P N Gadgil Jewellers Ltd Auditor Reports

Restated Consolidated Financial Information of P N Gadgil Jewellers Limited

To,

694, PNG House

Kunte Chowk, Laxmi Road Narayan Peth, Pune 411 030 Maharashtra, India

Independent Auditors Examination Report on the Restated Consolidated Financial Information prepared in connection with the proposed issue of equity shares of face value ? 10 each pursuant to the initial public offering by P N Gadgil Jewellers Limited.

Dear Sirs,

1. We, GDA & Associates, Chartered Accountants have examined, the attached restated consolidated financial information of P N Gadgil Jewellers Limited (the "Company" or the "Issuer") and its subsidiaries and joint ventures (together referred to as the "Group") which comprises of the Restated Consolidated Statement of Assets and Liabilities of the Group as at September 30, 2023, March 31, 2023, March 31, 2022 and March 31, 2021, the Restated Consolidated Statement of Profit and Loss (including other comprehensive income), the Restated Consolidated Statement of Changes in Equity and the Restated Consolidated Statement of Cash Flow of the Group for the six months period ended September 30, 2023 and for the financial years ended March 31, 2023, March 31, 2022 and March 31, 2021 and the summary statement of significant accounting policies, and other explanatory information (collectively referred to as the "Restated Consolidated Financial Information"), as approved by the Board of Directors of the Company (the "Board of Directors") at their meeting held on March 26, 2024 for the purpose of inclusion in the draft red herring prospectus (the "DRHP") to be prepared by the Company and filed with the Securities and Exchange Board of India (the "SEBI"), BSE Limited and National Stock Exchange of India Limited (together, the "Stock Exchanges") in connection with its proposed initial public offering of equity shares of face value of Rs. 10 each (the "Equity Shares", and such offering, the "IPO") comprising a fresh issue of Equity Shares and an offer for sale of Equity Shares by the selling shareholder, and prepared in terms of the requirements of:
1. Section 26 of Part I of Chapter III of the Companies Act, 2013, as amended (along with the rules framed thereunder, each as amended, the "Act");
2. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (the "ICDR Regulations"); and
3. The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India ("ICAI"), as amended from time to time (the "Guidance Note").
2. The Companys management (the "Management") and the Board of Directors are responsible for the preparation of the Restated Consolidated Financial Information. The Restated Consolidated Financial Information has been prepared by the Management based on preparation stated in paragraph 2.1 to the Restated Consolidated Financial Information. The responsibilities of the respective managements and the board of directors of the companies constituting a part of the Group included designing, implementing and maintaining adequate internal controls relevant to the preparation and presentation of the respective restated financial information, which have been used for the purpose of preparation of the Restated Consolidated Financial Information by the Management and the Board of Directors, as aforesaid. The Management and the Board of Directors are also responsible for identifying and ensuring that the Group comply with the Act, the ICDR Regulations and the Guidance Note.
3. We have examined the Restated Consolidated Financial Information taking into consideration:
1. the terms of reference and terms of our engagement agreed upon with you in accordance with our engagement letter dated December 22, 2023, in connection with the proposed IPO of the Company;
2. The Guidance Note, which also requires that we comply with the ethical requirements of the code of ethics issued by the ICAI;
3. Concepts of test checks and materiality to obtain reasonable assurance based on the verification of evidence supporting the Restated Consolidated Financial Information; and
4. The requirements of Section 26 of the Act and the ICDR Regulations. Our work was performed solely to assist you in meeting your responsibilities in relation to your compliance with the Act, ICDR Regulations and the Guidance Note in connection with the proposed IPO.
4. This Restated Consolidated Financial Information have been compiled by the Management from:
1. The audited special purpose interim audited consolidated financial statements of the Group as at and for the six months period ended September 30, 2023 (the "Special Purpose Interim Audited Consolidated Financial Statements") prepared in accordance with recognition and measurement principles of India Accounting Standard (Ind AS) 34 "Interim Financial Reporting", specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, each as amended, and other accounting principles generally accepted in India which have been approved by the Board of Directors at their meeting held on February 7, 2024; and
2. The audited consolidated financial statements of the Group as at and for the years ended March 31, 2023, March 31, 2022 and March 31, 2021 (the "Previous Years Audited Consolidated Financial Statements"), each prepared in accordance with the Indian Accounting Standards (the "Ind AS") prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India which have been approved by the Board of Directors at their meetings held on June 5, 2023, August 1, 2022 and October 1, 2021, respectively.
5. We have audited the Special Purpose Interim Audited Consolidated Financial Statements; and have issued an unmodified opinion thereon. We have issued our audit report dated February 7, 2024, on the Special Purpose Interim Audited Consolidated Financial Statements referred in Para 4 above (the "Special Purpose Audit Report"). The Companys previous auditors, G. D. Apte & Co., Chartered Accountants (the "Previous Auditors") have audited the Previous Years Audited Consolidated Financial Statements and have issued unmodified opinions thereon vide their audit reports dated June 5, 2023, August 1, 2022 and October 1, 2021, respectively.
6. For the purpose of our examination, we have relied on:

