Shri Hare-Krishna Sponge Iron Ltd Auditor Reports

To the Members of Shri-Hare Krishna Sponge Iron Limited

Report on Audit of financial statements

Qualified Opinion: We have audited the financial statements comprising Balance Sheet as at 31st March, 2026, Statement of Profit and Loss and Cash Flow Statement for the year then ended.

Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements give a true and fair view in conformity with accounting principles generally accepted in India.

Basis for Qualified Opinion: Government of India, vide notification dated November 21, 2025, notified the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020, and Occupational Safety, Health and Working Conditions Code, 2020 (collectively the Labour Codes). Under AS 15 Employee Benefits, legislative amendments constitute a plan amendment necessitating immediate recognition of variation in cost.

We were unable to obtain sufficient appropriate audit evidence to determine the nature and quantum of adjustments required on account of the Companys non-evaluation of the impact of the Labour Codes. The Company has not maintained any workings, estimates, or assessments. We are unable to quantify the financial impact. We have been unable to satisfy ourselves as to whether provisions and accruals relating to employee benefits are adequate, complete, and fairly stated.

Audit conducted in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013.

Key Audit Matters: In addition to the matter described in the Basis for Qualified Opinion section, descriptions of Key Audit Matters are given below.

SI No. Key Audit Matters	Auditors Response
1 IPO and Listing on NSE SME Platform (Refer Note 2.01 to the financial statements)	With respect to IPO and Listing, we have undertaken audit procedures, which include the following:
During the year, the Company successfully completed its Initial Public Offering (IPO) and was listed on the NSE SME Platform. The process involved compliance with various regulatory requirements and significant financial transactions.	Examined Board resolutions and other relevant documents to confirm proper recording of increased paid-up share capital.
	Checked bank statements, reconciled with utilization schedules provided by management.
Following are the key complexities identified in relation to the IPO:	Verified supporting documents for issue expenses and tested allocation between P&L and Securities Premium account for compliance with Section 52.
- Fresh equity issuance during the year, resulting in changes to share capital and securities premium.	Verified the presentation and disclosures of share capital, securities premium, and related information in the financial statements by checking them against the requirements of Schedule III to the Companies Act, 2013 and applicable Accounting Standards.
- Determination and accounting of IPO expenses, with correct allocation between the Profit & Loss account and Securities Premium account in accordance with Section 52 of the Companies Act, 2013.
- Ensuring correct presentation of share capital, securities premium, and related disclosures in the financial statements in line with applicable accounting standards and listing norms.

2 Assessment of carrying value of Capital Work-in-Progress	Our audit procedures in relation to assessment of carrying value of Capital Work-in-Progress included, among others, the following:
(Refer note 2.09 to the financial statements)
Capital Work-in-Progress represents a significant portion of the total assets of the Company as at March 31, 2026.	- Verified, on a test check basis, additions to Capital Work-in-Progress with underlying supporting documents, including invoices, purchase orders, work orders, and other relevant records.
The assessment of carrying value of Capital Work-in-Progress involves management judgement in determining whether there are any indicators of impairment, the appropriateness of capitalisation of costs, classification between Property, Plant and Equipment and Capital Work-in-Progress, and recoverability of the carrying amounts.	- Assessed the appropriateness of classification of assets between Property, Plant and Equipment and Capital Work-in-Progress, including the timing of capitalisation of assets ready for intended use.
Accordingly, assessment of the carrying value of Capital Work-in-Progress has been considered as a key audit matter.	- Examined the ageing of Capital Work-in-Progress and evaluated whether any projects were significantly delayed, suspended or required assessment for impairment.
	- Verified the disclosures made in the financial statements in respect of Capital Work-in-Progress, including ageing of Capital Work-in-Progress, wherever applicable.
	Based on the above procedures performed, we found the managements assessment of the carrying value of
	Capital Work-in-Progress to be reasonable and did not note any material exceptions.

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1 Capital Work-in-Progress to be reasonable and did not note any material exceptions.

Emphasis of Matter: We draw attention to:

? Note 2.10 to the financial statements regarding provision for diminution in the value of non-current investments in LLP

? Note 2.42 regarding temporary delay in completion and commencement of commercial production of Captive Power Plant

? Note 2.14 regarding temporary suspension of kiln operations

Our opinion is not modified in respect of the above matters.

