modern threads i ltd share price Auditors report


TO THE MEMBERS OF MODERN THREADS INDIA LIMITED

Report on tlie Audit of tlie Financial Statements Qualified

Opinion

We liave audited the financial statements of MODERN THREADS INDIA Linn TED ("the Company"), which comprise the Balance Sheet as at 31st March, 2023, and the Statement of Profit and Loss (including other comprehensive income), Statement of Changes in Equity and tlie Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter re feme d to as "the financial statements").

In our opinion and to the best of our information and according to the explanations given to us, except for tlie effects of the matter described in the B a si s for Qual 1 fi ed Op in ion se ction of our report, tli e a fores ai d financi al 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, find- AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 st March 2023, and its profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

(i) The company has not provided for Interest (Dividend) on cumulative

redeemable preference shares amounting toRs. 36.13 Lakhs for tlie year(Rs. 975.4SLakhsupto31.03.2023)asthe company is in process of settlement of remaining redeemable preference share capital. (Note No. 17.2b)

(u) Balances of trade payables and trade receivables are subject to confirmation and consequential adjustments, if any. (Note No. 16.1 and 9.1)

Had Hie impact of above qualification in Para (i), without considering Para (li) for which impact could not be determined, been considered, the total comprehensive income for the year would have been Rs. 21392.07 Lakhs as against reported total comprehensive income of Rs. 21428.20 Lakhs and other equity would have been Rs. 5882.2 5 Lakhs as against the reported figure of Rs. 6857.73 Lakhs and Other Current financial liabilities would have been Rs. 3391.97 lakhs as against reported figure of Rs. 2416.49 Lakhs

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143 (10) of the Act. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of tlie Company m accordance with the Code of Etlii cs l ssued by th e 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 tile Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Key Audit Matters

Key audit matters (‘KAM) 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 tlie context of our audit of tlie financial statements as a whole, and in forming our opinion thereon and we do not provide a separate opinion on these matters. Except for tlie matters described in the Basis for Qualified Opinion section, we liave determined that there are no key audit matters to be communicated in our report.

Ollier Matter

Tlie comparative financial statements of the company for tlie year ended 31st March 2022, were audited by predecessor auditor who expressed an modified opinion on those financial statements which are continued The predecessor auditor reported material uncertainty related to going concern due to negative net worth of the company, however, opinion was not modifiedm respect of this matter. The net worth ofthe company has become positive for the year ended on 31st March, 2023, therefore, material uncertainty related to going concern has not been reported.

Information Other than the Standalone Financial Statements and Auditors report thereon

The Companys Management and Board of Directors are responsible for the other information. The other information comprises the information included in tlie Companys annual report, but does not include the financial statements and our auditors report thereon. Tlie annual report is expected to be made available to us after the date of this auditors report.

Our opiniononthefinancialstatementsdoes not co vei the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility7 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 in the audit or otherwise appeals to be materially7 misstated

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary7 actions, as applicable under the relevant laws and regulations.

Responsibilities of Management and Those Charged with Governance for tlie Financial Statements

The Companys Management and Hoard of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a hue and fair view of the financial position, financial performance (including other comprehensive income), changes in equity7 and cash flows of the Company7 in accordance with the accounting principles generally7 accepted in India, including the Indian Accounting Standards (Ind AS) specified wider Section 133 of the Act. This responsibility7 also includes maintenance of adequate accounting records in accordance with the pr ovisions 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 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 ofthe accounting records, relevant to the preparation and presentation of the financial statements that give a fine and fair view7 and are free from material misstatement, whether due to fiaud or error.

In preparing the financial statements, management and Board of Directors are responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibilities for tlie Audit of tlie Financial Statements

Our obj ectives are to obtain reasonable assurance about whether the financial statements as a whole are fiee 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 S As 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, they7 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, w7hether 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 far ora- opinion The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may7 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 Act, we are also responsible for expressing our opinion on wfrether the company7 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, wriether a material uncertainty7 exists related to events or conditions that may7 cast significant doubt on the Company7s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw7 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 orconditians may cause the Company to cease to continue as a going concern.

