Varroc Engineering Ltd Auditor Reports

To the Members of Varroc Engineering Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Varroc Engineering Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2025, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the Standalone financial statements, including a summary of material accounting policies and other explanatory information .

In our opinion and to the best of our information and according to the explanations given to us , the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as 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 Standalone Financial Statements section of our report. We are independent of the Company in accordance with the ‘Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to Note 51B of the standalone financial statements which describes the effects of the GST Orders received by the Company from GST Authorities. The Company has initiated appellate proceedings against these orders, pending conclusion of which no adjustments have been made in respect of such matters in the standalone financial statements. Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2025. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.

Key audit matters	How our audit addressed the key audit matter
Accounting for merger of Varroc Polymers Limited (‘VPL) (wholly-owned subsidiary of the Company) with Varroc Engineering Limited (as described in note 55(b) of the standalone financial statements)	The audit procedures performed by us included the following:
Pursuant to provisions of Section 230-232 of the Companies Act, 2013, the Board of Directors of the Company on May 17, 2024 approved the scheme of amalgamation of VPL with the Company with appointed date of April 01, 2024 (‘the Scheme). National Company Law Tribunal (‘NCLT) approved the Scheme vide its order dated January 10, 2025 and the merger became effective on February 01, 2025 on filing of the NCLT order with the Registrar of Companies.	Inspected the documents filed by the Company with the Registrar of Companies including the NCLT order with respect to the merger of VPL with the Company based on which the Scheme became effective.
This merger has been accounted for as a business combination of entities under common control as per Appendix C to Ind AS 103 – Business Combinations. Consequently, all the comparative periods presented in the financial statements have been restated to include the effect of this merger.	Read the accounting treatment in the Scheme as approved by NCLT and assessed whether it is in accordance with Appendix C to Ind AS 103.
We identified this as a key audit matter in our audit of the standalone financial statements as the merger is considered a significant event that occurred during the year which required management judgement regarding assessment of common control transaction as per Appendix C to Ind AS 103 and required restatement of comparative periods presented in the financial statements.	Evaluated whether the accounting treatment applied to the merger is in accordance with the Scheme.
	Assessed the workings prepared by management for the merger including elimination of inter-company transaction and balances and workings prepared for restatement of comparative figures presented in the standalone financial statements as per Appendix C to Ind AS 103.
	Assessed the disclosures in the standalone financial statements for compliance with the relevant accounting standard requirements.
Key audit matters	How our audit addressed the key audit matter
Recoverability of investment in and loans to VarrocCorp Holding BV, Netherlands (as described in note 7(a) and 16 of the standalone financial statements)	The audit procedures performed by us included the following:
The Company has equity investment of RS. 7,771.23 Million (net of impairment provision of RS. 1,900.79 Million) in and loans of RS. 1,031.26 Million to its wholly owned subsidiary VarrocCorp Holding BV Netherlands (‘VCHBV) as at March 31, 2025.	Obtained an understanding, evaluated the design and tested the operating effectiveness of controls the Company has in relation to impairment assessment process;
As required by Ind AS 36 "Impairment of assets", at each reporting period end, management assesses the existence of impairment indicators for investments in and loans to subsidiaries. In case of existence of impairment indicators, the investment and loan balances are subjected to impairment test.	Evaluated the competence and objectivity of Companys external specialist involved in the process;
VCHBV holds equity investments in overseas subsidiaries - primarily in Italy, Vietnam, Romania and in China JV. Hence for impairment testing, the management has assessed the recoverability of the aforesaid underlying investments in overseas subsidiaries as at March 31, 2025.	Involved valuation specialist where necessary to assist in assessing the appropriateness of the valuation model including the independent assessment of the underlying key assumptions;
The recoverable amount of investment in and loans to each of these overseas subsidiaries is determined based on the discounted cash flow model which has sensitivity around key assumptions such as revenue growth, operating margins, discount rate, terminal growth rate and also involves significant judgements and estimates.	Performed sensitivity testing of key assumptions used;
We identified this as a key audit matter in our audit of the standalone financial statements considering the complexity in determining the recoverable amounts and the quantum of such equity investments and loans as at March 31, 2025.	Tested the arithmetical accuracy of the models;
	Assessed the adequacy of disclosures in the standalone financial statements.
Key audit matters	How our audit addressed the key audit matter
Allowability of deduction on write-off of loans to subsidiary under the Income Tax Act, 1961 (as described in note 24 of the standalone financial statements)	The audit procedures performed by us included the following:
In the previous year ended March 31, 2024, the Company derecognised (written-off) loans given to VCHBV and interest accrued on such loans aggregating to RS. 13,533.33 million (including RS. 1,736.89 million by VPL, wholly owned subsidiary, now merged with the Company with the appointed date of April 01, 2024)	Read the tax opinions obtained by the Company from two senior tax counsels supporting the allowability of tax deduction on write-off of the said loans;
These loans pertained to funding of Varroc Lighting Systems (‘VLS) entities (erstwhile subsidiaries of VCHBV) and were fully provided for during the period ended Sep 30, 2022 when the VLS business was sold to Compagnie Plastic Omnium.	Involved tax experts to assist in evaluating the allowability of deduction on write-off of loans to subsidiary;
Management considered the aforesaid write-off as an allowable business loss for computation of income tax provision for AY 2024-25 (and also recognition of deferred tax asset on unutilized loss), as it believes that these loans extended to VCHBV were in the nature of trade investments to advance the Companys business.	Assessed the forecast of future taxable income prepared by the management to test the recoverability of deferred tax asset as at March 31, 2025;
We identified this as a key audit matter in our audit of the standalone financial statements considering quantum of the deduction and the significant judgement involved with respect to deductibility of such expenditure under Income tax Act, 1961.	Assessed the adequacy of disclosures in the standalone financial statements.
Key audit matters	How our audit addressed the key audit matter
Derecognition of trade receivables under factoring arrangements (as described in note 13 of the standalone financial statements)	The audit procedures performed by us included the following:
The Company enters into non-recourse factoring arrangements for its trade receivables with various banks/financial institutions.	Evaluated the assessment made by management in respect of transfer of substantially all risks and rewards of ownership of the financial assets under the factoring contracts;
As at March 31, 2025, the Company derecognised trade receivables amounting to RS. 6,993.36 million. The Company derecognizes the receivables from its books if it transfers substantially all the risks and rewards of ownership of the financial asset (i.e. receivables).	Read samples of factoring contracts to understand the terms and assessed if they qualify as non-recourse agreements and further assessed the accounting treatment as per the requirements of Ind AS 109, "Financial Instruments";
The assessment of derecognition of trade receivables under the factoring arrangements is complex and requires judgement.	Assessed the adequacy of disclosures in the standalone financial statements for compliance with the relevant accounting standard requirements.
Accordingly, this has been identified as a key audit matter in our audit of the standalone financial statements.

