been filed by the auditors in Form ADT-4 as prescribed under Rule 13 of the Companies (Audit and Auditors) Rules, 2014 with the Central Government.

(c) As represented to us by the management, there are no whistle blower complaints received by the Company during the year.

(xii) According to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, clause 3(xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us, the transactions with related parties are in compliance with Section 177 and 188 of the Act, where applicable, and the details of the related party transactionshavebeendisclosed financialstatements theNote38standalone as required by the applicable accounting standards.

(xiv) (a) Based on information and explanations provided to us and our audit procedures, in our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(b) We have considered, the internal audit reports for the year under audit, issued to the Company during the year and till date, in determining the nature, timing and extent of our audit procedures.

(xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected to its directors and hence, provisions of Section 192 of the Act are not applicable to the Company.

(xvi) (a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934 as the company is not engaged in the business of financing. Accordingly, clause (xvi)(a) of the Order is not applicable.

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

(c) The Company is not a Core Investment Company (CIC) as defined Reserve Bank of India. Accordingly, clause 3(xvi)(c) of the Order is not applicable.

(d) The Company is not part of any group (as per the provisions of the Core Investment Companies (Reserve Bank) Directions, 2016 as amended). Accordingly, the requirements of clause 3(xvi)(d) are not applicable.

(xvii) The Company has not incurred cash losses in the current, however in the immediately preceding financial year it has incurred cash losses as mentioned below.

Amounts In Lakhs

Particulars	FY 2024-25	FY 2023-24
Cash Losses for the Financial Years	-	1815.17

(xviii) There has been resignation of the statutory auditors during the year and we have duly taken into consideration the issues, objections or concerns raised by the outgoing auditors.

(xix) According to the information and explanations given to us and on the basis of the financial ratios, age-ing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that the Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we 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) The Company has incurred losses during 3 of the immediatelyprecedingfinancialyears consequent to which there are no average profits, that are required to be spent under sub-section (5) of section 135 of the Act. Accordingly, reporting under clause (xx) of the order is not applicable to the company for the Current Financial Year.

(xxi) The Company has no Indian subsidiary and consequently there is no report issued under the Companies (Auditors Report) Order to be reported upon under this clause.

	For NSVR & Associates LLP.,
	Chartered Accountants
	FRN: 0008801S/S200060
	Sd/-
	V Gangadhara Rao N
	Partner
	Membership No. 219486
	UDIN: 25219486BMIRXU8330
Place: Hyderabad
Date: May 23,2025.