Evaluate Hie overall presentation, structure and content ofthe financial statements, including the disclosures, and whether the 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 tire 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 woik; and (11) to evaluate die effect of any identified misstatements in the Standalone Financial Statements.

We communicate with those chaiged 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 reasonablybe thought to bear on our independence, and where applicable, related safeguards

From the matters communicated with those chaiged with governance, we determine those matters that were of most significance in the audit of the

financial statements of the curaent period and are therefore die key audit matters. We describe these matters in our auditors report unless law7 or regulationprecludespublic disclosure aboutthe matter or when, in extremely rare circumstances, we determine that a matter shouldnot be communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements

1. As required by71he Companies (Auditors Report) Older, 2020 ("the

Order") issuedby7the Central Government of India in terms of Section

143(11) of die Act, we give in "Annexure A" a statement on the

matters specified in paragraphs 3 and 4 of the Order, to die extent

applicable.

2. As required by7 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 necessary7 for the purposes of our audit.

b. Except for the effects of the matters described in the basis for qualified opinion paragraph above, in our opinion, proper books of account as required by7 law7 have been kept by the Company7 so far as it appeals from our examination of those books

c. The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity7 and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

d. Except for the effects of the matters described in the basis for qualified opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of die Companies (Accounts) Rules, 2014.

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

f. Tlie qualification relating to die maintenance of account and other matters connected there with are as statedinthe ‘Basis for Qualified Opinion paragraph

g. With resp ect to the adequacy of di e internal financial controls with reference to financial statements of the Company7 and the oper ating 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 die Companys internal financial controls with reference to financial statements.

h. With respect to the matter to be included in the Auditors Report in accordance w7ith the requirements of section 197(16) of the Act, as amended:

In oui opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during die year is in accordance with the provisions of Section 197 of die Act.

i. 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, 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 as at 31stMarch 2023 on its financial

position in its financial statements - Refer Note 32 to the financial statements;

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company during the year ended on 31st March, 2023. (Refer Notel7_l)

iv. (a) The Management has represented that, to the

best of its knowledge and belief, no hinds (winch are material either individually or in tlie aggregate) have been advanced or loaned or invested (either from borcowed funds or share premium or any other sources or kind of hinds) 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; directly7 or indirectly lend or invest in other persons or entities identified in any maimer 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 Man agement has repres ented, that, to the

best of its knowledge and belief no hinds (which are material either individually or in the aggregate) have been received by the

Company7 from any person or entity, including foreign entity7 ("Funding Parties"), with Hie understanding, whether recorded in wnting or otherwise, that the Company7 shall, whether, directly or indirectly7, lend or invest in other persons or entities identified in any7 manner whatsoever by7 or on behalf of he Funding Party ("Ultimate Beneficiaries") or provide any7 guarantee, security7 or he like on behalf of the Ultimate Beneficiaries;

(c) Based anthe auditprocedures that have been

consideredreasonable and appropriate in the circumstances, nothing has come to our notice hat 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 any7 material misstatement. v7. The company7 has not declared or paid any7 dividend during the FY 2022-23. Hence, the provisions of section 123 of Companies Act, 2013 does not apply.

For S.S. Surana & Co.
Chartered Accountants
(FRN. 001079C)
Prahalad Gupta
(Partner)

Place: Bhihvara

Membership No. 074458

Date: 29/05/2023

UDIN: 23074458BGVWNX4606

ANNEXURE A FORMING PART OF THE INDEPENDENT AUDITORS REPORT OF MODERN THREADS (INDIA) LIMITED

Referred to in paragraph under the heading of "Report on other Legal & Regulateny Requirements" of our report of even date to the Members of Modem Threads (India) Limited on the hid AS financial statement for the year ended March 31st, 2023;

(:) (a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Prop fill Plant

and Equipment and relevant details of right-of-use assets.(B) The company has maintained proper records showing full particulars of intangible assets.

