Loyal Textile Mills Ltd Auditor Reports

To The Members of Loyal Textile Mills Limited Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of Loyal Textile Mills Limited (the Company), which comprise the Standalone Balance Sheet as at 31 st March 2026, the Standalone Statement of Profi t and Loss (including Other Comprehensive loss), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the Standalone Financial Statements, including a summary of material 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, as amended (the Act) in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India including the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (Ind AS), of the state of affairs of the Company as at 31 st March 2026, its loss (including other comprehensive loss), its changes in equity and its 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 SAs 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 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 suffi cient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

Emphasis of Matter:

Attention is invited to Note No. 51 of the Standalone Financial Statement, which describes the initiatives undertaken by the management involving Monetization of Assets resulting in scaling down of the operations and relocating manufacturing facilities in order to improve the operational efficiencies. The steps undertaken by the company is stated to be addressing the liquidity constraints and in addition the Management has informed that it continues its efforts in rationalizing its operations by further prioritizing high-value contribution segments and embark on steps towards cost optimization to achieve the targeted operational profitability and sustainability. Considering the progress in the initiatives undertaken during the year and based on the management assertion of achieving the operational profits, the companys operations have been considered sustainable. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgement, were of the most signifi cance in our audit of the Standalone Financial Statements of the financial year ended 31st March 2026. 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 following matters as Key Audit Matters to be communicated in our report:

1. Revenue recognition

Key Audit Matter	Auditor\u2019s Response
Refer Note No. 4.19 and 24 to the Standalone Financial	Principal Audit Procedures Performed:
Statements	Our audit process consisted of testing the design and operating
Cut off Revenue is one of the key profi t drivers and is therefore	effectiveness of the internal controls and substantive testing
susceptible to misstatement.	performed by us which are as follows:
	(i) We obtained an understanding of process and evaluated
Cut-off is the key assertion in so far as revenue recognition is
	the design, implementation, and operating effectiveness
concerned. There is a risk that revenue is recognized on sale
	of management\u2019s internal controls in relation to revenue
of goods without substantial transfer of control as on reporting
	recognition from sale of goods. We tested the Company\u2019s
date which will not be in accordance with Ind AS-115 \u201cRevenue
	control over timing of revenue recognition around year end.
from Contracts with Customers\u201d.
	(ii) At the year end, we have performed the cut off testing
In view of the above and since revenue is a key performance	for late cut off to test that the revenue is recorded in the
indicator of the Company, we have identifi ed timing of revenue	appropriate period. We have traced sales with proof of
recognition from sale of goods as a key audit matter.	delivery (POD) to confi rm the recognition of sale.

2. Inventory Valuation

Key Audit Matter	Auditor\u2019s Response
(Refer Note No 4.6 and 9 to the Standalone Financial	Principal audit procedures performed.
Statements)	Evaluated the design and operation of internal controls and its
The Company\u2019s inventories comprise of Raw materials, Work-	operating effectiveness in determining the NRV, including the
in-progress, Finished goods and Stores & spares amounting to	Company\u2019s review of key estimates, such as estimated future
Rs.10,520.64 Lakhs as at 31st March 2026.	selling prices on a test basis.
The inventories are valued at lower of cost and net realizable	Compared NRV with recent sales or estimated		selling price
value (\u2018NRV\u2019).	and selling costs.
NRV is the estimated selling price in the ordinary course of	Evaluated the Company\u2019s judgement	with	regards	to
business less the estimated costs of completion and the	application of write-down of inventories, where required.
estimated selling costs.	Assessed the adequacy and appropriateness of the disclosures
The determination of NRV involves estimates of prevailing	made by the management with respect	to Inventories		in
market conditions, stage of completion of the inventory, the	compliance with the requirements of applicable Ind AS 2 and
estimated future selling price and selling costs.	Schedule III to the Companies Act, 2013.
Considering the signifi cance of the amount of carrying value
of inventories and signifi cant judgements and assumptions
involved in assessment of NRV, the same is considered a key
audit matter.