1. The Special Purpose Audit Report, which included the following Other Matter paragraph and Emphasis of matter:
1. Other Matter paragraph

We did not audit the separate financial statements and other financial information of two subsidiaries, namely PNG Jewelers, Inc. and Gadgil Diamonds Private Limited, whose financial statements reflect total assets of Rs. 416.60 million as at September 30, 2023, total revenues of Rs. 358.45 million and net cash outflows amounting to Rs. 48.98 million for the year-to-date period then ended on that date, as considered in the Special Purpose Interim Audited Consolidated Financial Statements. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Special Purpose Interim Audited Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and our report in terms of sub section (3) of section 143 of the Act, in so far as it relates to the aforesaid subsidiaries is based solely on the reports of the other auditors.

Our opinion is not modified in respect of this matter.

2. Emphasis of Matter

1. We draw attention to note no. 38 of the Special Purpose Interim Audited Consolidated Financial Statements which states that the Company has prepared the interim financial statements for the first time in year-to-date for the six- month period ended on September 30, 2023. Hence the comparative figures of September 30, 2022, are not provided.
2. We draw attention to Note No. 38 stating that company is in the process of closing its operations of closing its operations in Dubai, consequently investments in P N Gadgil Jewellers DMCC (subsidiary) and PNG LLC (Joint venture) total amounting Rs. 101.70 million and loan given to P N G Jewellers LLC amounting Rs. 420.11 million has been written off in FY 2022-23.

Necessary legal and regulatory compliances under the Local laws in Dubai, Foreign Exchange Management Act, 1999 and Related Directions/Guidelines/Notifications issued by Reserve Bank of India are in process.

Our opinion is not modified in respect of this matter.

1. Audit reports issued by the Previous Auditors dated June 5, 2023, August 1, 2022, and October 1, 2021, on the Previous Years Audited Consolidated Financial Statements, referred in Para 4 above.

