Kothari Industrial Corporation Ltd Auditor Reports

<dhhead>Independent Auditor’s Report </dhhead>

To the Members of

KOTHARI INDUSTRIAL CORPORATION LIMITED Report on the Standalone Financial Statements

Qualified Opinion

We have audited the accompanying financial statements of KOTHARI INDUSTRIAL CORPORATION LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2025, 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 and other explanatory significant information (hereinafter referred to as "the financial statements"). In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the 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, 2025, the Loss and total comprehensive income, changes in equity and its cash flowsfor the year ended on that date except for the matters as discussed in the basis of opinion para.

Basis for Qualified Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs).

Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s 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 financial statements.

1. During the financial year 2023-24, the Company has sold its land and plant and machinery located in its factory in Ennore to Coromandel International Limited for Rs. 48,95,00,000 and Rs. 1,33,00,000 respectively. We were informed that the sale registration is still pending with the Sub Registrar office for assessment of market value for stamp duty purposes. Subject to this, the Company has computed capital gains on the sale consideration as per the sale deed. Pending the final order of the SRO, we are unable to comment on the correctness of the computation of the capital gains in line with the relevant provisions of the Income Tax Act 1961. To this extent, the provision for Current income tax may undergo revision depending on the outcome of the order of the competent authority against the writ petition. The Company plans to seek a valuation from the Income Tax Valuation Officer and pursue further steps, including appeals, if required.

2. For the land held by the Company in Gujarat valued at cost Rs. 1,85,174 we are unable to comment on the title of the Company as sufficientaudit evidence viz sale deed/allotment letter was not provided. This was also reported by us in the previous year.

3. Year-end direct balance confirmation in respect of trade receivables Rs. 4,13,85,015, trade payables Rs. 3,39,58,473, vendor advances Rs. 7,19,50,858, advances from customers Rs. 1,63,37,105 and other advances/deposits Rs. 26,32,927 have not been provided for our verification. In the absence of such confirmations, we are unable to ascertain any consequential effect of errors/disputes, if any, that may impact the financial results for the year.

4. The Company has recorded its closing inventory at Rs. 7,18,53,535 as of 31^st March 2025. In the absence of stock valuation reports, a detailed assessment of the valuation’s correctness and its effect on financial reporting for FY 2024-25 could not be ascertained. Further, the Company does not have a system of identifying and recording non-moving and slow-moving inventories as a result of which we are unable to comment on the impact of such items in the accompanying financial statements.

5. Out of the total related party balances of Rs. 11,63,11,633, sufficient audit evidence for nature of such transactions by way of loan/deposit agreements, balance confirmations was not provided for Rs. 4,90,000. Hence, we are unable to substantiate the correctness and existence of these loans & advances.

6. Attention is drawn to Note No 41(7)(n), wherein a subsidy of Rs. 80 lakhs is carried in the books as receivable from the Government for which no documentary evidence was produced to us for verification. Also, the Company has not made a provision against such balance which is outstanding for more than 8 years. Hence, we are unable to comment on its realizability or otherwise and its accounting treatment in consonance with Ind AS 20.

7. The proceedings initiated by the Collector of Nilgiris for repossession of certain plots of land in Coonoor earmarked for public use has been challenged by the company on a Write Petition filed

High Court and the matter is pending adjudication. Decision, if any, by the Madras High Court which does not go in favour of the Company, could give rise to a liability and consequential loss, which could not be ascertained at the balance sheet date.

Emphasis of matter

1) Attention is drawn to Note No 42 wherein the Company has Subsequent to the submission of financial results under Regulation 33 of SEBI (LODR) for FY 2024 25, the Company has regrouped certain items in the audited financial statements presented in this Annual Report. These changes have been made to enhance clarity and align with the requirements of Schedule III and Ind AS disclosures. The regrouping does not impact the previously reported loss or total equity for the year ended 31^st March 2025.

2) Attention is drawn to Note No 4 wherein the Company has liquidated its stake in subsidiary company Kothari Marine International Limited as a result of which the Company has not presented consolidated financial statements.