Other Information

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

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

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially 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.

Responsibilities of the Management for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

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

Auditors Responsibilities for the Audit of the Standalone Financial Statements

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

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

Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 standalone financial statements for the financial year ended March 31, 2025 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 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1" 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) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) 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 except for the matters stated in the paragraph (j)(vi) below on reporting under Rule 11(g);

(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) The matter described in Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

(f) On the basis of the written representations received from the directors as on March 31, 2025 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) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph (b) above on reporting under Section 143(3) (b) and paragraph (j)(vi) below on reporting under Rule 11(g)

(h) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(i) In our opinion, the managerial remuneration for the year ended March 31, 2025 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act.

(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 litigations on its financial position in its standalone financial statements

– Refer Note 51 to the standalone financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts

– Refer Note 7 and 16 to the standalone financial statements;

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, other than as disclosed in the note 54 to the standalone financial statements, 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; 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; and

c) Based on such audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.

v. As stated in note 20A to the standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

vi. Based on our examination which included test checks, the Company has used SAP accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility in respect of the application and the same has operated throughout the year for all relevant transactions. We did not come across any instance of the audit trail feature being tampered with in respect of this accounting software. Normal/Regular users are not granted direct database or super user level access. However, changes to the database by a super user specifically does not carry the feature of a concurrent real time audit trail. Additionally, the audit trail of prior year has been preserved by the Company as per the statutory requirements for record retention to the extent it was enabled and recorded in the respective year.

