Lakshmi Mills Company Auditors Report


To the Members of The Lakshmi Mills Company Limited

Report on the Audit of Standalone Financial

Statements

Opinion

We have audited the accompanying standalone financial statements of THE LAKSHMI MILLS COMPANY 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 Cash Flow Statement and for the year then ended and notes to the financial statements including 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 Companies Act, 2013 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, its LOSS and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements. 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. 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.

S. No. Key Audit Matter How our audit addressed the Key Audit Matter
1 Evaluation of uncertain tax positions Principal Audit Procedures
(Refer Note No. 30 to the standalone financial statements). We obtained details of the completed tax assessments and demands and the statutory appeals preferred by the company before appropriate appellate forums.
The Company has uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes as on the balance sheet date
The Company assesses the need to make a provision or disclose a contingency on a case-to-case basis considering the underlying facts of each matter, in consultation with its legal advisors. This involves a high level of management judgment and assumptions which impact the risk assessment and consequential provisioning and disclosure of contingencies in the financial statements. This area is significant to our audit, since the completeness and accuracy of accounting and disclosures for contingencies is dependent on such management judgment and assumptions. We evaluated and tested the Companys processes and controls for monitoring of litigations, disputes, compliances and assessment thereof for determining the likely outcome of disputes.
We reviewed the summary of the litigations obtained from the management and discussed the material cases to determine the Companys assessment of the likelihood and magnitude of any liability that may arise.
We analysed the managements underlying assumptions and grounds in estimating the tax provision and the possible outcome of the disputes at appellate forums.
We considered legal precedents, other rulings and legal opinions obtained by the management in evaluating the managements judgments and assumptions on these uncertain tax positions. Additionally, we considered the effect of new information, if any, in respect of material uncertain tax positions and other uncertain position of the tax dues under dispute, to evaluate whether any change was required to managements position on these uncertainties
We tested the adequacy of disclosures in the financial statements. We also obtained necessary representations from the management in regard to the provisioning and disclosures in respect of the litigations.
2 Recoverability of Income tax assets and Receivables from Government authorities Principal Audit Procedures
(Refer Note 8 to the standalone financial statements) As at March 31, 2023 non-current assets in respect of Income tax assets to the extent of Rs.180.30 lakhs (Net of provisions), current tax assets to the extent of Rs. 101.92 (Net of provisions) and balances with revenue authorities to the extent of Rs. 150.00 lakhs are outstanding. We analysed and reviewed the nature of the amounts recoverable, the sustainability and the likelihood of recoverability upon final resolution.
The income tax assets represents tax deducted at source, the taxes paid in advance and taxes paid towards disputed dues.
This area is significant to our audit, since the completeness and accuracy of accounting and disclosures for determining the recoverability of these items. The balances with revenue authorities represent input tax credits eligible for set off. We considered legal precedents, other rulings and legal opinions obtained by the management and the managements representations in this regard, in evaluating the managements judgments and assumptions on the recoverability / set off of these balances with revenue authorities.
3 Trade receivables and expected credit loss: Principal Audit Procedures
(Refer Note 10 to the standalone financial statements). We assessed the appropriateness of the accounting policy for expected credit loss as per the relevant accounting standards.
The trade receivables as at March 31, 2023 are Rs.
1,551.79 Lakhs and provision for expected credit loss as on the Balance Sheet date is Rs. 266.43 Lakhs. The provision for the expected credit losses involves certain judgment with respect to the assessment of probabilities of default and recovery. We obtained an understanding of and assessed the design, implementation and operating effectiveness of key controls relating to collection monitoring process, credit control process and estimation of expected credit losses.
We have considered assessment of expected credit loss for receivables as a key audit matter because of the significant management judgement involved in its estimation and provision.
We tested the controls relating to classification of the receivable balances included in the receivables ageing report.
We reviewed the ageing, tested the validity of the receivables, discussed with the management on the disputes, if any, with the customers, understood and evaluated the reason for delay in realization of the receivables and possibility of realization of the aged receivable.
We assessed the methodology used by management to estimate the expected credit loss provision and its compliance with the relevant accounting standard.
We assessed the reasonableness of estimate of expected credit loss and performed procedures relating to the accuracy of the inputs used. We assessed the adequacy of disclosures relating to trade receivables and related credit risk
4 Assessment of carrying value of Investments Principal Audit Procedures
[Refer Note No.5 to the standalone financial statements] Our audit procedures in relation to assessing the carrying value of these investments include ascertaining from relevant appropriate external sources that the equity instruments are carried at fair value as on 31st March 2023.
The Company has invested in equity instruments that are stated at fair values through OCI. In line with general market fluctuations, there are significant fair value changes in these investments. The evaluation of their fair values is considered as a key audit matter given the relative significance of the value of investments and the fluctuations in their fair values.
5 Assessing the recoverability of the carrying value of Principal Audit Procedures
Investment property including investment properties under construction Our audit procedures included, among other things the following:
[Refer Note No.4 to the standalone financial statements] We assessed the Companys valuation methodology and assumptions based on current economic and market conditions in determining the recoverable amount.
As at 31st March 2023, the carrying value of the Investment Property is Rs. 12,414.33 lakhs (including the carrying value of Investment Property reclassified during the year from Property, Plant and Equipment of Rs.10,770.48 lakhs) and carrying value of Investment Property under construction is Rs. 3,866.94 lakhs. The company reviews on an annual basis such carrying values for any indicators of impairment to ensure that the Investment Properties are not carried at more than their recoverable amount.
We obtained and read the valuation report used by the Companys management for determining the fair value (‘recoverable amount) of the investment property.
We considered the independence, competence and objectivity of the external specialist involved by the management in determination of valuation.
We considered the assessment of the carrying value of Investment Property as a key audit matter due to the significance of the balance and significant estimates and judgments involved in the impairment assessment and disclosure of fair values. We assessed the Companys valuation methodology applied and compared key property related data used as input with historical actual data.
We assessed the key assumptions used in Companys valuation methodology.
We compared the recoverable amount of the investment property to the carrying value in books.
We assessed the disclosures made in the financial statements in this regard