(b) As explained to us. the company has a phased program for physical verification of Property7, Plant and Equipment and right-of-use assets. In our opinion, the frequency of verification is reasonable, considering the size of the company and nature of its Property7, Plant and Equipment and right-of-use assets. Pursuant to the program, physrcal verification has been carried out during the year and no material discrepancies have been noticed an such verification except for furniture & fixtures for which detailed records ate not maintained

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company7, the title deeds of all the immovable properties (other than properties where Hie company is the lessee and the lease agreements are duly7 executed in favour of the lessee! are held in the name of the Company except for die following:

Description of Property

Gross Car lying Value Held in name of Whether promoter, director or their relative or employee Period Held Since

Reasons for not being in the name of the company

Leasehold land at kliasra no. 3404. 3745/3404. 3747/3406.

92.25 Sunil Textiles Mills Pvt Ltd. No 21.10.1994

Sunil Textile Mill Pvt Ltd. lias been amalgamated with

3 746/3409 at Hamirgarh Road, Blulwara

Modem Threads India Ltd Vide order of high court dated 21.10.1994

Leasehold land at khasra no. 2616 and 2617 at Hamirgarh Road, Blulwara

125.00 Modem Woollens Pvt. Ltd. No 21.10.1994

Modem Woollens Pvt Ltd. Converted into Modem Woollens Ltd. On 13.08.1976 and subsequently has been acquired by Modem Threads India Ltd. under the scheme of Reconstruction/ arrangement Vide order of high court dated 21.10.1994

Leasehold land at khasra no. 2616/1 at Hamirgarh Road. Blulwara

7.50 Modem Woollen Mill (Firm) No 21.10.1994

Modem Woollens Mills (Firm) Converted into Modem Woollens Pit Ltd. and subsequently converted into Modem Woollens Ltd. And then has been acquired by7 Modem Threads India Ltd. under the scheme of Reconstruction arrangement Vide order of high court dated 21.10.1994

Leasehold land at kliasra no. 3361/2, 3367/3k. 3402/3k. 3368/2, 3402/2k, 3368/1 and 3367/2k at Hamirgarh Road, Blulwara

43.77 Modem Woollens Ltd. No 21.10.1994

Modem Woollens Ltd. has been acquired by7 Modem Threads India Ltd. under the scheme of Reconstruction/ arrangement Vide order of high court dated 21.10.1994

Freehold land at Saha Mohalia, gosaitola. Mirzapur, Bhadohi

2.63 Modem Woollens Ltd. No 21.10.1994

Modem Woollens Ltd. has been acquired by7 Modem Threads India Ltd. under the scheme of Reconstruction/ arrangement Vide order of high court dated 21.10.1994

Freehold land at Aliemdabad

12.66 Modem Woollens Ltd. No 21.10.1994

Modem Woollens Ltd. has been acquired by Modem Threads India Ltd. under the scheme of Reconstruction/ arrangement Vide order of high court dated 21.10.1994

(d) The Company lias not revalued any of its Property Plant and Equipment (including right-of-use assets) and intangible assets 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 benaim property under die Ben ami Transactions (Prohibition) Act. 1988 (as amended in 2016) and rules made thereunder.

(ii) (a) The inventories were physically verified during the year by die Management at reasonable intervals. In our opinion and according to the

information and explanations given to us, the coverage and procedure of such verification by the Management is appropriate having regard to the size of die Company and die nature of its operations. Management has not found discrepancies of 10% or more ill die aggregate for each class of inventories on such physical verification of inventories when compared with books of account.

(b) According to the information and explanations given to us, at any point of time of die year, the Company has not been sanctioned any working capital facility horn banks or financial institutions on the basis of security of current assets, and hence reporting under clause (ii)(b) of die Order is not apphcable

(iii) According to the information and explanations provided to us and on die basis of our examination, company has not made any investments, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, films, limited liability partnerships or any other parties, hence clause (iii) of the order is not applicable.

iv) In our opinion and according to the information and explanations given to us, die Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013, with respect to die loans, investments and guarantees made, as applicable

(v) As per information and explanations given to us, the company has not accepted any deposits or amounts which are deemed to be deposits within the meaning of Section 73 to 76 of die Act, and the rules framed thereunder Accordingly, clause 3(v) of the Order is not applicable.