Our opinion in the above matter remains unmodified.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the 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	Principal Audit Procedures
The Evaluation of the Company as a going concern and the consequent classification of the liabilities assets as "held for sale"	The Company has been making losses in the previous years which has eroded the networth and the current exceeds the current assets. The Company is in the process of expansion of business and has entered into business contracts with various customers in India and abroad. The Company has provided for our verification the contracts in support of the assumption of going concern on the basis of which the accompanying financial statements have been drawn.
Acquisition of stakes from Mr. Rafiq Ahmed acquire 30%	The Company has entered into an agreement to equity stake in Phoenix Kothari Footwear Limited (PKFL) from Mr. Rafiq Ahmed for a total consideration of 99.06 crores (7,80,02,900 shares at Rs 12.70 per share). PKFL is a reputed contract manufacturer for global footwear brands such as CROCS and Adidas. This strategic investment is aimed at strengthening KICL’s global supply chain presence and supporting PKFL’s growth and innovation initiatives in the footwear sector. We have considered the valuation report provided by an independent valuer for this purpose.
Acquisition of M/s Parveen Roadways, proprietorship of Mr Rafiq Ahmed.	The Company has acquired Parveen Roadways, a sole proprietorship firm engaged in logistics and railway-related services, for a consideration of 24.04 crores through a business transfer agreement dated 8th April 2025. The business includes over 100 vehicles (such as tippers, trailers, buses, and forklifts) and a workforce of approximately 500 employees. Major clients include Integral Coach Factory, Southern Railways, Port Trusts, and Aavin Milk Factory. We have considered the valuation report obtained from an independent valuer. However, since the effective date of the agreement and the subsequent addendum is 1th April 2025, the assets and liabilities of Parveen Roadways as on 31st March 2025 will be accounted in the books of the Company in FY 2025-26.

Information Other than the Financial Statements and Auditor’s Report Thereon

The Company’s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility Report, Corporate Governance and Shareholder’s Information, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s 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 Company’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(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 management’s 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timingsignificantaudit of findings, the and includingany significant 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 consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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 (Auditor’s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub- section 11 of

Section 143 of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.:

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

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

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

c. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account.

d. In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.

e. 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.

f. In our opinion and to the extent of information made available to us, managerial remuneration for the year ended 31^st March 2025 that has been paid/provided by the Company is in accordance with the provisions of Section 197 read with Schedule V to the Act.

g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses a modified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements Refer Note 41 of the standalone financial statements.

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

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

i. In our opinion and to the best of our knowledge and belief and as represented to us by the Company, 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 source 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 as per Clause (e)(i) of Rule 11 of Companies Audit and Auditors Rules, 2014.

Refer Note No 38 to the accompanying financial statements.

j. In our opinion and to the best of our knowledge and belief and as represented to us by the Company, 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, 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 as per Clause (e)(ii) of Rule 11 of Companies Audit and Auditors Rules, 2014.Refer Note No 39 to the accompanying financial statements.

Based on such audit procedures as considered reasonable by us, we have not come across anything to believe that the representations made by the Company for Clause (i) & (j) as above contain any material misstatement

k. No dividend has been declared or paid by the Company during the year.

l. Based on our examination, which included test checks, the Company has used accounting software systems for maintaining its books of account for the year ended 31^st March, 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.

	For M/s. Ray & Ray
	Chartered Accountants
	Firm Reg.No.301072E
	(Swetha Srinivasan)
Place : Chennai	Partner
	N=TOP> Membership No. 240553
Dated: 30.05.2025	UDIN : 25240553BMLXEN6062

ANNEXURE "A" TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ of our report of even date)

i In respect of the Company’s fixed assets : (a) The Company has maintained proper records showing full particulars, except for details like supplier name, quantitative details and the location of the plant, property and equipment.

(b) The Company has not maintained proper records showing full particulars of intangible assets.