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 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, Boards Report including Annexures to Boards Report, Report on Corporate Governance and Shareholders Information, but does not include the standalone financial statements and our 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 Companies Act, 2013 ("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 (including other comprehensive income), changes in equity of the Company and its cash flows in accordance with the Indian Accounting Standards (IND AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, 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 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 also responsible for overseeing the companys financial reporting process.

Auditors Responsibility

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

(ESTD-1910)

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 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, 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 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 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 standalone 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 standalone 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 the Central Government in terms of Section 143 (11) 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 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 Statement of Cash flows dealt with by this report are in agreement with the books of account;

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

e) On the basis of the written representations received from the directors of the Company as on March 31, 2023 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 and the operating effectiveness of such controls, refer to our separate report in Annexure "B" and

g) 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

Companies Act 2013. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

h) 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 - Refer Note No. 30 to the standalone financial statements.

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

iii. There has been no delay in transferring amounts, required to be transferred, 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, other than as disclosed in the notes to the accounts, where applicable, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity ("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, where applicable, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("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;

(c) Based on the audit procedures 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.

a) The dividend proposed for the previous financial year, declared and paid by the company during the current financial year is in accordance with Sec. 123 of the Act, as applicable.

b) The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 1 23 of the Act. [Refer Note No. 34.1 to the standalone financial statements].

