1. We have audited the accompanying financial statements of M/s Hindustan Fluorocarbons Limited
(“the Company”), which comprise the Balance Sheet as at 31^st March, 2025, the Statement of
Profit and Loss, Cash Flow Statement and Statement of changes in Equity for the year ended on
that date and notes to financial statements including a summary of the significant accounting
policies and other explanatory information (hereinafter referred to as “the Ind AS financial
statements”).

2. In our opinion and to the best of our information and according to the explanations given to us, and
read with our comments below under the para ‘Material Uncertainty relating to Going Concern’, the
aforesaid Ind AS financial statements give the information required by the Companies Act, 2013
(“Act”) in the manner so required and give a true and fair view in conformity 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 said Company as at 31^st March, 2025, the Profit/Loss for the
year ended on that date including other Comprehensive Income, change in Equity and its Cash
Flow for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the financial statements in accordance with the Standards on Auditing
(SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under
those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the
Code of Ethics issued by the Institute of Chartered Accountants of India together with the Ethical
requirements that are relevant to our audit of the financial statements under the provisions of the
Companies Act, 2013 and 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 opinion on the financial
statements.

Material Uncertainty related to Going Concern

4. Attention is drawn to Note 29 to the Notes of Accounts wherein there is disclosure regarding the
decision of the Cabinet Committee on Economic Affairs to close the operations of the Company
which has been communicated to them through letter dated 29^th Jan, 2020 from Ministry of Chemicals
& Fertilizers, Department of Chemicals & Petrochemicals, Govt of India vide File No. 51015/06/
2019 together with timelines for implementation of the said directions, the process of which is
being initiated by the Board.

In this regard, while noting the above, in our view considering the decision of the Government to
close the operations of the Company and the steps taken by the Company including grant of
Interest Free Unsecured Loan for settling various liabilities by the GoI, receipt of the same, significant
payments being made out of the total estimated liabilities by the year end, plan of action for
balance payments, initiation of follow up measures regarding various legal cases filed by/against
the Company and its follow up, adoption of applicable Ind AS 105 in the books of account, there is
material uncertainty relating to Going Concern and the Company is no longer a Going Concern
Entity.

Emphasis of Matter

5. A) We draw attention to Note No.2(a) in the Notes to Accounts regarding the decision of the

Government of India to close the operations of the Company resulting in the Company ceasing
to be a Going Concern entity and the adoption of applicable Accounting Standard Ind-AS 105
‘NonCurrent Assets held for Sale or Discontinuing Operations’. Accordingly, the Company
had re-classified the assets which are part of disposal group as ‘assets held for sale’ at its
carrying cost without providing for any pro-rata depreciation in the absence of any specific cut
off date being adopted for the purpose which is not determinable.Our opinion is not modified
in this regard.

B) We also draw attention to Note No. 18, under the head legal expenditure of Rs 67.71 Lakhs
an amount of Rs 27.68 Lakhs was paid towards filing and other expenditure in addition to the
Professional charges paid to advocates and no details were produced for this expenditure.

C) We also draw attention to Note No.13,14 and 7, that there was balance in the electricity
payable account and outstanding provisions relating to electricity demand from Telangana
State Southern Power Distribution Company Limited (SPDCL) of Rs 65.72 Lakhs under Note
No 13 & 14 which was adjusted against the Deposit with the TGSPDCL of Rs 64.79 Lakhs in
the year 2022 for which adjustment entries was not passed in the books of accounts.

Information other than the Financial Statements and Auditor’s Report thereon

6. The Company’s management and Board of Directors are responsible for the other information. The
other information comprises the information included in the Company’s annual report, but does not
include the standalone financial statements and our auditor’s report thereon.

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 the other information is materially inconsistent
with the standalone financial statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If, based on the work we have performed, we conclude that there is a
material mis-statement of this other information, we are required to report that fact. We have
nothing to report in this regard.

Management Responsibilities for the Ind AS Financial Statements

7. The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the
Companies Act 2013, with respect to the preparation of these financial statements that give a true
and fair view of the financial position and financial performance, including other comprehensive
income, cash flows and Statement of changes in Equity of the Company in accordance with the
Accounting Principles generally accepted in India, including the Accounting Standards specified
under section 133 of the Act. This responsibility also includes maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the assets of the Company
and for preventing and detecting frauds and other irregularities; selection and application of appropriate
accounting policies; making judgements 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 Ind AS financial statements that give a true and fair view and are
free from material misstatement, whether due to fraud or error.

