kiri industries ltd share price Auditors report

To,

The Members

KIRI INDUSTRIES LIMITED

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the accompanying standalone financial statements of Kiri Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, the loss including total comprehensive income, changes in equity and the cash flows for the year ended on that date.

Basis for Opinion

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 Responsibilities 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 made 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 we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Emphasis of Matter

1. We draw attention to various court cases and judgments in relation to disputes between Kiri Industries Ltd., ("the Company") and DyStar Global Holdings (Singapore) Pte. Ltd. ("DyStar") & Senda International Capital Ltd. ("Senda")

• The Court of Appeal (the Supreme Court of Singapore) vide its judgement dated July 6, 2022 has dismissed all points in three appeals filed by Senda and allowed majority two of the appeal issues filed by the Company.

• In another judgment, the Court of Appeal (the Supreme Court of Singapore) vide its judgement dated November 25, 2022 in favour of the Company uphelding the earlier cost judgement of SICC.

• The Singapore International Commercial Court ("SICC") vide judgement dated February 8, 2023 has decided computation base of 53,550 tonnes annually to be considered for computation of patent licence fees.

• Senda has failed to make payment of cost amount awarded to the Company and failed to comply within deadlines given till 20 January 2023. The Company has filed Writ of Seizure and Sale of Sendas shares held in DyStar to the extent of recovery of cost awarded by SICC and Singapore Supreme Court on January 20, 2023.

• The SICC vide its judgement dated March 3, 2023 has confirmed the final value of Companys 37.57% stake in DyStar as US$603.80 million as against US$481.60 million, which was valued by the SICC vide its judgement dated June 21, 2021 which is now significantly increased by US$122.20 million. We do not express any form of assurance/ conclusion thereon with respect to performance/ honour of SICC judgment by other party.

• The Court of Appeal (the Supreme Court of Singapore) dismissed both the appeals, an appeal of the Company as well as an appeal of DyStar vide judgement dated April 14, 2023. The Company and DyStar had filed appeals against SICC judgement dated September 24, 2021, dismissing the Companys counterclaim of pertaining to whether the Company being treated as preferred supplier against DyStar in SIC/7.

• The defamation suit filed by the Company against the DyStar, Senda & MLS India & their respective directors/officers is pending with City Civil Court, Ahmedabad.

2. We draw attention to cash loss incurred by the company during the year under review and also losses in the current financial year and previous financial year. We have been informed by the management of the company that the business of the company is cyclical in nature and is affected either favourably or adversely by various local and global factors. The main reasons for losses are the operating losses due to a squeeze on margins, slack demand, recession in Europe, USA & elsewhere and the significant litigation costs incurred to protect the economic interest in the investment in the overseas associate namely DyStar Global Holdings (Singapore) Pte. Ltd.

However, the realizable value of the assets including investment in overseas associate is significantly higher than the liabilities as ascertained by Supreme Court of Singapore in its Judgment. On discussion regarding risk assessment, the management of the company informed us that the company is able to realise its assets and discharge its liabilities in the normal course of business and the management does not intend to liquidate the company or cease its operations.

Our Opinion is not modified in respect of the above 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. Against Key audit matter, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone financial statements.

The results of our audit procedures, including the procedures performed to address the matter below, provide the basis of our audit opinion on the accompanying financial statement.

No. Key Audit Matter	Auditors Response
Inventory of Raw material and Finished Goods
1 We refer to Significant accounting policies on inventory and Note No. 1.12.	To address the matter our audit procedure included amongst others:
Inventories are considered as Key Audit Matter due to nature of business, technical indicators governing inventory valuation, size of Balance sheet and because inventory valuation involves management judgement.	> Assessing the compliance of accounting policies over inventory with applicable accounting standards.
According to accounting policy followed by the company, inventories are valued at lower of cost or market value. Cost comprise in addition to other things, overheads related to material, labour and other overheads. The company has specific procedures to identify risk for obsolescence and valuation of inventories.	> Assessing the inventory valuation process and practices.
	> Assessing the analysis and assessment made by management with respect to slow moving or obsolete stock.
	> Discussion with those charged with responsibility of overlooking inventory management process.
	> Expert opinion obtained by the company on the technicalities of matter.
	> Justification of management estimates and Judgements.
	> Assessing the effectiveness of perpetual and physical inventory verification process.