(c) The Management has a regular programme for verification of property, plant and equipment at reasonable intervals. The company has obtained the confirmation of assets held by their employees at the reporting date. According to the information and explanation given to us, no material discrepancies were noticed on such verification. However, the physical verification report produced to us did not record details such as quantity and the physical condition of the property, plant and equipment.

(d) The title deeds of immovable properties are held in the name of the company except for the land in Gujarat for which only Form 7 was produced for our verification. Hence, we are unable to comment on the title of the Company as sufficientaudit evidence viz sale deed/allotment letter was not provided.

(e) The Company has not revalued its Property, Plant and Equipment including (Right of use) assets or intangible assets during the year.

(f) According to the information and explanation given to us, no proceeding 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) According to the information and explanation given to us, physical verification of inventory has been conducted at reasonable intervals by the Management and no discrepancies were reported by the Management. Based on the reports presented, we are of the opinion that the coverage and the procedure adopted for such verification is appropriate.

(b) According to the information and explanation given to us, the Company has not been sanctioned working capital limits at any point of time during the year. Hence, we have nothing to report under this clause.

iii. According to in the information and explanations given to us, the Company, during the year, has not made investments in, provided any guarantee or security or granted any loans or advances, in the nature of loan, secured or unsecured, to companies, firms, limited liability partnership or any other parties. Hence, we have nothing to report under sub-clause (a) to (f) of this clause.

iv. According to the information and explanations given to us, the Company has not advanced any loans or advances directly or indirectly to the directors of the Company covered u/s 185 of the Companies Act 2013. The Company has not made investment and given guarantee during the year. Hence, we have nothing to report under this clause.

v. According to the information and explanations given to us, the Company has not accepted deposits or amounts which are deemed to be deposits during the year and therefore, the provisions of this clause is not applicable to the Company.

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. Hence, we have nothing to report under this clause.

vii. According to the information and explanations given to us, in respect of statutory dues: (a) The Company has not been regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income Tax

(TDS), Goods and Service Tax, Professional tax and other material statutory dues applicable to it with the appropriate authorities.

(b) There were undisputed amounts payable in respect of the following statutory dues in arrears as at March 31, 2025 for a period of more than six months from the date they became payable.

(c) As per the information and explanations provided to us, there were no dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise duty and Value Added Tax which have not been deposited as on March 31, 2025 on account of disputes except as mentioned below:

Name of the statue	Nature of dues	Amount in Rs.	Period to which the amount relates	Forum where dispute is pending
Income Tax 1961	Income tax	95,33,960	2022-23 (FY 2021-22)	CIT(A)
	Total	95,33,960

Name of the statue	Nature of dues	Amount (Rs.)	Period to which the amount relates	Due date	Date of payment	Remarks
Tamil Nadu Tax on Professions, Trades Callings, and Employment’s Act, 1992	Professional tax	20,35,003	2008-09 to 2023-24	Half yearly	Not paid	Not paid till the date of this report
Provident Fund Act	PF penal damages	30,38,008	FY 2023-24 and previous years	15th of subsequent month	Not paid	Not paid till the date of this report
Income Tax Act	Tax deducted at source	1,83,98,357	FY 2023-24 and previous years	7th of subsequent month	Not paid	Not paid till the date of this report

viii. According to the information and explanation given to us, there were no transactions that were not recorded in books & was surrendered or disclosed as income during the year in the tax assessments under Income Tax Act 1961.

ix. (a) According to the information and explanations given to us, the Company has not defaulted in the repayment of loans or other borrowings or in payment of interest thereon to any lender. However, schedule for repayment of principal and interest of loans amounting to Rs 1,80,95,000 from promoters and Rs 2,01,47,638 from others has not been stipulated and hence, we are unable to comment on the regularity of the repayment of such loans.

(b) According to the information and explanation given to us, the Company has not been declared as a wilful defaulter by any bank or financial institutions or any other lender.