3. Discontinued Operations and Assets Held for Sale

Key Audit Matter	Auditor\u2019s Response
(Refer Note No. 4.4, 5B, 35(a) and 35(b) to the Standalone	Principal audit procedures performed.
Financial Statements)	\u2022 Obtained an understanding of the process adopted by the
During the year, the Board of Directors, at its meeting held	management for identifi cation, accounting and presentation
on 12th August 2025, decided to dispose of the Shri Vishala	of discontinued operations and assets held for sale and
Textile Mills (SVTM) Unit at Naidupet and the Chinthamani	evaluated the design and operating effectiveness of the
Textile Mills (CTM) Unit at Sivagangai. Accordingly, during the	relevant internal controls.
year ended 31st March 2026, the Company completed the sale	\u2022 Evaluated the appropriateness of the Company\u2019s accounting
of the SVTM Unit and presented its results as discontinued	policy and management\u2019s assessment for classifi cation of
operations in accordance with Ind AS 105, Non-current Assets	the Shri Vishala Textile Mills (SVTM) Unit located in Naidupet
Held for Sale and Discontinued Operations. The CTM Unit,	as discontinued operations and the Chinthamani Textile
pending disposal, was classifi ed as a disposal group held for
Key Audit Matter	Auditor\u2019s Response
sale based on management\u2019s assessment that the criteria	Mills (CTM) Unit located in Sivagangai as held for sale in
under Ind AS 105 were satisfi ed.	accordance with the requirements of Ind AS 105.
We considered this matter to be a key audit matter due to	\u2022 Verified the minutes of the meetings of the Board of Directors,
the signifi cance and materiality of the disposal group and the	sale agreements, sale deed and other supporting documents
signifi cant management judgement involved in assessing the	relating to the disposal of the Shri Vishala Textile Mills (SVTM)
classifi cation and measurement under Ind AS 105, including	Unit located in Naidupet and the proposed disposal of the
determining the gain on disposal of the SVTM Unit, measuring	Chinthamani Textile Mills (CTM) Unit located in Sivagangai.
the CTM disposal group at the lower of its carrying amount and	\u2022 Tested the allocation of assets, liabilities, revenues and
fair value less costs to sell, where applicable, and the related	expenses relating to the discontinued operations to the
presentation and disclosures in the Standalone Financial	underlying accounting records.
Statements.
	\u2022 Verified the computation of the gain recognised on disposal of
	the Shri Vishala Textile Mills (SVTM) Unit located in Naidupet
	and evaluated the measurement of the Chinthamani Textile
	Mills (CTM) Unit located in Sivagangai disposal group,
	including the assessment of fair value less costs to sell,
	where applicable.
	\u2022 Assessed the adequacy and appropriateness of the
	presentation and disclosures made by the management
	relating to discontinued operations and assets held for sale
	in compliance with the requirements of Ind AS 105 and
	Schedule III to the Companies Act, 2013.

Other Information

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Companys Annual Report, 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 other information is materially inconsistent with 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 the fact. We have nothing to report in this regard.

Managements Responsibilities for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these Standalone Financial Statements that give a true and fair view of the Financial Position, Financial Performance, Total Comprehensive Loss, Changes in Equity and Cash flows of the Company in accordance with the Accounting Principles generally accepted in India, including the Ind AS specified under section 133 of the Act read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements 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, Board of Directors 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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is also responsible for overseeing the Companys Financial Reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

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

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

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

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. (d) 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.

(e) 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 misstatement 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 the 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 fi ndings, 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 financial year ended 31st March 2026 and are therefore the Key Audit Matters. We describe these matters in our auditors report unless law or regulations 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 of India in terms of sub-section (11) of section 143 of the Act, we give in the 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, 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 of the aforesaid Standalone Financial Statements. (b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid Standalone Financial Statements have been kept by the Company so far as it appears from our examination of those books, except for the matters stated in the paragraph 3(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, as amended.

(c) The Standalone Balance Sheet, the Standalone Statement of Profi t and Loss (including Other Comprehensive loss), the Standalone Statement of Changes in Equity, the Standalone 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 Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standard) Rules, 2015 as amended. (e) On the basis of the written representations received from the directors as on 31st March 2026 taken on record by the Board of Directors, none of the directors are disqualified as on 31st March 2026 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2(b) above on reporting under Section 143(3)(b) of the Act and paragraph 3(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, as amended.

(g) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B to this report.

3. 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:

a. The Company has disclosed the impact of pending litigations on its financial position in Note No 38.1 to the Standalone Financial Statements

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

c. There has been no delay in transferring amounts required to be transferred, to the Investor Education and Protection Fund by the Company.

d. (i) The Management has represented that, to the best of its knowledge and belief, 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(s) or entity(ies), including foreign entities (Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(ii) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), 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.

(iii) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (i) and (ii) above, contain any material misstatement.

e. The Company has not declared or paid any dividend during the year. Hence provisions of Section 123 of the Act are not applicable. f. According to information and explanation given to us and based on our examination which included test checks, the Company has used licensed Textile specific ERP software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. However, in the absence of any confirmation on the controls concerning the maintenance of relevant audit trails at the database level by ERP service provider, we are unable to comment on the prevalence of audit trail (edit log) facility at the database level.

g. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with. The audit trail has been preserved by the Company as per the statutory requirements for record retention under Rule11(g) of the Companies (Audit and Auditors) Rules,2014.

4. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under section 197(16), which are required to be commented upon by us.