Further, the Company has also used a payroll processing software which is operated by a third-party service provider. In the absence of necessary evidence regarding audit trail in the Service Organisation Controls report received by us, we are unable to comment whether the audit trail feature was enabled and operated throughout the year for all relevant transactions recorded in the payroll processing software or whether there were any instances of the audit trail feature being tampered with. Additionally, we are unable to comment whether the audit trail has been preserved by the Company as per the statutory requirements for record retention.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Paul Alvares

Partner

Membership Number: 105754

UDIN: 25105754BMITLI3154

Place : Pune

Date: May 29, 2025

Annexure ‘1

referred to in paragraph under the heading "Report on other legal and regulatory requirements" of our report of even date Re: Varroc Engineering Limited ("the Company")

In terms of the information and explanations sought by us and given by the company and the books of account and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that

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

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

(b) Property, Plant and Equipment have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) The title deeds of immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in notes 3 and 6 to the financial statements included in property, plant and equipment are held in the name of the Company. Certain title deeds of the immovable Properties, in the nature of freehold and leasehold land & buildings, as indicated in the below mentioned cases which were acquired pursuant to a Scheme of Amalgamation approved by National Company Law Tribunals (NCLT) Order dated January 10, 2025, are not individually held in the name of the Company, however the deed of merger has been registered by the Company on February 25, 2025.

Description of property	Gross carrying value (J Million)	Held in name of	Whether promoter director or their relative or employee	Period held (Refer Note 2)	Reason for not being held in name of company
Free Hold Land	175.64	Varroc Polymers Limited	No	01/04/2024	Refer note 1
Buildings	60.77	Varroc Polymers Limited	No	01/04/2024	Refer note 1
Right to Use Asset- Land	241.49	Varroc Polymers Limited	No	01/04/2024	Refer note 1
Right to Use Asset- Building	34.62	Varroc Polymers Limited	No	01/04/2024	Refer note 1

Note1: The title of the asset transferred pursuant to the scheme of amalgamation are in the process of being transferred in the name of the Company.

Note 2: Period held has been considered from the appointed date as defined in the scheme of amalgamation.

Note 3: Subsequent to March 31, 2025, title deeds of Freehold land having Gross carrying amount of RS. 98.60 million have been transferred in the name of the Company.

(d) The Company has not revalued its Property, Plant and Equipment (including Right of use assets) or intangible assets during the year ended March 31, 2025 since the Company follows cost model for measurement after recognition for Property, Plant and Equipment and Intangible Assets.

(e) There are no proceedings initiated or pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

(ii) (a) The inventory has been physically verified by the management during the year except for inventories lying with third parties. In our opinion, the frequency of verification by the management is reasonable and the coverage and procedure for such verification is appropriate. Discrepancies of 10% or more in aggregate for each class of inventory were not noticed in respect of such physical verification except for ‘Packing material which have been properly dealt with in the books of account. Inventories lying with third parties have been confirmed by them as at or near year end and discrepancies of 10% or more in aggregate for each class of inventory were not noticed in respect of such confirmations.

(b) As disclosed in note 22 to the financial statements, the Company has been sanctioned working capital limits in excess of H five crores in aggregate from banks and financial institutions during the year on the basis of security of current assets of the Company. Based on the records examined by us in the normal course of audit of the financial statements, the quarterly returns/statements filed by the Company with such banks and financial institutions are in agreement with the books of accounts of the Company, except for the cases for which the details are disclosed in Appendix A.

(iii) (a) During the year, the Company has provided loans and stood guarantee to companies as disclosed below. According to the information and explanations given to us and audit procedures performed by us, the Company has not provided advances in the nature of loans or security to companies, firms, Limited Liability Partnerships or any other parties: (Rs. in Million)

	Guarantees	Loans
Aggregate amount granted/ provided during the year
- Subsidiaries	346.43	708.45
Balance outstanding as at balance sheet date in respect of above cases
- Subsidiaries	818.00	1,208.64*

*Balance outstanding includes opening balances and restatement impact on foreign currency loans.