1. The audits for the financial years ended March 31, 2023, March 31, 2022 and March 31, 2021 were conducted by the Previous Auditors , and accordingly reliance has been placed on the restated consolidated statement of assets and liabilities of the Group and the restated consolidated statements of profit and loss (including other comprehensive income), the restated consolidated statements of changes in equity and the restated consolidated statements of cash flow of the Group, the summary statements of significant accounting policies, and other explanatory information (collectively, the "Previous Years Restated Consolidated Financial Information") examined by the Previous Auditors. Our examination report in respect of the financial years ended March 31, 2023, March 31, 2022 and March 31, 2021 is based solely on the examination report dated March 26, 2024 submitted by the Previous Auditors (the "Previous Auditors Examination Report"). The Previous Auditors have also confirmed that the Previous Years Restated Consolidated Financial Information:
1. has been prepared after incorporating adjustments for the changes in accounting policies, material errors and regrouping/reclassifications retrospectively in the Previous Years Audited Consolidated Financial Statements, to reflect the same accounting treatment as per the accounting policies and grouping/classifications followed by the Group as at and for the six-month period ended September 30, 2023;
2. do not require any adjustment for modification as there is no modification in the underlying audit reports; and
3. have been prepared in accordance with the Act, the ICDR Regulations and the Guidance Note.
2. As indicated in our Special Purpose Audit Report referred above:
1. We did not audit the financial statements of Companys subsidiary, "Gadgil Diamonds Private Limited" which have been audited by Manas M. Bapat (the "GDPL Auditor") and whose reports have been furnished to us by the Management and our opinion on the Special Purpose Interim Audited Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of this subsidiary, is based solely on the reports of the GDPL Auditor.
2. The consolidated financial statements include Companys subsidiary "PNG Jewelers, Inc." incorporated outside India whose financial statements and other financial information have been prepared in accordance with accounting principles generally accepted in its respective country and which have been audited by Joseph Reeve CPA (the "PJI Auditor") under generally accepted auditing standards applicable in its respective country. The Management has converted the financial statements of such subsidiary located outside India from accounting principles generally accepted in their respective country to accounting principles generally accepted in India. We have audited these conversion adjustments made by the Management. Our opinion in so far as it relates to the balances and affairs of such a subsidiary located outside India is based on the report of the PJI Auditor and the conversion adjustments prepared by the Management and audited by us.
3. The Previous Years Audited Consolidated Financial Statements include 3 subsidiaries incorporated outside India whose financial statements as of and for the financial years ended March 31, 2023, March 31, 2022, March 31, 2021, and other financial information have been prepared in accordance with accounting principles generally accepted in their respective countries and which have been audited by other auditors under generally accepted auditing standards applicable in their respective countries. The Management has converted the financial statements of such subsidiaries located outside India from accounting principles generally accepted in their respective country to accounting principles generally accepted in India. The Previous Auditors have audited these conversion adjustments made by the Management. The Previous Auditors opinion in so far as it relates to the balances and affairs of such subsidiaries located outside India is based on the reports of other auditors and the conversion adjustments prepared by the Management and audited by the Previous Auditors.

Our opinion on the Special Purpose Interim Audited Consolidated Financial Statements and the Previous Years Audited Consolidated Financial Statements is not modified in respect of the above matters.

3. Based on the Previous Auditors Examination Report, the audit reports on the consolidated financial statements issued by the Previous Auditors included the following other matters:

As at and for the year ended March 31, 2023:

1. The Previous Auditor did not audit the financial statements and other financial information of 4 subsidiaries (Gadgil Diamonds Private Limited, PNG Jewelers, INC., P N Gadgil Jewellers DMCC Dubai, and P N G Jewellers LLC

Dubai), whose financial statements reflect total assets of Rs. 26.37 million as at March 31, 2023, total revenues of Rs. 1,553.11 million and net cash inflows amounting to Rs. 46.57 million for the year ended on that date, as considered in consolidated financial statements. These financial statements have been audited/reviewed by other auditors whose reports have been furnished to the Previous Auditor by the Management and the Previous Auditors opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and joint venture and our report in terms of sub section (3) of section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and joint venture is based solely on the reports of the other auditors.

2. Emphasis of Matter

"We draw attention to Note No. 38 stating that company is in the process of closing its operations of closing its operations in Dubai, consequently investments in P N Gadgil Jewellers DMCC (subsidiary) and P N G Jewellers LLC (Joint venture) total amounting Rs. 101.70 million and loan given to P N G Jewellers LLC amounting Rs.

420.11 million has been written off in FY 2022-23.

Necessary legal and regulatory compliances under the Local laws in Dubai, Foreign Exchange Management Act, 1999 and Related Directions/Guidelines/Notifications issued by Reserve Bank of India are in process."

The Previous Auditors opinion on the consolidated financial statements above, and the Previous Auditors report on other legal and regulatory requirement, is not modified in respect of above matters with respect to the Previous Auditors reliance on the work done and the reports of other auditors.