Annexure A to the Independent Auditors Report

The Annexure A referred to in clause 1 of Report on Other Legal and Regulatory Requirements Paragraph of the Independent Auditors Report of even date to the members of Loyal Textile Mills Limited (the Company) on the Standalone Financial Statements as on and for the year ended 31 st March 2026.

i) In respect of the Companys Property Plant and Equipment and Intangible Assets.

(a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property Plant and Equipment.

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

(b) We are informed that a test of physical verification of Property, Plant and Equipment was carried out by the management at reasonable intervals, and no material discrepancies were noticed. In our opinion, the frequency of verification of these assets is reasonable having regards to the size of the Company and nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, the title deeds of immovable properties (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the company) as disclosed in the Standalone Financial Statements are held in the name of the Company. Based on the examination of relevant documents by us and confi rmations received from the lenders as on the reporting date, immovable properties of land and buildings whose title deeds have been pledged as security for borrowings, are held in the name of the Company.

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, the Company has not revalued its Property, Plant and Equipment and Intangible assets during the year ended 31 st March 2026.

(e) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, there are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transaction Act, 1988 and rules made thereunder.

ii) a) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, the inventories were physically Verified during the year. In our opinion, the frequency of such verifi cation is reasonable, and procedures and coverage as followed by management were appropriate. No discrepancies were noticed on physical verifi cation.

b) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, The Company has been sanctioned working capital limits in excess of INR Five crores in aggregate from banks during the year on the basis of security of current assets of the Company. The quarterly returns / statements along with subsequent revisions fi led by the Company with the banks are in agreement with the books of accounts of the Company.

iii) According to the information and explanations given to us and based on our examination of the records of the Company, 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 loans secured or unsecured to companies, fi rms, Limited Liability Partnerships, or any other parties. Accordingly, reporting under clause 3(iii)(a) to (f) of the Order is not applicable.

iv) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, the Company has complied with the provisions of section 185 and section 186 of the Act to the extent applicable with respect to grant of loans, security, guarantee given, and investments made.

v) According to the information and explanations given to us, and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, the Company has not accepted any deposits from the public and no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal. Therefore, the provision of clause (v) of paragraph 3 of the order are not applicable to the Company.

vi) According to the information and explanations given to us, and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however made a detailed examination of the same.

vii) According to the information and explanation given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India,

a) In our opinion, the Company is generally regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Goods and Service tax, Duty of Customs, Cess and other statutory dues with the appropriate authorities. There are no outstanding undisputed statutory dues on 31 st March 2026 for a period of more than six months from the date they become payable.

b) Dues of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Goods and Service tax, Duty of Customs. Cess and other statutory dues which have not been deposited as on 31 st March 2026, on account of any dispute and the forum where disputes are pending is given below:

Sl.no	Nature of the	Nature of	Amount in Lakhs	Period to Which	Forum where dispute is
	Statute	Dues		amount relates	pending
1	Central Sales	CST	795.54	2013-2014	State Tax Appellate Tribunal,
	Tax Act. 1956				Kakinada
2	Goods &	GST	1,689.27	Various Periods	Appellate Authority
	Service Tax Act			from FY 2017-18
				to FY 2022-23
3	Income Tax Act	Income Tax	2183.37	Various Periods	CIT Appeals
	1961			from AY 2017-18 to
				AY 2022-23
			2.59	AY 2015-16	IT Department

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

ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, the Company has not defaulted in repayment of Principal or payment of Interest thereon to any lender.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, the Company has not been declared a wilful defaulter by any bank or financial institution or government or government authority or other lender.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with generally accepted auditing practices in India, the Company has not availed any term loans during the year.

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, carried out in accordance with the generally accepted auditing practices in India, in our opinion, hat the Company has not raised funds on short term basis.

(e) According to the information and explanations given to us and on the basis of our examination of the records of the Company, carried out in accordance with the generally accepted auditing practices in India, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its Joint venture as defi ned under the act. Therefore, the provisions of clause (ix)(e) of paragraph 3 of the Order are not applicable to the Company. The Company does not have any subsidiaries or associates.

(f) According to the information and explanations given to us and on the basis of our examination of the records of the Company, carried out in accordance with the generally accepted auditing practices in India, in our opinion, the Company has not raised loans during the year on the pledge of securities held in its Joint Venture. Therefore, the provisions of clause (ix)(f) of paragraph 3 of the Order are not applicable to the Company. The Company does not have any subsidiaries or associates.

x) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with generally accepted auditing practices in India, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Therefore, the provisions of clause (x) (a) of paragraph 3 of the Order are not applicable to the Company.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with generally accepted auditing practices in India, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of clause (x)(b) of paragraph 3 of the Order are not applicable to the Company.

xi) (a) During the course of our examination of the books and records of the Company and according to the information and explanations given to us we have neither come across any instance of material fraud by the company or on the company noticed or reported during the year nor have we been informed any such cases by the management during the course of our audit.