8. In preparing the Ind AS financial statements, management is 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.

9. The Board of Directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Ind AS Financial Statements

10. Our objectives are to obtain reasonable assurance about whether the Ind AS 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 Ind AS financial statements.

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

♦ Identify and assess the risks of material misstatement of the Ind AS 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 financial controls 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 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 uncertainty 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 disclosure are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s 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 Ind AS financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

12. Materiality is the magnitude of misstatements in the Ind AS financial statements that, individually
or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable
user of the 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
work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

13. We also communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings that we identify during our audit.

14. 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.

15. From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s 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

16. 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.

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

d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting
Standards 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 March 31,2025,
and 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.

f) With respect to the adequacy of the internal financial controls with reference to Financial
Statements of the Company, and the operating effectiveness of such controls, refer to our
separate Report in “Annexure A”. Our report expresses an unmodified opinion on the adequacy
and operating effectiveness of the Company’s internal financial controls with reference to
Financial Statements.

g) The Company did not pay any remuneration to its Directors during the year. Accordingly, we
have nothing to report u/s 197(16) of the Act.

h) With respect to the other matters to be included in the Auditor’s 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 had disclosed the impact of pending litigations as on 31^st March, 2025 on
its financial position in its Ind AS financial statements;

ii. The Company had made provision, as required under the applicable law or accounting
standards for material foreseeable losses, if any, on long term contract. The Company
neither entered into any derivative contracts during the year nor have any outstanding
derivative contract at the end of the year;

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no

funds have been advanced or loaned or invested (either from borrowed funds or
share premium or any other sources or kind of funds) by the Company to or in any
other person(s) or entity(ies), including foreign entities (Intermediaries), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall,
directly or indirectly lend or invest in other person or entities identified in any manner
whatsoever by the Company (Ultimate Beneficiaries) or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries

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

(c) Based on the audit procedures 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 (i) and (ii) or Rule
11(e), as provided under (a) and (b) above, contain any material misstatement.

v The Company had not declared or paid any dividend during the year under report.
Accordingly, we have nothing to report with regard to compliance of provisions of Section
123 of the Act

i) As required under section 143(5) of the Companies Act, we report that:

i. As per the information, explanations and records produced for our verification, the
Company has a system in place to process all the accounting transactions through IT
system and there are no instances of processing of accounting transactions outside the
IT system;

ii. During the year under review, there are no instances of any restructuring of existing loan
availed by the Company or cases of waiver/write off of debts/loans/interest made by a
Lender to the Company except interest waiver for loan taken from the HOCL with effect
from 01-04-2023 on account of company’s inability to repay the loan;

iii. As per the information, explanations and records produced for our verification, as a part
of closure direction given by Gol, an amount of Rs.7720 Lakhs was sanctioned by Gol as
Interest Free Term Loan to be exclusively utilized for closure related expenditure including
(a) implementation of VRS/VSs for HFL employees, their dues, statutory dues, payment
to suppliers/contractors/ utilities dues and repayment of SBI working capital loan (b)
salary/wages and administrative expenses of HFL’s skeletal staff to be temporarily retained
for completing the closure of HFL for two years.

Following table shows the said Interest Free Loan amount sanctioned, received and spent
upto 31-03-2025 for the said purpose against each head of expenditure

Considering the timelines given for the purpose, as could be seen from the above, there
was delay in spending the amounts, particularly in case of Suppliers/Contractor Dues,
Water & Electricity Dues, Implementation of VRS as well as Payment of Salaries/Wages/
Statutory Dues of employees.

Interest earned on the upsent balances of Interest free loan from Government of India for
closure related expenditure upto 31-03-2025 was Rs. 610.92 lakhs.

17. As required by the Companies (Auditors’ Report) Order, 2020 (“the Order”) issued by the Central
Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the
matters specified in paragraphs 3 and 4 of the Order.

For A V R S K AND ASSOCIATES LLP

Chartered Accountants
FRN: 003028S/S000113

CA G K BABU

Designated Partner
Member No. 213273
UDIN: 25213273BMJGIT1051

Date: 24.07.2025
Place: Hyderabad