MODERN THREADS INDIA LIMITED
Report on the Audit of the Financial Statements
Qualified Opinion

We lia ve audited the financial statements of MODERN THREADS INDIA
LIMITED (“the Company”), "inch comprise the Balance Sheet as at
31st March, 2023, and the Statement of Profit and Loss (including other
comprehensive income), Statement of Changes in Equity and the Statement
of Cash Flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies and other explanatory
information (hereinafter referred to as “the financial statements”).

In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter described in
the Basis for Qualified Opinion section of our report, the aforesaid financial
statements give the infonnation required by the Companies Act, 2013 (“the
Act”) in the manner so required and give a hue and fair view in confonnity
with the Indian Accounting Standards prescribed under section 133 of the
Act read with the Companies (Indian Accounting Standards) Rules, 2015,
as amended, (“Ind-AS”) and other accounting principles generally accepted
in India, of the state of affairs of the Company as at 31st March 2023, and
its profit (including other comprehensive income), changes in equity and
its cash flows for the year ended on that date.

Basis for Qualified Opinion

(i) The company has not provided for Interest (Dividend) on cumulative
redeemable preference shares amounting to Rs. 36.13 Lakhs for the
year (Rs. 975.48 Lakhs upto 31.03.2023) as the company is in process
of settlement of remaining redeemable preference share capitaL (Note
No. 17.2b)

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

Had die impact of above qualification in Para (i), without considering Para

(ii) for which impact could not be determined, been considered, the total
comprehensive income for the year would have been Rs. 21392 .07 Lakhs
as against reported total comprehensive income of Rs. 21428.20 Lakhs
and other equity would have been Rs. 5882.25 Lakhs as against the reported
figure of Rs. 6857.73 Lakhs and Other Cuirent financial liabilities would
have been Rs. 3391.97 lakhs as against reported figure of Rs. 2416.49
Lakhs.

We conducted our audit in accordance with the Standards on Auditing (S As)
specified under Section 143(10) of the Act. Our responsibilities under those
standards are further described in the Auditor $ Responsibilities for the
Audit of the Financial Statements section of our report. We are independent
of the Company in accordance with the Code ofEthics 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 die Act and the Rules thereunder, and we have fiilfilled our other ethical
responsibilities in accordance with these requirements and the ICAI’s Code
of Ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our qualified opinion.

Key Audit Matters

Key audit matters ('KAM') are those matters that, in our professional
judgment, were of most significance in our audit of the financial statements
of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in fanning our opinion
thereon, and we do not provide a separate opinion on these matters. Except
for the matters described in the Basis for Qualified Opinion section, we
have determined that there are no key audit matters to be communicated in
our report

Other Matter

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

Information Other than the Standalone Financial Statements and
Auditor’s report thereon

The Company’s Management and Board of Directors are responsible for
the other information. The other infonnation comprises the infonnation
included in the Company’s annual report, but does not include the 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 financial statements does not cover the other infonnation
and we do not express any fonn of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility
is to read the other infonnation and, in doing so, consider whether the other
infonnation is materially inconsistent with the 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 and take necessary actions, as applicable under
the relevant laws and regulations.

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

The Company’s Management and Board of Directors are responsible for
the matters stated in Section 134(5) of the Act with respect to the
preparation of these financial statements that give a hue and fair view of
the financial position, financial performance (including other
comprehensive income), changes in equity and cash flows 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. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions of the Act
for safeguarding of the assets of the Company and for preventing and
detecting frauds and other irregularities; selection and application of
appropriate accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation and maintenance
of adequate internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records, relevant
to the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether due
to fraud or error.

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

Those Board of Directors is also responsible for overseeing the Company’s
financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to

fraud or error, and to issue an auditor’s 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 financial statements.

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

• Identify and assess the risks of material misstatement of the financial
statements, 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 m 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 system in place and the operating
effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made
by management.