For M/s Subbachar & Srinivasan
Chartered Accountants
Firm Registration No.004083S
(T.S.V.RAJAGOPAL)
Coimbatore Membership No. 200380
29th May, 2023 UDIN:23200380BGUDUC7983

Annexure "A" to the Independent Auditors Report

(Referred to in Paragraph 1 under "Report on Other legal and regulatory requirements" section of our report to the members

of THE LAKSHMI MILLS COMPANY LIMITED of even date)

To the best of our information and according to the explanations provided to us by the Company and the books

of account and records examined by us in the normal course of audit, we report that:

1) In respect of its Property, Plant and Equipment, Intangible Assets and Investment Property:

a) The company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment, Intangible Assets and Investment Property.

b) The Company has a program of physical verification of Property, Plant and Equipment, and Investment Property, so as to cover all the assets once in every three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its Property, Plant and Equipment and Investment Property. Pursuant to the program, certain Property, Plant and Equipment and Investment Property were physically verified by the management during the year. According to the information and explanations given to us during the course of the audit no material discrepancies were noticed on such verification.

c) Based on our examination of relevant records and on the basis of information and explanations given to us, we report that the title deeds of all immovable properties disclosed in the financial statements included under Property, Plant and Equipment, Intangible Assets (where applicable) and Investment Property are held in the name of the Company as at the balance sheet date.

d) The Company has not revalued any of its Property, Plant and Equipment, Intangible Assets and Investment Property during the year.

e) No proceedings have been initiated during the year or are pending against the Company as at March 31, 2023 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

2) In respect of its inventories:

a. As explained to us, physical verification of inventories, except goods in transit, has been conducted at reasonable intervals by the management during the year.

b. In our opinion and according to the information and explanations given to us during the course of the audit, the coverage and procedure for such physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c. In our opinion and according to the information and explanations given to us, the company has maintained proper records for its inventories and no material discrepancies were noticed on physical verification in any class of inventories as compared to the book records.

d. According to the information and explanations given to us, the Company has been sanctioned working capital limits in excess of Rs. 5 Crores, in aggregate, during the year from banks or financial institutions on the basis of security of current assets and the quarterly returns or statements filed by the Company with such banks or financial institutions are in agreement with the books of accounts of the Company of the respective quarters and no material discrepancies have been observed between such returns / statements when compared with the books of account having regard to the reconciled discrepancies.

3) The company has not made any investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties, including promoters and related parties, during the financial year and accordingly sub-clauses

(a) to (f) of Paragraph 3(iii) of the Order are not applicable to the company.

4) During the year, the Company has not made any loans or investments or given any guarantees or securities and hence compliance with the provisions of Section 185 and Section 186 of the Companies Act 2013 is not applicable.

5) According to the information and explanations given to us, the company has not accepted any deposits from the public or amounts which are deemed to be deposits during the year to which directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 of the Act are applicable and as such Paragraph 3(v) of the Order is not applicable.

6) We have broadly reviewed the cost records maintained by the company specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, as applicable to the company, and are of the opinion that prima facie the specified cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete

7) According to the information and explanations given to us during the course of the audit and on the basis of our examination of the records of the company in respect of the statutory dues:

a. The company is generally regular in depositing undisputed statutory dues including Goods and service Tax, Provident Fund, Employees State insurance, Income tax, Sales Tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities during the year. According to the information and explanations given to us during the course of the audit, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2023 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us during the course of the audit, the details of disputed statutory dues that have not been deposited on account of dispute is as under:

Name of the Statute Nature of the dues Amount [Rs. in lakhs] Amount paid / adj usted [Rs in lakhs] Period to which the amount relates Forum where dispute is pending
Central Excise / Service Tax Rebate claim 48.63 4.86 April 2015 to March 2017 Commissioner of GST and Central Excise (Appeals)
Income tax Income tax 34.54 14.57 A Y 2014-15 CIT( Appeals)-NFAC
851.11 85.11 A Y 2013-14 CIT( Appeals)-NFAC
97.51 --- A Y 2018-19 AO - Rectification petition

8) Based on our audit procedures and as per the information and explanations given by the management, during the year there were no transactions not recorded in the books of account that have been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 and hence paragraph 3(viii) of the Order is not applicable.

