Nilachal Refractories Ltd Auditor Reports

To the Members of

NILACHAL REFRACTORIES LIMITED

Report on the Audit of Financial Statements

Qualified Opinion

We have audited the financial statements of NILACHAL REFRACTORIES LIMITED (“the Company”), which comprise the Balance Sheet as at March 31,2025, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to the financial statements including a summary of significant accounting policies and other explanatory information ( hereinafter referred to as “ the financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the “Basis for Qualified opinion” paragraph of our report, the aforesaid financial statements give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025, the Loss and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. As disclosed in Note 4(b) of the financial statements, the Company after carrying out impairment assessment and sale of certain assets has recognised Capital Work in progress (CWIP) of Rs. 939.27 Lakhs as on 31^st March 2025 (Previous Year: Rs. 3147.04 Lakhs). The CWIP assets of the Company had remained without capitalisation for over thirteen years. During the year, the Company carried out an impairment assessment and recognised an impairment loss of Rs. 1933.88 Lakhs (Previous Year: Nil) based on a valuation report from a government approved Valuer (Chartered Engineer). However, the said Chartered Engineer is not registered with the Insolvency and Bankruptcy Board of India (IBBI) as a Registered Valuer for Plant & Machinery Asset Class as required under Section 247 of the Companies Act, 2013 read with Rule 3 of the Companies (Registered Valuers and Valuation) Rules, 2017. Additionally, certain CWIP assets amounting to Rs. 273.88 Lakhs were disposed of during the year. Accordingly, given the prolonged stagnation in capitalisation of the CWIP assets and further sale of certain CWIP assets carried out in the current year, the CWIP assets has not been classified as “Assets Held for Sale” in accordance with Ind AS 105.

In the absence of a valuation performed by a Registered Valuer and appropriate asset classification, we are unable to determine whether the impairment loss recognised is adequate and whether appropriate disclosures have been made in the financial statements.

2. The Company has not obtained an actuarial valuation for its employee benefit obligations, as required under Ind AS 19 - Employee Benefits. Instead, retireinent benefits are recognised based on the requirements of the applicable legislation. Additionally, these obligations are unfunded. Due to non-availability of actuarial reports, we are unable to determine and quantify the impact on the loss for the year and the related liabilities.

3. The company had issued two kind of redeemable preference shares a) 11% Redeemable Cumulative preference shares of Rs 100/- each fully paid up and b) 0% Redeemable Preference Shares of Rs. 100/-each fully paid up.

(a) The Company has not redeemed its 11% Redeemable Cumulative Preference Shares, which were due for redemption on or before September 2000. No provision has been made for cumulative dividends amounting to Rs.71.73 lakhs up to March 31, 2024, and ^ 1.65 lakhs for the year ended March 31, 2025. Consequently, the loss for the year is understated by Rs.1.65 lakhs, and the reserves and surplus are overstated by Rs.73.38 lakhs.

(b) In respect of 0% Redeemable Preference Shares, the Company is contractually obligated to pay redemption premium, including Rs.282.22 lakhs for the current year and a cumulative unpaid premium of Rs.2,383.75 lakhs up to March 31, 2024. The same remains unprovided. Had it been accounted for, the loss for the year would have been higher by Rs.282.22 lakhs and reserves and surplus would have been lower by Rs.2,665.97 lakhs.

We conducted our audit in accordance with 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 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.

Material Uncertainty Related to Going Concern

We draw attention to Note No. 31(h) of the Financial Statements, regarding preparation of Financial Statements on Going Concern basis for the reasons stated therein. The Company has incurred a net loss of Rs. 2201.77 lakhs (Previous Year: Rs. 649.66 lakhs) during the year ended March 31, 2025 and as of that date, the Companys current liabilities exceed its current assets by Rs. 1257.071akhs (Previous Year: Rs. 1283.02 lakhs). As on 31^st March 2025 the companys total liabilities exceed its total assets leading to a negative net worth of Rs. 2793.91 lakhs (Previous Year: Rs. 592.13 Lakhs). The Company continues to incur losses and there is considerable decline in the level of operations.