(b) During the year, the investments made, guarantees provided and the terms and conditions of the grant of all loans to companies, firms, Limited Liability Partnerships or any other parties are not prejudicial to the Companys interest. The Company has not provided security and advances in the nature of loans to companies, firms, Limited Liability Partnerships or any other parties during the year.

(c) In respect of loans where schedule of repayment of principal has been specified, there was no amount which was due during the year. Further, in respect of loans repayable on demand, no principal amounts were demanded during the year. In respect of payment of interest where due dates are stipulated, the delays in receipt of interest as of balance sheet date are mentioned below:

Name of the Subsidiary	Amount (J Million)	Due date	Extent of delay (days)
VEHBV	0.56	30-Apr-22	1066
VEHBV	1.30	30-Jul-22	975
VEHBV	1.63	30-Oct-22	883
VEHBV	2.50*	30-Jan-23	791
VEHBV	3.25*	30-Apr-23	701
VEHBV	3.46*	30-Jul-23	610
VEHBV	3.73*	30-Oct-23	518
VEHBV	3.61*	30-Jan-24	426
VEHBV	3.48*	30-Apr-24	335
VEHBV	3.51*	30-Jul-24	244
VEHBV	3.04*	30-Oct-24	152
VEHBV	2.82*	30-Jan-25	60
VarrocCorp Holding B.V.	>4.95	31-Jan-24	285
VarrocCorp Holding B.V.	2.10	30-Apr-24	210
VarrocCorp Holding B.V.	28.25#	30-Apr-24	335
VarrocCorp Holding B.V.	20.57#	30-Jul-24	244
VarrocCorp Holding B.V.	16.41#	30-Oct-24	152
VarrocCorp Holding B.V.	13.40#	30-Jan-25	60
Varroc Connect Private Limited (erstwhile CarIQ Technologies Private Limited)	0.77	31-Mar-20	1815
Varroc Connect Private Limited (erstwhile CarIQ Technologies Private Limited)	2.00	31-Mar-21	1450
Varroc Connect Private Limited (erstwhile CarIQ Technologies Private Limited)	2.06	31-Mar-22	1085
Varroc Connect Private Limited (erstwhile CarIQ Technologies Private Limited)	2.25	31-Mar-23	720
Varroc Connect Private Limited (erstwhile CarIQ Technologies Private Limited)	2.54	31-Mar-24	354

* This interest on loans given to Varroc European Holdings B.V. Netherlands ("VEHBV") aggregating RS. 29.40

Million has not been accrued in books of account post impairment of the underlying loans. The Loan amount granted to VEHBV, Netherlands aggregating RS. 199.80 million outstanding as at March 31, 2025 has been impaired. #Interest receivable outstanding as at March 31, 2025

(d) The following amounts are overdue for more than ninety days from subsidiaries to whom loan has been granted, and reasonable steps have been taken by the Company for recovery of the overdue amount of interest.

Number of Cases	Principal Amount Overdue	Interest Overdue (Amount in J million)	Total Overdue (Amount in J million)
15	Nil	108.69*	108.69*

*Out of INR 108.69 Million of outstanding interest from subsidiaries, interest amount aggregating RS. 26.58 Million has not been accrued in the books of account. Further, RS. 3.49 Million has been impaired.

(c) During the year, the Company has granted fresh loans to companies to settle the loans granted to these parties prior to those falling due.

Name of the Parties	Aggregate amount of loans or advances in the nature of loans granted during the year (Rs. in Million)	Aggregate overdue amount settled by renewal or extension or by fresh loans granted to same parties (Rs. in Million)	Percentage of the aggregate to the total loans or advances in the nature of loans granted during the year
	A	B	B/A
Varroc Connect Private Limited (erstwhile CarIQ Technologies Private Limited)	118.57	63.57	54%

Other than the above, there were no loans or advance in the nature of loan granted to companies, firms, Limited Liability Partnerships or any other parties which had fallen due during the year, that have been renewed or extended or fresh loans granted to settle the overdues of existing loans given to the same parties.

