We have audited the accompanying Standalone Financial
Statements of DIFFUSION ENGINEERS LIMITED ("the
Company"), which comprise the balance sheet as at March
31, 2026, and the Statement of Profit and Loss including
the statement of Other Comprehensive Income and the
Cash Flows Statement and the Statement of Changes
in Equity for the year then ended, and notes to the
financial statements, including a summary of significant
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 (‘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, 2026,
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 in accordance with the Standards
on Auditing (SAs), as 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 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
opinion.

Key Audit Matters

Key Audit Matters are those matters that, in our
professional judgment, were of most significance in
our audit of the standalone Ind AS Financial Statements
for the financial year ended March 31, 2026. 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
Auditor's 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.

Management's Responsibility for the Financial Statements

The Company's board of directors are 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
Standard) 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 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
Statement 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 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.
The Board of Directors are 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 Standalone 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 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 Companies Act, 2013, 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 disclosures 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 Standalone Financial Statements,
including the disclosures, and whether the 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, 2026
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

1. As required by the Companies (Auditor's Report)
Order, 2020 issued by the Central Government of
India in terms of sub-section (11) of section 143 of
the Act (herein after referred to as the "Order"),
and on the basis of such checks and records of the
Company as we consider appropriate and according
to the information and explanations given to us, we
give in the "Annexure A", 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.

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 financial statement
comply with the Accounting Standards referred
to in section 133 of the Companies Act, 2013

read with the Rule 7 of the Companies (Account)
Rules 2015.

e) On the basis of written representations received
From the directors as on March 31, 2026 and
taken on record by the Board of Directors,
none of the directors is disqualified as on
March 31, 2026, from being appointed as
a director in terms of Section 164(2) of the
Companies Act, 2013.

f) With respect to the adequacy of the internal
financial controls over financial reporting of
the Company and the operating effectiveness
of such controls, refer to our separate report
in "Annexure B" Our report expresses an
unmodified opinion on the adequacy and
operating effectiveness of the Company's
internal financial controls over financial
reporting;

g) In our opinion, the managerial remuneration for
the year ended March 31, 2026 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 and

h) With respect to 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 knowledge and belief and according to the
information and explanations given to us, we
report as under:

(i) The Company has disclosed the impact of
pending litigations as at March 31, 2026, if
any, on its financial position in its financial
statements.

(ii) The Company did not have any long — term
contracts including derivative contracts for
which there were any material foreseeable
losses;

(iii) There was no amount required to be
transferred to the Investor Education and
Protection Fund by the Company during
the year ended March 31, 2026;

(iv) a) The Management has represented

that, to the best of its knowledge and
belief, no funds (which are material
either individually or in the aggregate)
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 or entity, including
foreign entity ("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;

b) The Management has represented,
that, to the best of its knowledge
and belief, no funds (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"), 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;

c) Based on the audit procedures that
were 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) &
(b) contain any material misstatement.

(v) The final dividend paid by the Company
during the year in respect of that declared
for the previous year is in accordance
with section 123 of the Act to the extent it
applies to payment of dividend.

As stated in Note No 44 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.

(vi) Based on our examination, which included
test checks, the Company has used
accounting software's for maintaining its
books of account for the financial year
ended March 31, 2026 which has a feature
of recording audit trail (edit log) facility
and the same has operated throughout the
year for all relevant transactions recorded
in the software's. Further, during the
course of our audit we did not come across
any instance of the audit trail feature being
tampered with.

For P G S & ASSOCIATES

Chartered Accountants
Firm Registration No.: 122384W
UDIN- 26111592OXZYUS8449

Premal H Gandhi

Partner

Membership No: 111592

Place: Nagpur
Date: May 16, 2026