These events or conditions as set forth herein above, indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the financial year ended on March31, 2025. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the basis for adverse opinion paragraph and Emphasis of Matter paragraph herein above, we have determined the matters described below to be the key audit matters to be communicated in our report.

SI. No. Key Audit Matter	Auditors Response
1. Litigation matters	The Company has certain ongoing legal proceedings with the revenue authorities and /or cases arisen during the ordinary course of business of the company.
	The companys management does not expect these legal proceedings, when concluded will have any material and adverse effect on the financial position of the company.
	Principal Audit Procedures
	Our audit procedures included and were not limited to the following:
	• Assessed the managements position through discussions with the in-house legal expert on both, the probability of success, and the magnitude of any potential loss.
	• Discussed with the management on the development in these litigations during the year ended March 31, 2025.
	• Reviewed the disclosures made by the Company in the financial statements in this regard.

 

2. Inventory	The Company has certain slow/ non-moving items of inventory. The Companys management has valued such inventory at cost.
	Principal Audit Procedures
	Our audit procedures included and were not limited to the following: We have test checked that such items are being sold at a price higher than the cost value.

Information other than the 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 and Directors Report including Annexures to Directors Report but does not include the financial statements and our auditors report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the 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 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 financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the .Act. 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 judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibility for the Audit of the Financial Statements

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

As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional scepticism 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 financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and 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 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, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (“the Order”), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. Except for the matters described in the Basis for Qualified Opinion paragraph, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above and matter as described in clause (j) (vi) below, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The Financial Statements dealt with by this Report are in agreement with the books of account;

d. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Indian Accounting Standards (Ind AS) specified under section 133 of the Act;

e. The matters described in the Basis for Qualified Opinion paragraph above, in our opinion may have adverse effect on the functioning of the Company;

f. On the basis of written representations received from the Directors taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2025 from being appointed as a Director in terms of Section 164 (2) of the Act;

g. Refer reservation stated in clause (j) (vi) below, relating to maintenance of accounts.

h. With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B;

i. No managerial remuneration for the year ended March 31,2025 has been paid/ provided by the Company to its directors and accordingly reporting for the provisions of section 197 read with Schedule V of the Act is not applicable;

j. 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 litigation as at March 31, 2025 on its financial position in its Financial Statements- Refer Note no. 29(a) 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 were no amounts which were 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, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The management has represented, that, to the best of its knowledge and belief, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(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) The company has not declared or paid any dividend during the year.

(vi) Based on our examination, the company, has not used accounting software for maintaining its books of account which had a feature of recording audit trail (edit log) facility during the entire financial year under review. Moreover, the inventory records are recorded in excel software which also does not have the feature of recording audit trail (edit log).

The Audit trail (edit log) has not been preserved as per the statutory requirements of record retention for the immediately preceding financial year i.e., 2023-24.

For J AIN SARAOGI & CO LLP	Manoj keshan
Chartered Accountants	(Partner)
FRN: 305004E/E300281	Membership No. 055272
Place: Kolkata	UDIN: 25055272BMJBDW7241
Date: 30th May, 2025.

Annexure “A” to Independent Auditors Report of even date to the members of NILACHAL REFRACTORIES LIMITED, on the financial statements as of and for the year ended March 31, 2025.

I. (a) (A) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of Property, Plant & Equipment.

(B) The Company is maintaining proper records showing full particulars of Intangible Assets.

(b) As informed to us, Property, Plant & Equipment of the company have been physically verified by the management and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the Property, Plant & Equipment is reasonable having regard to the size of the company and the nature of its assets.

(c) In our opinion and according to the information and explanations given to us, all the title deeds of immovable properties are held in the name of the company, however land having carrying value of Rs. 5.77 Lacs in the erstwhile / former name of the company.