(f) As disclosed in note 16 to the financial statements, the Company has granted loans which are repayable on demand or without specifying any terms or period of repayment:

	Subsidiaries
Aggregate amount of loans –
Repayable on demand (Rs. in Million)	1,128.64*
Percentage of loans repayable on demand to the total loans	93%

*This excludes RS. 199.80 million outstanding from VEHBV (100% subsidiary and hence a related party under section 2(76) of the Companies Act 2013) which has been impaired.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities given in respect of which provisions of section 185 of the Companies Act 2013 are applicable and hence not commented upon. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 186 of the Act in respect of loans and advances given, investments made and guarantees and securities given.

(v) The Company has neither accepted any deposits from the public nor accepted any amounts which are deemed to be deposits within the meaning of sections 73 to 76 of the Companies Act and the rules made thereunder, to the extent applicable. Accordingly, the requirement to report on clause 3(v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture of its products and generation of electricity, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases. According to the information and explanations given to us and based on audit procedures performed by us, no undisputed amounts payable in respect of these statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(b) The dues of goods and services tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess, and other statutory dues have not been deposited on account of any dispute, are as follows:

Name of the statute	Nature of the dues	Amount* (Rs. in Million)	Period to which the amount relates	Forum where the dispute is pending
Income Tax Act, 1961	Income Tax	133.23	AY 2008-09	Bombay High Court, Ch. Sambhajinagar (Aurangabad) Branch
			AY 2013-14
			AY 2018-19
Income Tax Act, 1961	Income Tax	110.58	AY 2015-16 to AY 2020-21	Commissioner of Income Tax (Appeals), Pune
Income Tax Act, 1961	Income Tax	44.14	AY 2020-21	Income Tax Appellate Tribunal, Pune
Income Tax Act, 1961	Income Tax	95.79	AY 2022-23	Dispute Resolution Panel, Pune
The Central Excise Act, 1944	Excise Duty	118.23	FY 2011-12 to FY 2015-16	Commissioner of Central Excise, Ch. Sambhajinagar (Aurangabad)
The Central Excise Act, 1944 & The Finance Act, 1994	Excise Duty and Service Tax	34.11	FY 2012-13 to FY 2017-18	Various Excise and Service Tax Authorities
Customs Act, 1962	Custom Duty	37.59	FY 2021-22	Commissioner of Customs Mumbai
Goods and Service tax, 2017	Goods and Service Tax	866.89#	2017 -2018 to 2023-2024	Assistant Commissioner of Commercial Taxes (Enforcement)
Goods and Service tax, 2017	Goods and Service Tax	728.11^	2017 -2018 to 2023-2024	Additional Commissioner, Ch. Sambhajinagar (Aurangabad)
Goods and Service Act, 2017	Goods and Service Tax	59.27	FY 2017-18 to FY 2020-21	Various GST Authorities
State Value Added Tax	Value Added Tax	2.53	2006 -2007 & 2017 - 2018	Various VAT authorities

* Against the litigation amounts as mentioned above, RS. 49.47 Million have been deposited with the respective authorities.

#This includes interest of RS. 302.67 million and penalty of RS. 564.19 million

^ This pertains to interest of RS. 98.18 million and penalty of RS. 629.93 million

(viii) The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year. Accordingly, the requirement to report on clause 3(viii) of the Order is not applicable to the Company

(ix) (a) The Company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender.

(b) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(c) The Company did not avail any term loan during the year hence, the requirement to report on clause (ix)(c) of the Order is not applicable to the Company.

(d) On an overall examination of the financial statements of the Company, the Company has used funds raised on short-term basis in the form of current borrowings/payables aggregating to RS. 3,243.04 million for loans to overseas subsidiaries which have been written off (hence considered as long-term utilization)

(e) On an overall examination of the financial statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries or joint ventures.

(f) The Company has not raised loans during the year on the pledge of securities held in its subsidiaries or joint ventures. Hence, the requirement to report on clause (ix)(f) of the Order is not applicable to the Company.

(x) (a) The Company has not raised any money during the year by way of initial public offer / further public offer (including debt instruments) hence, the requirement to report on clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or private placement of shares /fully or partially or optionally convertible debentures during the year under audit and hence, the requirement to report on clause 3(x)(b) of the Order is not applicable to the Company.