Information Other than the financial statements and Auditors Report Thereon: The Companys Board of Directors is responsible for other information. Our opinion does not cover other information. We do not express any form of assurance conclusion thereon.

Responsibilities of Management and Those Charged with Governance for the financial statements: Board responsible under section 134(5) of the Companies Act, 2013. Responsibility includes maintenance of adequate accounting records, selection and application of accounting policies, design/implementation/maintenance of adequate internal financial controls.

Auditors Responsibilities for the Audit of the financial statements: Objectives: obtain reasonable assurance about whether financial statements are free from material misstatement, whether due to fraud or error, and issue auditors report including opinion. Reasonable assurance is high level of assurance but not guarantee.

As part of audit in accordance with SAs:

? Identify and assess risks of material misstatement

? Obtain understanding of internal control relevant to audit

? Evaluate appropriateness of accounting policies

? Conclude on appropriateness of managements use of going concern basis

? Evaluate overall presentation, structure and content of financial statements

Materiality is magnitude of misstatements that makes it probable that economic decisions of a reasonably knowledgeable user may be influenced.

We communicate with those charged with governance regarding planned scope and timing of audit and material audit findings.

Report on Other Legal and Regulatory Requirements:

1. As required by Companies (Auditors Report) Order, 2020 (the Order), we give in Annexure A a statement on matters specified in paragraphs 3 and 4.

2. As required by Section 143(3) of the Act: i. We have sought and obtained all information and explanations necessary for audit except as stated in Basis for Qualified Opinion ii. Proper books of account have been kept by the Company except for matters stated in paragraph 2(viii)(f) on reporting under Rule 11(g) and except for effects of matter in Basis for Qualified Opinion iii. Balance Sheet, Statement of Profit and Loss and Cash Flow Statement are in agreement with books of account iv. Except as stated in Basis for Qualified Opinion, financial statements comply with Accounting Standards specified under Section 133

v. On basis of written representations received from directors as on 31st March, 2025, none of the directors is disqualified as on 31st March, 2026 from being appointed as director in terms of Section 164(2) of the Act.

vi. Modifications relating to maintenance of accounts and other matters connected therewith are as stated in paragraph 2(ii) above on reporting under Section 143(3)(b) and paragraph 2(viii)(f) on reporting under Rule 11(g) and in Basis for Qualified Opinion.

vii. With respect to adequacy of internal financial controls with reference to financial statements and operating effectiveness, refer to separate report in Annexure B.

viii. With respect to other matters to be included in Auditors Report in accordance with Rule 11 of Companies (Audit and Auditors) Rules, 2014:

a. The Company does not have any pending litigations which would impact its financial position. b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

c. There were no amounts which were required to be transferred to the Investor Education and Protection Fund.

d. (i) Management has represented that 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 that the Intermediary shall lend or invest in other persons or entities identified by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(ii) Management has represented that no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties), with the understanding that the Company shall lend or invest in other persons or entities identified by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(iii) Based on audit procedures, nothing has come to our notice that the representations made by management contain any material misstatement.

e. The Company has not declared or paid any dividend during the year, therefore compliance with Section 123 of the Companies Act, 2013 is not applicable. f. Based on examination including test checks, the Company has used accounting software for maintaining books of account which has a feature of recording audit trail (edit log) facility except in respect of property, plant, equipment and inventory records. The audit trail facility has been operating throughout the current and previous year for all relevant transactions recorded in the software except in respect of property, plant, equipment and inventory records. Additionally, the audit trail has been preserved by the company as per statutory requirements for record retention except in respect of property, plant, equipment and inventory records. Further, during the course of audit we did not come across any instance of audit trail feature being tampered with.

ix. The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

1. With respect to other matters to be included in Auditors Report in accordance with requirements of section 197(16) of the Act: According to information and explanations given to us and based on examination of records, the Company has paid/provided for managerial remuneration in accordance with requisite approvals mandated by provisions of section 197 read with Schedule V of the Act.