• Conclude on the appropriateness of management’s use of the going
concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertamty exists related to events or
conditions that may cast significant doubt on the Company’s ability"
to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s
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

Ý Evaluate the overall presentation, structure andcontentofthe financial
statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a
manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone Financial
Statements that, individually or in aggregate, makes it probable that the
economic decisions of a reasonably knowledgeable user of the Standalone
Financial Statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit
work and in evaluating the results of our woik; and (ii) to evaluate the
effect of any identified misstatements in the Standalone Financial
Statements.

We communicate with those cliaiged 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 cliaiged with governance, we
deteimine those matteis that were of most significance in the audit of the

financial statements of the cuirent period and are therefore the key audit
matters. We describe these matters in our auditors’ report unless law or
regulation precludes public disclosure aboutthe matter or when, in extremely
rare circumstances, we determine that a matter shouldnot be communicated
in our report because the adverse consequences of doing so 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 (Auditor’s Report) Order, 2020 (“the
Order”) issuedby the Central Government of India in terms of Section
143(11) of the Act, we give in “Annexure A” a statement on the
matters specified in paragraphs 3 and 4 of the Order, to the extent
applicable.

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 puiposes of our audit.

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

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

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

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

f The qualification relating to the maintenance of account and

other matters connected there with are as stated in the ‘Basis
for Qualified Opinion’ paragraph

g. Withrespectto the adequacy of the internal financial controls

with reference to financial statements of the Company and
the operating effectiveness of such controls, refer to our
separate Report in “Annexure B”. Our report expresses a
modified opinion on the adequacy and operating
effectiveness of the Company’s internal financial controls
with reference to financial statements.
li_ With respect to the matter to be included in the Auditors’
Report in accordance with the requirements of section
197(16) of the Act, as amended

In our opmion and according to the information and
explanations given to us, the remuneration paid by the
Company to its directors during the year is in accordance
with the provisions of Section 197 of the Act.
i_ With respect to the other matters to be included in the
Auditors’ Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our information and according to the
explanations given to us:

i. The Company has disclosed the impact of pending
litigations as at 31stMarch 2023 on its financial

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

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

iii. There has been no delay m transferring amounts,
required to be transferred, to the Investor Education
and Protection Fund by the company during the year
ended on 31st March, 2023. (Refer Notel7.1)

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

best of its knowledge and belief, no hinds
(which are material either individually or in
the aggregate) have been advanced or loaned
or invested (either from boirowed fluids or
share premium or any other sources or kind
of hinds) by the Company to or in any other
person or entity, including foreign entity
(“Intennedianes”), with the understanding,
whether recorded in wilting or otherwise, that
the hitennediary shall, whether, directly or
indirectly lend or invest in other persons or
entities identified in any manner whatsoever
by or on behalf of the Company (“Ultimate
Beneficiaries”) or provide any guarantee,
security or the like on behalf of the Ultimate
Beneficiaries;

(b) The Management has represented, that, to the
best of its knowledge and belief, no hinds
(which are material either individually or in
the aggregate) have been received by the

Company from any person or entity,
including foreign entity (“Funding Parties”),
Midi die understanding, whether recorded m
writing or otherwise, that the Company shall,
whether, directly or indirectly, lend or invest
in other persons or entities identified in any
maimer whatsoever by or on behalf of the
Funding Party (“Ultimate Beneficiaries”) or
provide any guarantee, security or die like
on behalf of the Ultimate Beneficiaries;

(c) Based on the auditproceduresthatliave been
consideredreasonable and appropriate in the
circumstances, nothing has come to our
notice tiiat has caused us to believe that the
representations under sub-clause (i) and (ii)
of Rule 11(e), as provided under (a) and (b)
above, contain any material misstatement,

v. The company has not declared or paid any dividend
during the FY 2022-23. Hence, the provisions of
section 123 of Companies Act, 2013 does not apply.

For S.S. Surana & Co.

Chartered Accountants
(FRN. 001079Q

Prahalad Gupta

(Partner)

Place: Bhilwara Membership No . 074458

Date: 29/05/2023 UDIN: 23074458BGWVNX4606