(xi) (a) No fraud by the Company or no material fraud on the Company has been noticed or reported during the year.

(b) During the year, no report under sub-section (12) of section 143 of the Companies Act, 2013 has been filed by cost auditor or secretarial auditor or by us in Form ADT – 4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.

(c) We have taken into consideration the whistle blower complaints received by the Company during the year while determining the nature, timing and extent of audit procedures.

(xii) The Company is not a nidhi Company as per the provisions of the Companies Act, 2013. Therefore, the requirement to report on clause 3(xii)(a), (b) and (c) of the Order is not applicable to the Company.

(xiii) Transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) (a) The Company has an internal audit system commensurate with the size and nature of its business

(b) The internal audit reports of the Company issued till the date of the audit report, for the period under audit have been considered by us.

(xv) The Company has not entered into any non-cash transactions with its directors or persons connected with its directors and hence requirement to report on clause 3(xv) of the Order is not applicable to the Company.

(xvi) (a) The provisions of section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934) are not applicable to the Company. Accordingly, the requirement to report on clause (xvi)(a) of the Order is not applicable to the Company.

(b) The Company is not engaged in any Non-Banking Financial or Housing Finance activities. Accordingly, the requirement to report on clause (xvi)(b) of the Order is not applicable to the Company.

(c) The Company is not a Core Investment Company as defined in the regulations made by Reserve Bank of India. Accordingly, the requirement to report on clause 3(xvi) of the Order is not applicable to the Company.

(d) There is no Core Investment Company as a part of the Group, hence, the requirement to report on clause 3(xvi) (d) of the Order is not applicable to the Company.

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

(xviii) There has been no resignation of the statutory auditors during the year and accordingly requirement to report on Clause 3(xviii) of the Order is not applicable to the Company.

(xix) On the basis of the financial ratios disclosed in note 53 to the financial statements, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

(xx) (a) In respect of other than ongoing projects, there are no unspent amounts that are required to be transferred to a fund specified in Schedule VII of the Companies Act (the Act), in compliance with second proviso to sub section 5 of section 135 of the Act. This matter has been disclosed in note 37(b) to the financial statements.

(b) There are no unspent amounts in respect of ongoing projects, that are required to be transferred to a special account in compliance of provision of sub section (6) of section 135 of Companies Act. This matter has been disclosed in note 37(b) to the financial statements.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Paul Alvares

Partner

Membership Number: 105754

UDIN: 25105754BMITLI3154

Place : Pune

Date: May 29, 2025

Appendix A referred to in Annexure 1 of our report clause 2b of even date

1. Varroc Engineering Limited

1. Inventories

(Rs. in Million)

					Reconciliation items
Sr. No.	Quarter ended	Amount as per books of accounts	Amount as per quarterly returns	Amount of difference	Components not considered for the purpose of reporting (Refer Note 2 of Note 22(a)(i) of the Standalone Financial Statements)	Post closure adjustments (Refer Note 3 of Note 22(a) (i) of the Standalone Financial Statements)	Net difference
1	June 30, 2024	4,418.91	4,578.08	(159.17)	(159.17)	-	-
2	Sept 30, 2024	5,062.90	5,225.09	(162.19)	(162.19)	-	-
3	Dec 31, 2024	5,009.48	5,219.93	(210.45)	(210.45)	-	-
4	March 31, 2025	4,466.09	4,652.46	(186.37)	(186.37)	-	-

2. Trade Receivables

(Rs. in Million)

					Reconciliation items
Sr. No.	Quarter ended	Amount as per books of accounts	Amount as per quarterly returns	Amount of difference	Components not considered for the purpose of reporting (Refer Note 2 of Note 22(a)(i) of the Standalone Financial Statements)	Post closure adjustments (Refer Note 3 of Note 22(a) (i) of the Standalone Financial Statements)	Net difference
1	June 30, 2024	2,405.37	6,131.12	(3,725.75)	(3,723)	(2.75)	-
2	Sept 30, 2024	3,302.88	7,163.90	(3,861.02)	(3,861.02)	-	-
3	Dec 31, 2024	2,523.80	6,405.10	(3,881.30)	(3,881.30)	-	-
4	March 31, 2025	3,161.25	6,968.61	(3,807.36)	(3,795.26)	(12.10)	-