Signed: For A.C. Bhuteria & Co. Chartered Accountants Firms Registration No. 303105E Sd/- (Mahak Bhuteria) Partner Membership No.314270 UDIN: 26314270FLRBYA8099 Place: Kolkata Dated: 29th May, 2026

ANNEXURE A TO AUDITORS REPORT

(i) Property, Plant and Equipment: (a) (A) Proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment maintained. (B) Proper records showing full particulars of Intangible Assets maintained. (b) Property, Plant and Equipment physically verified by management in phased manner. No material discrepancies noticed. (c) Title deeds of all immovable properties disclosed in financial statements (other than lessee properties) are held in name of Company. (d) Company has not revalued any class of Property, Plant and Equipment or intangible assets during the year. No Right of Use assets. (e) No proceedings initiated or pending for holding any benami property under Benami Transactions (Prohibition) Act, 1988.

(ii) Inventories: (a) Physical verification of inventories conducted at reasonable intervals by management. No discrepancies of 10% or more in aggregate for each class of inventory noticed. (b) Company sanctioned working capital limits in excess of five crore rupees from banks on basis of security of current assets. Quarterly returns/statements filed are in agreement with books of accounts except as provided in Note 2.29:

Quarter	Name of Bank	Particulars	Amount as per Books of Account (Rs in Lakhs)	Amount as reported in quarterly return/statement (Rs in Lakhs)	Amount of Difference (Rs in Lakhs)
June, 2025	HDFC Bank	Inventories	1,001.61	1,108.61	-107.00
September 2025	HDFC Bank	Inventories	650.71	515.09	135.62
December, 2025	HDFC Bank	Inventories	1,187.69	1,279.64	-91.95
March, 2026	HDFC Bank	Inventories	1,488.83	1641.30	-48.28

ANNEXURE A (CONTINUED)

Quarter	Name of Bank	Particulars	Amount as per Books of Account (Rs in Lakhs)	Amount as reported in quarterly return/statement (Rs in Lakhs)	Amount of Difference (Rs in Lakhs)
June, 2025	HDFC Bank	Debtors and Advances to Suppliers	685.02	962.99	-277.97
September 2025	HDFC Bank	Debtors and Advances to Suppliers	539.58	776.61	-237.03
December, 2025	HDFC Bank	Debtors and Advances to Suppliers	866.46	904.52	-38.06
March, 2026	HDFC Bank	Debtors and Advances to Suppliers	525.55	472.45	53.10

(iii) Company has not made any investments in, provided any guarantee or security to, companies, firms, LLPs or any other party.

(a) Terms and conditions of loans not prejudicial to interest of company. Aggregate amount during year and Balance Outstanding at Balance Sheet date with respect to Loans to parties other than subsidiaries, joint ventures and associates amounts to Rs 69.74 Lakhs (P.Y. Rs 64.51 lacs). No loans granted to associates. Amount of NIL (PY Rs. 125 lacs) granted during year to party other than associates, joint venture, or subsidiary.

(b) Schedule of repayment of principal and payment of interest stipulated and repayments/receipts regular.

(c) Amount of Rs. 3.16 lacs overdue for more than ninety days, being interest on loan for financial year 2024-25. No reasonable steps taken for recovery.

(d) No loan or advance in nature of loan granted which has fallen due during year, has been renewed or extended or fresh loans granted to settle overdues.

(e) Company has not granted any loans or advances in nature of loans either repayable on demand or without specifying terms or period of repayment, except Loans to parties other than subsidiaries, joint ventures and associates aggregating to Rs. NIL (P.Y. Rs 125 Lakhs) repayable on demand and percentage thereof to total such loans granted in previous year being 100%.

(iv) Company has complied with provisions of Section 185 and Section 186 of Companies Act, 2013 as applicable.

(v) Company has not accepted deposits or amounts deemed to be deposits. No order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal.

(vi) Maintenance of cost records has not been specified by Central Government under sub-section (1) of section 148 of Companies Act, 2013.

(vii) (a) Company is regular in depositing undisputed statutory dues including GST, provident fund, employees state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues. No undisputed amounts payable in arrears as at 31.03.2026 for period more than six months. (b) No dues of Income tax, Sales tax, Value Added Tax, Service Tax, Custom duty, Excise duty or GST which have not been deposited on account of any dispute.