(vi) We have br oadly reviewed the books of account maintained by the Company in respect of products where die maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed them under and we are of the opinion that puma facie, the prescribed accounts and records have been made and maintained

(vn) (a) Acc aiding to the rec aids of til e comp any produc ed f or ora1 v en fic ation, th e company is g enerally regular in dep ositing undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, customs duty, excise duty, value added tax, goods and service tax, cess and any other1 statutory dues with appropriate authorities except die dues pertaining to Thread Division of the company which was lying closed upto 19.12.2016 and the dues are outstanding for more than 6 months from die date of becoming payable :

Textiles Committee Cess

Rs. 26.40 Lakhs

Custom Duty

Rs. 11.31 Lakhs

Mandi Tax

Rs. 455.20 Lakhs

(b) According to the information and explanation given to us, the dues in respect of Income Tax, Sales Tax, Service Tax, Custom duty. Excise duty, Value added Tax, Goods and Service Tax that have not been deposited on account of dispute and amount involved and forum where dispute is pending are as under:

Name of statute

Nature of Dues Amount (Rs. in Lakhs) Period to which the amount relates Forum where dispute is pending

Rajasthan Municipality Act, 1959

ETiban Tax 79.91 FY 2007-2017 stay of demand granted by HC, appeal pending before deputy director local bodies agriculture

Employee State

ESI 28.09 FY 1986-1999 High Court, Jodhpur

Insurance Act

ESI 3.53 FY 1993-1996 Labour Tribunal, Delhi

Provident Fund Act

PF 4.67 FY 1987-2006 Comm, Jaipur

The Rajasthan Tax on Entry far goods into Local area Act

EntryTax 4.50 FY 2015-2016 Tax Board, Ajmer

(viii) As per information and explanations given to us and based on die records of die company, tiiere were no transactions relating to previously

unrecorded income that have been suuendered or disclosed as income dining the year in the tax assessments under die Income Tax Act, 1961 (43 of 1961).

(ix) (a) According to the records ofthe Company and information given to us, die company lias settled its term loans and dues to debenture hoi den

in earlier and repaid the balance settlement amount during die year.

(b) According to die information and explanations given to us and on the basis of our audit procedures, we report diat the company lias been declared willful defaulter by banks and Financial Institutions upto 31/03/2010. However, there are no dues of tiiose banks/ FIs as on balance sheet date.

(c) The Company has not taken any term loan dining the year and there are no unutilized term loans at the beginning of tile year.

(d.) On an overall examination of the financial statements of the Company, in our opinion, die company has not raised any short-term fund during the year and hence reporting under clause ix(d) of the Ol der is not applicable to die company.

(e) On an overall examination of the financial statements of the Company and on the basis of information and explanations given to us, the Company has not taken any funds from any entity or person on account of or to meet die obligations of its subsidiaries, associates or j oint ventures. However, the company does not have any subsidiary, joint ventures or associates.

(f) The Company has not raised loans during the year on pledge of securities held in its subsidiaries or joint ventures or associates. However, the company does not have any subsidiary, joint ventures or associates, hence, reporting on clause (ix)(f) of the Older is not applicable.

(x) (a) The Company has not raised moneys by way of initial public offer or farther public offer- (including debt instruments) during the year and

hence reporting under- clause 3(x)(a) of the Older 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) and hence reporting under- clause 3(x)(b) of the Order is not applicable.

(xi) (a) According to the information and explanations given to us, no fraud by the Company or on the Company has been noticed or- reported

during the course of our- audit. Hence clause (xi)(a) of the order is not applicable.

(b) No report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rale 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 the information and explanations given to us and based on our examination of re cords. No whistle-blower complaints were

received by the company during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company and hence reporting under- clause (xii) of the Order is not applicable.