(d) According to the information and explanations given to us, the Company has not revalued its Property, Plant and Equipment and Intangible Assets during the year. Accordingly, reporting under paragraph 3(i)(d) of the Order is not applicable.

(e) According to the information and explanations given to us, no proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

II. (a)The management has conducted physical verification of inventory at reasonable intervals during the year. In our opinion the coverage and the procedure of such verification by the management is appropriate. Discrepancies of 10% or more in the aggregate for each class of inventory were not noticed on such physical verification

(b) The Company has not been sanctioned working capital limits in excess of Rs. 5 crore, in aggregate, from bank on the basis of security of current assets. Accordingly, reporting under of Clause3(ii)(b) of the Order is not applicable.

III. The company 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, firms, Limited Liability Partnerships or any other parties during the year. Accordingly, the provisions of Clauses 3(iii) (a) to 3(iii)(f) of the Order are not applicable to the company.

IV. In our opinion and according to the information and explanations given to us, the company has not granted any loans or made any investments or provided any guarantees or security to the parties covered under Section 185 and 186. Therefore, the provisions of clause 3(iv) of the said order are not applicable to the Company.

V. According to the information and explanation given to us, the Company has not accepted any deposits or amounts which are deemed to be deposits from the public in accordance with directives issued by Reserve Bank of India and relevant provisions of Section 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Hence, the reporting under paragraph 3(v) of the Order does not arise.

VI. To the best of our knowledge and belief, the Central Government of India has not specified the maintenance of cost records under sub-section (1) of Section 148 of the Act. Therefore, the provisions of Clause (vi) of paragraph 3 of the said Order is not applicable to the company.

VII. (a) According to the information and explanations given to us and on the basis of our examinations of the books of account, the Company has generally been 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 other material statutory dues applicable to it. According to the information and explanations given to us, undisputed amounts payable in respect of TDS amounting to Rs 12.30 Lakhs were in arrears as at March 31,2025 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, statutory dues which as referred to in sub-clause (a) above have not been deposited on account of any dispute are as under:

Name of the statute	Nature of Dues	Amount in Lacs	Period to which the amount relates	Forum where dispute is pending	Remarks
Sales Tax	Sales Tax	72.18	1999-2000 to 2001-02	Additional Commissioner of Sales Tax, Central Zone, Cuttack, Orrisa (Sales Tax)
Entry Tax	Entry Tax	33.80	2001-2002	Additional Commissioner of Commercial Taxes, Range - I, Cuttack, Orissa (Entry Tax)
Entry Tax	Entry Tax	0.79	2002-2003	Commissioner of Commercial Tax, Angul Range, Angul, Orrisa (Entry Tax)
Sales tax	Sales Tax	24.10	2002-2003	Commissioner of Commercial Tax,: Angul Range, Angul, Orrisa (Entry Tax)
Goods and service Tax	GST, Interest and penalty	3.50	2019-20	Commissioner (Appeal), Cuttack

VIII. According to information and explanations given to us, the company has not surrendered or disclosed as any income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961). Accordingly, the provisions of clause 3(viii) of the Order are not applicable to the company.

IX. (a) Based on our audit procedures and on the information and explanation given to us, the Company has defaulted in the payment of interest on unsecured loan obtained from a related party body corporate. The period of default and the amount of default is as per table below.

Nature of borrowing, including debt securities	Name of Lender	Amount not paid on due date Amount (Rs. In Lacs)	Whether principal or interest	No. of days delay or unpaid (upfo 31st March 2025)	Remarks if any
Unsecured Loan (Inter corporate Deposit)	Ambarella Cap Fin Private Limited	22.13	Interest	1097
Unsecured Loan (Inter corporate Deposit)	Ambarella Cap Fin Private Limited	18.00	Interest	732
Unsecured Loan (Inter corporate Deposit)	Ambarella Cap Fin Private Limited	18.83	Interest	366
Unsecured Loan (Inter corporate Deposit)	Ambarella Cap Fin Private Limited	20.01	Interest	1
11% Redeemable cumulative Preference shares	Preference Shareholders	86.71	Principal and Interest	8948

(b) According to information and explanations given to us, the company is not declared wilful defaulter by any bank or financial institution or other lender.