(viii) No transactions not recorded in books of account that have been surrendered or disclosed as income during year in tax assessments under Income Tax Act, 1961.

(ix) (a) Company has not defaulted in repayment of loans or other borrowings or payment of interest thereon to any lender. (b) Company has not been declared wilful defaulter by any bank or financial institution or other lender. (c) Company has utilized term loan for purpose for which it was obtained. (d) Funds raised on short term basis have not been utilized for long term purposes. (e) Company has not taken any funds from any entity or person on account of or to meet obligation of its associates. (f) Company has not raised any loan during year on basis of pledge of securities held in its associate companies.

(x) (a) Company has raised money by way of initial public offer during year. Raised Rs. 2991.30 lacs, out of which Rs. 2565.22 lacs utilized towards purpose and Rs. 426.08 lacs parked in Fixed Deposits. (b) Company has not made any preferential allotment or private placement of shares or convertible debentures during year.

(xi) (a) No fraud by Company or on Company noticed or reported during year. (b) No report under Section 143(12) of Companies Act, 2013 filed by auditors in Form ADT-4 with Central Government. (c) No whistle-blower complaint received by Company during year.

(xii) Company is not a Nidhi Company.

(xiii) Transactions with related parties are in compliance with sections 177 and 188 of Act where applicable. Details disclosed in financial statements.

(xiv) Company has an internal audit system commensurate to size and nature of its business. Reports of internal auditor considered.

(xv) Company has not entered into any non-cash transactions with directors or persons connected with him as specified under Section 192 of Companies Act, 2013.

(xvi) (a) Company is not required to be registered under section 45-IA of Reserve Bank of India Act, 1934 as Non-Banking Finance Company. (b) Company has not conducted any Non-Banking Financial activities or any Housing Finance activities. (c) Company is not a Core Investment Company (CIC) as defined in regulations made by RBI. (d) There is no Core Investment Company (CIC) in the group.

(xvii) Company has not incurred any cash losses in current financial year and in immediately preceding financial year.

(xviii) There has been no resignation of statutory auditors during year.

(xix) On basis of financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, no material uncertainty exists as on date of audit report that company is capable of meeting its liabilities existing at date of balance sheet as and when they fall due within a period of one year from balance sheet date. This is not an assurance as to future viability.

Company does not have any ongoing projects and there is no unspent amount required to be transferred to a fund specified in Schedule VII of Companies Act, 2013.

Signed: For A.C. Bhuteria & Co. Chartered Accountants Firms Registration No. 303105E Sd/- (Mahak Bhuteria) Partner Membership No.314270 UDIN: 26314270FLRBYA8099

(CONTINUED FROM PAGE 25)

(Continuation of xix and signing details)

ANNEXURE B TO AUDITORS REPORT

Report on the Internal Financial Controls with reference to the aforesaid financial statements under Section 143(3)(i) of the Companies Act, 2013

Opinion: We have audited internal financial controls with reference to financial statements of Shri-Hare Krishna Sponge Iron Limited as of 31st March, 2026. In our opinion, the Company has, in all material respects, an adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31st March 2026, based on internal controls criteria established by Company considering essential components of internal control stated in Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by ICAI.

Managements Responsibility for Internal Financial Controls: Management responsible for establishing and maintaining internal financial controls based on criteria established by Company considering essential components of internal control stated in Guidance Note. Responsibilities include design, implementation and maintenance of adequate internal financial controls.

Auditors Responsibility: Our responsibility to express opinion on Companys internal financial controls with reference to financial statements based on our audit. Conducted in accordance with Guidance Note and Standards on Auditing issued by ICAI.

Meaning of Internal Financial Controls with reference to financial statements: A companys internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements for external purposes in accordance with GAAP.

ANNEXURE B (CONTINUED)

Inherent Limitations of Internal Financial Controls with reference to financial statements: Because of inherent limitations, including possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected.

Signed: For A.C. Bhuteria & Co. Chartered Accountants Firms Registration No. 303105E Sd/- (Mahak Bhuteria) Partner Membership No.314270 UDIN: 26314270FLRBYA8099 Place: Kolkata Dated: 29th May, 2026