 

Assessment of Trade Receivables
2 We refer to Significant accounting policies on trade receivables and Note No.1.13.	To address the matter our audit procedure included amongst others:
Trade receivables amounting to Rs.6,139.74 lacs are considered as Key Audit Matter as they represent approx 32 % of the current assets of the company. Significant management judgement is required to assess the recoverability of trade receivables.	> Obtaining an understanding of and evaluating the companys process and control over the collection and the assessment of the recoverability of trade receivables.
Management performed a detailed analysis considering customers ageing profile, existence of disputes, credit history, increase in competition, historical payment pattern, forward-looking information for the estimation of expected credit losses on its trade receivables and any other available information concerning the creditworthiness of counterparties.	> We evaluated the managements assessment on the expected credit loss of trade receivables with reference to the historical payment records, credit history of the companys customers and the correspondence with customers.
Management uses this information to determine whether a provision for impairment is required either for a specific transaction or for a customers balance overall. The accounting policies, accounting judgements and estimates and disclosures of trade receivables are included in Note No. 05 and 09 to the financial statements.	> We tested the ageing of trade receivables at the end of the reporting period on a sampling basis.
	> We assessed the ageing of trade receivables and advances, the customers historical payment patterns and whether any post year-end payments has been received up to the date of completing our audit procedures.
	> We also obtained evidence of any disputes between the parties involved, attempts by management to recover the amounts outstanding and on the credit status of significant counterparties wherever available.
	> We also tested the subsequent settlements and the latest amounts of revenue certified by customers on a sampling basis.

 

The risk for revenue being recognized in an incorrect period
3 We refer to Significant accounting policies on Revenue recognition and Note No. 1.3.	To address the matter our audit procedure included amongst others:
Net sales comprises revenue from the sale of products/goods adjusted by indirect taxes and sales adjustments which primarily comprise discounts and sales returns.	> Evaluation of internal control activities over revenue recognition and testing of key controls. > Analysis of significant sales contracts to verify correct Ind AS accounting treatment.
Revenue from sale of goods is recognised when significant risks and rewards of ownership have been transferred to the buyer.	> Testing timeliness of revenue recognition by comparing sample sales transactions to delivery documents and by checking significant credit notes issued after year end.
This normally means when a product has been delivered to the customer in accordance with agreed delivery terms. The risk for revenue being recognised in an incorrect period presents a key audit matter due to the financial significance and nature of sales in the financial statements. The accounting policies, accounting judgements and estimates and disclosures of revenue recognition are included in notes to the financial statements.	> Testing of accounts receivables by requesting confirmations from the customers and by reconciling payments received after the year end against the accounts receivable balances at the year end.

 

Property, Plant & Equipment And Intangible Assets
4 We refer to Significant accounting policies on Property, Plant & Equipment and Intangible Assets and Note No.1.5 and 1.6.	To address the matter our audit procedure included amongst others:
Management Judgements impacts the carrying value of property, plant and equipment, intangible assets and their respective depreciation and amortization amounts. It also includes the decision to capitalize or expense costs, the annual asset life review, the timeliness of the capitalization of assets and the use of Management assumptions and estimates for the determination or the measurement and recognition criteria for assets retired from active use.	> Assessment of controls in place, evaluation of appropriateness of capitalization process, sample testing of details on costs capitalized, the timeliness of the capitalization of assets and the de-recognition criteria for assets retired from active use.
	> In performing these procedures, we reviewed the judgments made by management including the nature of underlying costs capitalized, determination of realizable value of the assets retired from active use, the appropriateness of asset live applied in the calculation of depreciation, useful lives of assets as per the technical assessment of the management and external technical experts.
Due to the materiality in the context of the balance sheet of the Company and the level of judgments and estimates required, we consider this to be a key audit matter.	> We have observed that there are no material changes.

We have determined that there are no other Key Audit Matters to communicate in our report.

Information other than the Standalone Financial Statements and Auditors Report thereon

The Companys Management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Directors Reportincluding Annexures thereto, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the 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 the management for the Standalone Financial Statements

The Companys Management and Board of Directors are 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 of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone 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 is responsible for assessing the Companys ability to continue as a going concern, disclosing, as

Sr. No.	Name of the Statute	Section under which dispute is pending	Period to which amount relates (FY)	Amount (Rs. in Lakhs)	Forum where the dispute is pending
1	The Income Tax Act, 1961	271 (1)(c)	2005-06	53.69	Commissioner of Income Tax (Appeal)
2	The Central Excise Act, 1944	CENVAT Refund	2009-10	341.08	Gujarat High court
			2010-11	116.76	Gujarat High Court
			2010-11	153.73	Gujarat High Court
		Similar Goods	2010-11	344.00	Central Excise Commissioner
			2011-12	4.09	Central Excise Commissioner
		Outward Transportation of Finished Goods	2013-14	2.17	Central Excise Commissioner
3	The Gujarat VAT Act, 2003	VAT Liabilities	2007-08	62.39	Gujarat Value Added Tax Tribunal

We have determined that there are no other Key Audit Matters to communicate in our report.