(xii) According to the information and explanations given to us and based on our examination of the records of the Company, all the transactions with the related patties are in compliance with sections 177 and 1SS of the Act and details of such transactions have been disclosed in the financial statements as required by the applicable Indian accounting standards.

(xiv) (a) In our opinion the Company has an adequate internal audit system commensurate with the size and tire 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, nature, timing and extent of our audit procedure.

(xv) According to the information and explanations given to us and based on our examination of records of the company, the company has not entered into any non cash transaction prescribed under section 192 of the Companies Act, 2013 with the directors or person connected with

them dining tire year.

(xvi) (a) Hie Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Hence, repotting under clause

(xvi)(a) and (b) of the Order is not applicable.

(c) fa our opinion and a ccording to the information and explanations given to us and based on our examination of records,, the Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, clause 3(xvi)(c) of tile Older is not applicable.

(d) According to the information and explanations provided to us during the course of audit, the Group does not have any CICs.

(xvii) The Company has not ineuired cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xvill) There has been no resignation of the statutory auditors of the Company during the year.

(xix) On the basis of tire financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements and 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 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 ofthe 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 tire Company as and when they fall due.

(xx) According to the information and explanation provided to us, there are no unspent amount towards Corporate Social Responsibility (CSR) in respect of any ongoing or other than ongoing project as at expiry of the Financial Year requiring a transfer to a Fund specified in Schedule MI to tire Companies Act in compliance of second proviso to subsections of section 135 of the said Act or special account in compliance with the provision of sub-section (6) of section 135 of the said Act. Accordingly, reporting under clause (xx)(a) and (xx) (b) of the Order is not applicable to the company.

(xxi) Hie rep oiting under clause 3 (xxi) ofthe Order is not applicable in respect of the audit of standalone financial statements and hence no comment in respect of said clause has been included in this report.

For S.S. Surana & Co.
Chartered Accountants
(FRN 001079C)
Pralialad Gupta
(Partner)

Place: Bhilwara

Membership No. 074458

Date: 29/05/2023

UDIN: 2307445SBGAWNX4606

Annexure -B to the Independent Auditors Report on Financial Statements of Modern Threads (India) Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls -with reference to financial statements of Modem Threads (India) Limited ("the Company) as of 31 st March 2023 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls Tlie Campanysinanagementisresponsible for establishing andmaintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated m the Guidance Note on Audit of Internal Financial Controls over Financial Repotting issuedbythe 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 requu-ed 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 wider section 143(10) of fee Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by fee Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial repotting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about fee adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Oil 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 fee design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including fee assessment of the risks of material misstatement of fee financial statements, whether due to fraud or error

We believe feat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified 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 regaiding the reliability of financial reporting and fee preparation of financial statements fin external proposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to fee maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of fee assets of fee 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 tlrat 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 timety detection of unauthorized acquisition, use, or disposition of fee 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 mayr occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subj ect to the risk that the internal financial control over financial repotting may become in adequate because of changes in conditions, orthat the degree of compliance with the policies or procedures may deteriorate.

Basis of Qualified Opinion

According to the information and explanation given to us and based on our audit, the following material weakness has been identified as at March 31, 2023:

1. The companys internal financial controls were not operating effectively in respect of balance confirmation of trade payables and trade receivables.

Material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibilitythat a material misstatement of the Companys annual financial statements will not be prevented or detected on a timely basis. Qualified Opinion

In oot opinion, except for fee possible effects of fee material weakness described above and on the achievement of fee obj ectives of control criteria, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial contr ols over financial reporting were operating effectively as at March 31, 2023, based an 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 fee ICAI.

We have considered the material weaknesses identified and reported above in determining fee natwe, timing and extent of audit tests applied in our audit of the financial statements of the Company for the year ended March 31, 2023 and these material weaknesses have affected our opinion on the financial statements of fee Company and we have issued a qualified opinion on the financial statements.

For S.S. Surana & Co.
Chartered Accountants
(FRN. 001079C)
Prahalad Gupta
(Partner)

Place: Bhihvara

Membership No. 074458

Date: 29/05/2023

UDIN: 2307445SBG\rWNX4606