3. Trade Payables

					Reconciliation items
Sr. No.	Quarter ended	Amount as per books of accounts	Amount as per quarterly returns	Amount of difference	Components not considered for the purpose of reporting (Refer Note 4 of Note 22(a)(i) of the Standalone Financial Statements)	Post closure adjustments (Refer Note 5 of Note 22(a) (i) of the Standalone Financial Statements)	Net difference
1	June 30, 2024	7,972.58	6,920.92	1,051.66	1,068.91	(17.25)	-
2	Sept 30, 2024	8,539.71	7,606.97	932.74	936.95	(4.21)	-
3	Dec 31, 2024	8,092.91	6,812.92	1,280.07	1,197.55	82.52	-
4	March 31, 2025	8,155.48	7,039.70	1,115.78	1,061.64	54.14	-

II Varroc Polymers Limited (Now merged with the Company - Refer Note 55 (b)) :

1. Inventories

(Rs. in Million)

					Reconciliation items
Sr. No.	Quarter ended	Amount as per books of accounts	Amount as per quarterly returns	Amount of difference	Components not considered for the purpose of reporting (Refer Note 1 of Note 22(a) (ii) of the Standalone Financial Statements)	Post closure adjustments	Net difference
1	June 30, 2024	1,415.34	1,459.83	(44.49)	(44.49)	-	-
2	Sept 30, 2024	1,643.50	1,695.81	(52.31)	(52.31)	-	-
3	Dec 31, 2024	1,693.32	1,727.75	(34.43)	(34.43)	-	-
4	March 31, 2025	1,365.90	1,442.73	(76.83)	(76.83)	-	-

2. Trade Receivables

					Reconciliation items
Sr. No.	Quarter ended	Amount as per books of accounts	Amount as per quarterly returns	Amount of difference	Components not considered for the purpose of reporting (Refer Note 3 of Note 22(a) (ii) of the Standalone Financial Statements)	Post closure adjustments (Refer Note 2 of Note 22(a) (ii) of the Standalone Financial Statements)	Net difference
1	June 30, 2024	1,282.56	3,373.53	(2,090.97)	(2,090.97)	-	-
2	Sept 30, 2024	1,240.71	3,711.74	(2,471.03)	(2,471.03)	-	-
3	Dec 31, 2024	1,070.55	3,352.73	(2,282.18)	(2,282.03)	(0.15)	-
4	March 31, 2025	2,066.55	3,991.23	(1,924.68)	(1,924.68)	-	-

3. Trade Payables

					Reconciliation items
Sr. No.	Quarter ended	Amount as per books of accounts	Amount as per quarterly returns	Amount of difference	Components not considered for the purpose of reporting (Refer Note 3 of Note 22(a) (ii) of the Standalone Financial Statements)	Post closure adjustments (Refer Note 2 of Note 22(a) (ii) of the Standalone Financial Statements)	Net difference
1	June 30, 2024	4,197.66	3,605.59	592.07	592.10	(0.03)	-
2	Sept 30, 2024	4,443.41	3,885.41	558.00	557.98	0.02	-
3	Dec 31, 2024	4,127.30	3,604.51	522.79	522.79	-	-
4	March 31, 2025	4,435.13	4,206.83	228.30	212.30	16.00	-

Annexure 2

to the Independent Auditors Report of even date on the Standalone Financial Statements of Varroc Engineering 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 standalone financial statements of Varroc Engineering Limited ("the Company") as of March 31, 2025 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys 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 the 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 Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to these standalone 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, as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to these standalone financial statements was established and maintained and if such controls operated effectively in all material respects.

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

Meaning of Internal Financial Controls With Reference to these Standalone Financial Statements

A companys internal financial controls with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls with reference to standalone 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 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 financial statements.

Inherent Limitations of Internal Financial Controls With Reference to Standalone Financial Statements

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

Opinion

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to standalone financial statements and such internal financial controls with reference to standalone 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 issued by the ICAI.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Paul Alvares

Partner

Membership Number: 105754

UDIN: 25105754BMITLI3154

Place : Pune

Date: May 29, 2025