Information other than the Standalone Financial Statements and Auditors Report thereon

The Companys Management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Directors Report including Annexures thereto, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the 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 the management for the Standalone Financial Statements

The Companys Management and Board of Directors are 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 of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone 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 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibilities for the Audit of the 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 Standards on Audit (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 Standards on Audit (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 basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

> Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system 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 management.

> Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If

we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

> Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent 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 financial statements may be influenced. We consider quantitative 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 financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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 the Companies (Auditors Report) Order, 2020 ("the Order") issued by Central Government in terms of sub-Section (11) of section 143 of the Act, we give in "Annexure-1", a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet, Statement of Profit and Loss including Statement of other comprehensive income, Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of accounts;

d. In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules 2015, as amended;

e. On the basis of written representations received from the directors as on March 31, 2023, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2023, from being appointed as a director in terms of section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate report in "Annexure-2" to this report.

g. In our opinion the managerial remuneration for the year ended March 31, 2023 has been paid/ provided by the company to its directors in accordance with the provisions of Section 197 read with Schedule V to the Act.

(B) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts.

iii. There has been no delay in transferring amounts, required to be transferred to the Investors Education and Protection Fund by the company.

iv. (a) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, 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;

(b) The management has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, 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; and

(c) Based on such audit procedures considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused them to believe that the representations under sub-clause (a) and (b) contain any material mis-statement.

v. The company has not declared dividend or paid during the year.

vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company w.e.f. April 01, 2023, reporting under this clause is not applicable.

	For, Pramodkumar Dad & Associates
	Chartered Accountants
	CA Pramod Dad
	Partner
	MRN: 038261
Place: Ahmedabad	FRN: 115869W
Date: May 30, 2023	UDIN:23038261 BGZGAY1511

ANNEXURE - 1 TO THE INDEPENDENT AUDITORS REPORT

TO MEMBERS OF KIRI INDUSTRIES LIMITED FOR THE YEAR ENDED MARCH 31, 2023

(Referred to in Paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report of even date on the standalone financial statements of the company for the year ended March 31, 2023)

On the basis of such checks as we considered appropriate, according to the information and explanation given to us by the management and on the basis of examination of books of accounts during the course of our audit, we report that:

(i)a) The company has maintained proper records showing full particulars including quantitative details and situation of its Property, plant and equipment.

b) The company is in the process of conducting physical verification of Property, plant and equipment for the year.

c) All the title deeds of freehold land are held in the name of the company except a plot of an Agricultural Land intended for Industrial purpose held in the name of the Late Chairman Mr. Pravin Kiri in his fiduciary capacity as per section 88 of the Indian Trust Act 1882, pending necessary approval for conversion of agricultural land into non-agricultural land and transfer to company, details are as under:

Description of Property	Gross Carrying Value	Held in name of	Designation	Period held	Reason for not being held in the name of company
Agricultural Lands at Kadodara, Bharuch, Gujarat	Rs.6.40 Crores	Late Mr. Pravin Kiri	Appointed Chairman before Demise	14 years	Management decided to purchase land in name of promoter director of the Company for future projects of the Company. The said lands are held on behalf of the Company and will be transferred in name of the company after conversion into non agriculture for projects.

d) The company has not revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year.

(e) No proceedings have been initiated or are pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(ii) a) Physical verification of Inventory has been conducted at reasonable intervals by the management. The coverage and procedure of such verification by the management is appropriate and no discrepancies of 10% or more in the aggregate for each class of inventory were noticed.

b) The company has not been sanctioned working capital limits in excess of five crore rupees.

(iii) During the year the company has made investments in and granted unsecured loan to companies -

(a) (A) during the year, the aggregate amount of loan given is Rs.86.80 Lakhs, and balance outstanding at the balance sheet date is Rs.153.14 Lakhs with respect to such loans to subsidiaries, joint ventures and associates;

(B) during the year, loans or advances are provided to employees and balance outstanding at the balance sheet date is Rs.210.82 Lakhs.

(b) the investments made and the terms and conditions of the grant of loans are not prejudicial to the companys interest;

(c) the schedule of repayment of principal and payment of interest has not been stipulated with respect to loan given and no repayments have been started during the year except for loans or advances provided to employees;

(d) total amount due for more than ninety days is Rs.137.14 Lakhs for loans or advances given to subsidiaries, joint ventures and associates, which according to company is not overdue.

(e) According to the company no loan is fallen due during the year.

(f) Loan of Rs.86.80 Lakhs is granted to a related company with terms or period of repayment mutually decided and the aggregate amount granted is the only amount of loan granted to related parties as defined in clause (76) of Section 2 of the Companies Act, 2013.

(iv) The company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

(v) The company has not accepted any deposits during the concerned financial year under Section 73 to 76 or any other relevant provision of the Companies Act, 2013 during the concerned financial year.