As at and for the year ended March 31, 2022:

3. The Previous Auditor did not audit the financial statements and other financial information of 4 subsidiaries (Gadgil Diamonds Private Limited, PNG Jewelers, INC., P N Gadgil Jewellers DMCC Dubai, and P N G Jewellers LLC Dubai¹), whose financial statement reflect total assets of Rs. 390.18 million as at March 31, 2022, total revenues of Rs. 939.21 million and net cash inflows amounting to Rs. 275.90 Million for the year ended on that date, as considered in consolidated financial statements. These financial statements have been audited/reviewed by other auditors whose reports have been furnished to the Previous Auditor by the Management and the Previous Auditors opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and joint venture and our report in terms of sub section (3) of section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and joint venture is based solely on the reports of the other auditors.

The Previous Auditors opinion on the consolidated financial statements above, and the Previous Auditors report on other legal and regulatory requirement, is not modified in respect of above matters with respect to the Previous Auditors reliance on the work done and the reports of other auditors.

As at and for the year ended March 31, 2021:

4. The Company had prepared separate sets of consolidated financial statements for the year ended March 31, 2020, and March 31, 2021 in accordance with Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) on which the Previous Auditor issued auditors reports dated October 27, 2020 and August 31, 2021 respectively. These separate sets of consolidated financial statements have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have also been audited by the Previous Auditor. The Previous Auditors opinion is not modified in respect of this matter.

The Previous Auditors did not audit the financial statements and other financial information of 4 subsidiaries(Gadgil Diamonds Private Limited, PNG Jewelers, INC., P N Gadgil Jewellers DMCC Dubai, and P N G Jewellers LLC Dubai²), whose financial statements reflect total assets of Rs. 497.83 million as at March 31, 2021, total revenues of Rs. 1,276.24 million and net cash outflows amounting to Rs. 23.24 Million for the year ended on that date, as considered in consolidated financial statements. These financial statements have been audited/reviewed by other auditors whose reports have been furnished to the Previous Auditor by the Management and the Previous Auditors opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in

1 P N G Jewellers LLC was considered as a subsidiary on the basis of control.

2 P N G Jewellers LLC was considered as a subsidiary on the basis of control.

respect of these subsidiaries and joint venture and our report in terms of sub section (3) of section 143 of the Act, in so far as it relates to the aforesaid subsidiaries and joint venture is based solely on the reports of the other auditors.

The Previous Auditors opinion on the consolidated financial statements above, and the Previous Auditors report on other legal and regulatory requirement, is not modified in respect of above matters with respect to the Previous Auditors reliance on the work done and the reports of other auditors.

4. Based on our examination and according to the information and explanations given to us and also as per the reliance placed on the Previous Auditors Examination Report and the audit reports of the GDPL Auditor and the PJI Auditor for the respective periods / years mentioned in paragraphs 7 and 8 above, we report that the Restated Consolidated Financial Information:
1. has been prepared after incorporating adjustments for the changes in accounting policies, material errors and regrouping/reclassifications retrospectively in the financial years ended March 31, 2023, March 31, 2022, and March 31, 2021 to reflect the same accounting treatment as per the accounting policies and grouping/classifications followed as at and for the six-month period ended September 30, 2023;
2. do not require any adjustment for modification as there is no modification in the underlying audit reports; and have been prepared in accordance with the Act, the ICDR Regulations and the Guidance Note.
5. The Restated Consolidated Financial Information do not reflect the effects of events that occurred subsequent to the date of the Special Purpose Audit Report on the Special Purpose Interim Audited Consolidated Financial Statements mentioned in paragraph 4 above.
6. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.
7. This examination report should not in any way be construed as a re-issuance or re-dating of any of the previous audit reports issued by us or the Previous Auditors, nor should this examination report be construed as a new opinion on any of the financial statements referred to therein.
8. We have no responsibility to update this examination report for events and circumstances occurring after the date of this examination report.
9. Our examination report is intended solely for use of the Board of Directors for inclusion in the DRHP to be filed with the SEBI and the Stock Exchanges in connection with the proposed IPO. Our examination report should not be used, referred to or distributed for any other purpose except with our prior consent in writing. Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come without our prior consent in writing.