(b) No report under Section 143 (12) of the Act has been fi led by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014, as amended, with the Central Government.

(c) According to the information and explanations given to us, the Company has not received any whistle blower complaints during the year. Therefore, the provisions of clause (xi)(c) of paragraph 3 of the Order are not applicable to the Company.

xii) In our opinion and according to the information and explanations given to us and on the basis of our examination of records of the Company, carried out in accordance with the generally accepted auditing practices in India, the Company is not a Nidhi Company. Therefore, the provisions of clause (xii)(a), (xii)(b) and (xii)(c) of the paragraph 3 of the Order are not applicable to the Company.

xiii) According to the information and explanations given to us and based on our examination of the records of the Company, carried out in accordance with the generally accepted auditing practices in India, transactions with the related parties, are prima facie in compliance with the provisions of sections 177 and 188 of the Act, where applicable, and details of such transactions have been disclosed in the Standalone Financial Statements as required by the applicable Ind AS.

xiv) (a) According to the information and explanations given to us and based on our examination of the records of the Company, carried out in accordance with the generally accepted auditing practices in India, the Company has an internal audit system that 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.

xv) According to the information and explanations given to us and based on our examination of the records of the Company, carried out in accordance with the generally accepted auditing practices in India, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, the provision of clause (xv) of the paragraph 3 of the Order are not applicable to the Company.

xvi) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India,

a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Therefore, the provision of clause (xvi) (a) of the paragraph 3 of the Order are not applicable to the Company.

b) The Company has not conducted non-banking fi nancial/housing fi nance activities during the year. Therefore, the provision of clause (xvi)(b) of the paragraph 3 of the Order are not applicable to the Company.

c) The Company is not a Core Investment Company (CIC) as defi ned in the regulations made by the Reserve Bank of India. Therefore, the provisions of clause (xvi)(c) of the paragraph 3 of Order are not applicable to the Company.

d) According to the information and explanations provided to us during the course of audit, the Group does not have any CIC. Therefore, the provisions of clause (xvi)(d) of the paragraph 3 of Order are not applicable to the Company.

xvii) The Company has incurred cash loss of INR 5141.95 Lakhs in the current financial year and INR 4832.35 Lakhs in the immediately preceding financial year.

xviii) There has been no resignation of the statutory auditors during the year. Therefore, the provisions of clause (xviii) of the paragraph 3 of Order are not applicable to the Company.

xix) According to the information and explanations given to us and on the basis of the financial ratios (Refer Note No.48 to the Standalone Financial Statements), ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the Standalone Financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that the Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

xx) According to the information and explanations given to us and on the basis of our examination of the records of the Company, carried out in accordance with the generally accepted auditing practices in India, the provisions of Section 135 of the Act are not applicable to the Company. Therefore, the provisions of clause (xx) of paragraph 3 of the Order are not applicable to the Company.

Annexure B to the Independent Auditors Report

The Annexure B, referred to in Clause 2(g) of Report on Other Legal and Regulatory Requirements Paragraph of the Independent Auditors Report of even date to the members of Loyal Textile Mills Limited (the Company) on the Standalone Financial Statements as of and for the year ended 31 st March 2026.

Report on the Internal Financial Controls with reference to Standalone Financial Statements under Clause (i) of subsection 3 of section 143 of the Companies Act, 2013 (the Act)

We have audited the internal financial controls with reference to Standalone Financial Statements of Loyal Textile Mills Limited (the Company) as of 31 st March 2026 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 Board of Directors 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 (the Guidance Note) 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 effi cient 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 Act.

Auditors Responsibility for Internal Financial Controls

Our responsibility is to express an opinion on the Companys internal financial controls with reference to Standalone Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, 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 ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to Standalone Financial Statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to Standalone Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to Standalone Financial Statements included obtaining an understanding of internal financial controls with reference to Standalone Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system with reference to Standalone Financial Statements.

Meaning of Internal Financial Controls with reference to Standalone Financial Statements

A Companys internal financial control with reference to the Standalone Financial Statements 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 controls with reference to Standalone Financial Statements include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly refl ect the transactions and dispositions of the assets of the 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 authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companys assets that could have a material effect on the Standalone Financial Statements.

Inherent Limitations of Internal Financial Controls with reference to Standalone Financial Statements

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

Opinion

In our opinion, and to the best of our information and according to the explanation given to us, the Company has, in all material respects, an adequate internal financial controls system with reference to Standalone Financial Statements and such internal financial controls with reference to Standalone Financial Statements were operating effectively as at 31 st March 2026, 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 Brahmayya & Co.,
Chartered Accountants
Firm Registration No.000511S

Sd/-
N Sri Krishna
Partner
Membership No.026575
UDIN: 26026575PZMJYK2256