(c) According to the information and explanation given to us, no term loan was obtained by the Company during the year. However, the Company obtained a car loan from the Bank in the previous year which was utilized for the purpose for which the loan was obtained. Hence, we have nothing to report on the utilization of such loans under this clause.

(d) According to the information and explanation given to us, no short-term loans were raised for long term purposes during the year. Hence, we have nothing to report under this clause.

(e) According to the information and explanation given to us, 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. Hence, we have nothing to report under this clause.

(f) According to the information and explanation given to us, the Company has not raised any loans during the year on pledge of securities held in its subsidiaries, joint ventures or associate companies. Hence, we have nothing to report under this clause.

x. (a) According to the information and explanation given to us, the Company has not raised money by way of initial public offer or further public offer (including debt instruments) during the year. Hence, we have nothing to report under this clause.

(b) According to the information and explanation given to us, the Company has utilized funds raised by way of preferential allotment of shares for the purpose for which they were raised.

xi. (a) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company or any fraud on the Company has been noticed or reported during the year.

(b) According to the information and explanation given to us, no report under sub-section (12) of Section 143 of the Companies Act has been filed by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with 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. Hence, we have nothing to report under this clause.

xiii. In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements 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 of the Company issued till date for the period under audit.

xv. In our opinion and according to the information and explanations given to us, during the year 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 Companies Act, 2013 are not applicable to the Company.

xvi. (a) & (b) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934. Hence, we have nothing to report under this clause.

(c) & (d) In our opinion, according to the information, representation and explanations given to us, the Company is not a Core Investment Company as per the definition contained in the Core Investment Company (Reserve Bank) Directions 2016. Hence, we have nothing to report under this clause. xvii. The Company has incurred cash losses of Rs. 1728.54 lakhs in the current financial year and did no cash loss was incurred in the immediately preceding financial year.

xviii. There has been no resignation of the statutory auditors during the year. Hence, we have nothing to report under this clause.

xix. According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payments of financial liabilities, other information accompanying the 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 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 upto 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. According to the information and explanation given to us and based on our examination of the books of accounts, the Company does not have any unspent amount specified in Schedule VII to the Act within the time limits. xxi. The reporting under this clause is not applicable in respect of audit of the financial statements of the Company. Accordingly, no comment has been included in respect of the said clause under this report.

	For M/s. Ray & Ray
	Chartered Accountants
	Firm Reg.No.301072E
	(Swetha Srinivasan)
	Partner
Place : Chennai	Membership No. 240553
Dated: 30.05.2025	UDIN : 25240553BMLXEN6062

ANNEXURE ‘B’ TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1(g) under ‘Report on Other Legal and Regulatory Requirements’ of our report of even date) Report on the Internal Financial Controls Over Financial Reporting 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 KOTHARI INDUSTRIAL CORPORATION LIMITED ("the Company") as of March

31, 2025 in conjunction with our audit of the financial statements of the Company for the year ended on that date:

Management’s Responsibility for Internal Financial Controls

The Company’s 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 company’s 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.

Aditor’s Responsibility

Our responsibility is to express an opinion on the Company’s 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.

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 auditor’s 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 audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of lnternal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 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, deficiencies 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 and during the course of our audit of the financial statements for the year ended 31^st March 2025, we evaluated the design and operating effectiveness of internal financial controls over financial reporting. Based on our procedures undertaken as per criteria established in the Guidance Note on Audit of Internal Financial controls over financial reporting issued by the Institute of Chartered Accounants of India, we identified certain deficiencies in the internal financial control framework that, in our professional judgement, constitute significant. These deficiencies may not result in material misstatement but warrant attention of those charged with governance. We have communicated these matters to the management and the Audit committee, alongwith our recommendations for appropriate and immediate remediation.

	For M/s. Ray & Ray
	Chartered Accountants
	Firm Reg.No.301072E
	(Swetha Srinivasan)
	Partner
Place : Chennai	Membership No. 240553
Dated: 30.05.2025	UDIN : 25240553BMLXEN6062