9) a) In our opinion and according to the information and explanations given to us during the course of the audit, the company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender including banks, financial institutions and government

b) According to the information and explanations given to us during the course of the audit and on the basis of our audit procedures, the company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

c) In our opinion and according to the explanations given to us during the course of the audit and based on the audit procedures performed, term loans availed by the company during the year have been applied for the purpose for which they were obtained.

d) According to the information and explanations given to us during the course of the audit and the audit procedures performed by us, and on an overall examination of the financial statements of the company, funds raised on short term basis have, prima facie, not been used during the year for long term purposes by the company.

e) The company does not have any subsidiaries, associates or joint ventures and hence reporting on the funds taken by the company from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures is not applicable.

f) The company does not have any subsidiaries, associates or joint ventures and hence reporting on the loans raised by the company during the year on the pledge of securities held in its subsidiaries, associates or joint ventures is not applicable.

10) (a) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year and hence reporting under paragraph 3(x)(a) of the Order is not applicable.

(b) During the year, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally convertible) and hence reporting under paragraph 3(x) (b) of the Order is not applicable.

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

(b) To the best of our knowledge and belief and according to the information and explanations given to us during the course of the audit, 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 the Central Government during the year and upto the date of this report.

(c) According to information and explanations given to us and as represented to us by the management and on the basis of our audit procedures there were no whistle blower complaints received by the company during the year.

12) The Company is not a Nidhi Company and hence reporting under sub clauses (a) to (c) of paragraph 3(xii) of the Order is not applicable.

13) In our opinion and according to the information and explanations provided to us and based on our examination of the records of the company, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 with respect to applicable transactions with the related parties undertaken during the year and the details of such related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards

14) a) In our opinion and based on our examination, 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.

15) According to the information and explanations given to us during the course of the audit the Company has not entered into non-cash transactions with directors or persons connected with its directors during the year and hence provisions of section 192 of the Companies Act 2013 are not applicable and accordingly paragraph 3(xv) of the Order is not applicable.

16) a) According to the information and explanations given to us during the course of the audit and on the basis of our examination of the financial statements of the company in our opinion the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

b) In our opinion on the basis of our examination of the financial statements and representations made by

the company it has not conducted any Non-Banking Financial or Housing Finance activities during the year.

c) According to the information and explanations given to us during the course of the audit and on the basis of our examination of the financial statements of the company and representations made by the company, in our opinion the Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India.

d) According to the information and explanations given to us during the course of the audit and as represented to us by the company in our opinion, there is no core investment company within Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under Paragraph 3(xvid) of the Order is not applicable.

17) The company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

18) There has been no resignation of Statutory Auditors of the Company during the year and accordingly reporting under Paragraph 3(xviii) is not applicable.

19) According to the information and explanations given to us during the course of the audit and 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, 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 indicating 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.

20) As per information and explanations given to us during the course of the audit and based on our examination of the records of the company, the company is not liable under Sec. 135 of the Companies Act, 2013 to contribute any amount towards Corporate Social Responsibility (CSR) and hence reporting under Paragraph 3(xx)(a) and 3(xx)(b) of the Order regarding transfer of unspent amounts towards Corporate Social Responsibility (CSR) under the provisions of sub-section (5) of Section 135 or sub-section (6) of Section 135 of the Companies Act, 2013 is not applicable.

21) The company is not required to prepare consolidated financial statements and hence Paragraph 3(xxi) of the Order regarding qualifications or adverse remarks by the auditors of the companies included in the consolidated financial statements is not applicable.

For M/s Subbachar & Srinivasan
Chartered Accountants
Firm Registration No.004083S
(T.S.V.RAJAGOPAL)
Coimbatore Membership No. 200380
29th May, 2023 UDIN:23200380BGUDUC7983

Annexure "B" to the Independent Auditors Report

(Referred to in Paragraph 2(f) under "Report on Other legal and regulatory requirements" section of our report to the members of THE LAKSHMI MILLS COMPANY LIMITED 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 THE LAKSHMI MILLS COMPANY LIMITED as of 31st March 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 Board of Directors of the company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

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. 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 standalone 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 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 standalone 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

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company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In 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 controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 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 M/s Subbachar & Srinivasan
Chartered Accountants
Firm Registration No.004083S
(T.S.V.RAJAGOPAL)
Coimbatore Membership No. 200380
29th May, 2023 UDIN:23200380BGUDUC7983