(c ) The Company has not obtained term loans during the financial year and accordingly, the provisions of clause 3(ix)(c) of the Order are not applicable to the Company.

(d) According to the information and explanations given to us, and the procedures performed by us, and on an overall examination of the financial statements of the company, we report that the funds raised on short term basis have been utilised for long term purposes by Rs. 1243.69 Lacs.

(e) The Company does not have any subsidiaries, associates or joint ventures and accordingly, reporting under clause 3(ix)(e) of the Order is not applicable;

(f) The Company does not have any subsidiaries, associates or joint ventures and accordingly reporting under clause 3(ix)(f) of the Order is not applicable

X. (a)The company did not raise monies by way of initial public offer or further public offer (including debt instruments) during the year under review.

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

XI. (a) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, 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 by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the management.

(b) There were no reports filed under Section 143(12) of the Act in Form ADT-4 as prescribed under rule 13 of Companies (Audits 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, the Company has not received any complaint during the year under review.

XII. According to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii)(a), 3(xii)(b) and 3(xii)(c) of the Order are not applicable.

XIII. According to the information and explanations provided by the management, transactions with related parties are in compliance with the provisions of Sections 177 and 188 of the Companies Act, where applicable and the details have been disclosed in the financial statements as required by the applicable Ind AS.

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

(b) The reports of the Internal Auditors for the period under audit were considered by us.

XV. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable.

XVI. (a) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

(b) The Company has not conducted any Non-Banking Financial or Housing Finance activities.

(c) The company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, provisions of clause 3(xvi)(c) and 3(xvi)(d) of the Order are not applicable.

XVII. The company has incurred cash losses of Rs. 221.25 Lacs in the financial year under review and Rs. 63.67 Lacs in the immediately preceding financial year.

XVIII. There has not been any resignation of the statutory auditors during the year, Accordingly, the provisions of Clause 3(xviii) of the Order are not applicable.

XIX. On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, we are of the opinion that 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.

XX. There is no liability of the company under the provisions of section 135 the Act to the Company. Hence, reporting under paragraph 3(xx) (a) and (b) of the Order is not applicable.

XXI. The Company does not have any subsidiaries, associates or joint ventures and accordingly, reporting under clause 3(xxi) of the Order is not applicable.

For J AIN SARAOGI & CO LLP	Manoj keshan
Chartered Accountants	(Partner)
FRN: 305004E/E300281	Membership No. 055272
Place: Kolkata	UDIN: 25055272BMJBDW7241
Date: 30th May, 2025.

Annexure B” to the Independent Auditors Report of even date to the members of NILACHAL REFRACTORIES LIMITED on the financial statements for the year ended March 31, 2025.

Independent Auditors Report on the Internal Financial Controls 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 financial statements of NILACHAL REFRACTORIES LIMITED (“the Company”) as of March 31, 2025 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘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 Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements 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 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 Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to 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 Ind AS 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 with reference to financial statements.

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial controls with reference to financial statements includes those policies and procedures that

1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS 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 Ind AS financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls with reference to 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 financial statements to future periods are subject to the risk that the internal financial controls with reference to 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, apart from the, matter describe in “Basis of qualified opinion” paragraph and matter described in clause (j) (vi) of Report on other Legal and Regulatory Requirements” paragraph of our Independent Auditors Report; the Company has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2025, 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 J AIN SARAOGI & CO LLP	Manoj keshan
Chartered Accountants	(Partner)
FRN: 305004E/E300281	Membership No. 055272
Place: Kolkata	UDIN: 25055272BMJBDW7241
Date: 30th May, 2025.