(vi) We have been informed that maintenance of cost records under sub-section 1 of Section 148 of the Companies Act 2013 is mandatory for the company and such records are maintained by the company. However we have not made the detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales- tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, GST, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there is no outstanding undisputed statutory dues as on March 31, 2023 for a period of more than six months from the date they became payable except for Professional tax of Rs.5.76 Lakhs outstanding as on March 31, 2023 for a period of more than six months.

b) According to the information and explanation given to us, there are no dues outstanding with respect to, income tax, sales tax, service tax, value added tax, customs duty, excise duty, GST on account of any dispute except for the following:

Sr. No.	Name of the Statute	Section under which dispute is pending	Period to which amount relates (FY)	Amount (Rs. in Lakhs)	Forum where the dispute is pending
1	The Income Tax Act, 1961	271 (1)(c)	2005-06	53.69	Commissioner of Income Tax (Appeal)
2	The Central Excise Act, 1944	CENVAT Refund	2009-10	341.08	Gujarat High court
			2010-11	116.76	Gujarat High Court
			2010-11	153.73	Gujarat High Court
		Similar Goods	2010-11	344.00	Central Excise Commissioner
			2011-12	4.09	Central Excise Commissioner
		Outward Transportation of Finished Goods	2013-14	2.17	Central Excise Commissioner
3	The Gujarat VAT Act, 2003	VAT Liabilities	2007-08	62.39	Gujarat Value Added Tax Tribunal

(viii) According to 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 accounts, in the tax assessments under Income Tax Act, 1961 as income during the year.

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

(b) The company is not declared willful defaulter by any bank or financial institution or other lender during the year.

(c) The company has obtained term loan during the year and as per management representation the loan is applied for the purpose for which it was obtained.

(d) Funds raised on short term basis have not been utilised for long term purposes.

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

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

(x) (a) The Company has not raised money through initial public offer or further public offer (including debt instruments) during the year.

(b) The company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year.

(xi) (a) No material fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

(b) No report under sub-section (12) of Section 143 of the Companies Act has been filed in Form ADT- 4 as prescribed under rule 13 of the Companies (Audit and Auditors) Rules, 2014 with the Central Government.

(c) Whistle-blower complaints, if any, received during the year by the company were considered.

(xii) The company is not Nidhi Company, therefore provisions of clause 3 (xii) of the order are not applicable.

(xiii) The transactions with related party are in compliance with Sections 177 and 188 of the Companies Act, 2013 and all the details have been disclosed in Financial Statements as required by the applicable Indian Accounting Standards.

(xiv) (a) The company has an internal audit system commensurate with the size and nature of its business.

(b) Reports of the Internal Auditors for the period under audit were considered.

(xv) The Company has not entered into any non-cash transaction with its directors or person connected with them during the year with respect to Section 192 of Companies Act, 2013.

(xvi) The Company is not required to be registered under Section 45-IA of Reserve Bank of India Act, 1934.

(xvii) The company has incurred cash loss of Rs.9,179.01 Lakhs in the current financial year and has not incurred cash losses in immediately preceding financial year. Net profit before tax and extraordinary items is adjusted for depreciation to arrive at cash loss.

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

(xix) On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements, knowledge of the Board of Directors and management plans, no material uncertainty exists as on the date of the audit report that 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) (a) With respect to other than ongoing projects, company does not have any unspent amount to a Fund specified in Schedule VII to the Companies Act.

(b) With respect to ongoing projects, company does not have any unspent amount remaining unspent under sub-section (5) of section 135 of the Companies Act.

	For, Pramodkumar Dad & Associates
	Chartered Accountants
	CA Pramod Dad
	Partner
	MRN: 038261
Place: Ahmedabad	FRN: 115869W
Date: May 30, 2023	UDIN:23038261BGZGAY1511

ANNEXURE - 2 TO THE INDEPENDENT AUDITORS REPORT TO MEMBERS OF KIRI INDUSTRIES LIMITED FOR THE YEAR ENDED MARCH 31, 2023

(Referred to in Paragraph 2(f) under "Report on Other Legal and Regulatory Requirements" section of our report of even date on the standalone financial statements of the company for the year ended March 31, 2023)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 ("THE ACT")

We have audited the internal financial controls over financial reporting of Kiri Industries Limited ("the Company") as of March 31, 2023 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control 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. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our 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 financial statements, whether due to fraud or error.

During the year, review of internal financial control by an Independent IFC Auditor is under process.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system 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 authorisations 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 our 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 March 31, 2023, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

	For, Pramodkumar Dad & Associates
	Chartered Accountants
	CA Pramod Dad
	Partner
	MRN: 038261
Place: Ahmedabad	FRN: 115869W
Date: May 30, 2023	UDIN:23038261BGZGAY1511