We have audited the accompanying standalone financial
statements of KOTHARI INDUSTRIAL CORPORATION
LIMITED (“the Company”), which comprise the
standalone Balance Sheet as at March 31, 2026, the
standalone Statement of Profit and Loss (including Other
Comprehensive Income), the standalone Statement
of Changes in Equity and the standalone Statement
of Cash Flows for the year ended on that date, and a
summary of the 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, the aforesaid
financial statements give the information required by
the Companies Act, 2013 (“the 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 Company as at
March 31, 2026, the Loss and total comprehensive
loss, changes in equity and its cash flows for the year
ended on that date except for the matters as discussed
in the basis of qualified opinion para.

Basis for Qualified Opinion

We conducted our audit of the financial statements
in accordance with the Standards on Auditing
specified under section 143(10) of the Act (SAs).
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 (ICAI) together with
the independence requirements that are relevant to our
audit of the financial statements under the provisions of
the Act and the Rules made there under, and we have
fulfilled 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
audit opinion on the financial statements.

1. Attention is drawn to Note No 7, wherein a subsidy
of Rs. 80 lakhs is carried in the books as receivable
from the Government for which no documentary
evidence was produced to us for verification. Also,
the Company has not made a provision against
such balance which is outstanding for more than
8 years. Hence, we are unable to comment on
its realizability or otherwise and its accounting
treatment in consonance with Ind AS 20. This was
also reported in our audit report for the previous
year.

2. Year-end direct balance confirmation in respect
of promoters Rs. 1.80 crores, trade receivables
Rs. 33.49 crores trade payables Rs. 23.24 crores,
vendor advances Rs. 15.06 crores, advances from
customers Rs. 3.99 crores, other loans payable
Rs. 52.88 crores have not been provided for our
verification. Further, out of the total related party
balances of Rs. 15.26 crores balance confirmations
was not provided for Rs. 1.44 crores. In the
absence of such confirmations, we are unable to as
certain any consequential effect of the above in the
financial results for the year.

3. The Company’s books of accounts reflect a balance
of Rs. 10.41 crores in GST input credit, Rs. 10.55
crores in GST output liability, and a debit balance
of Rs. 1.41 crores in the GST payable account.
However, the Company has not reconciled the input
credit as per the GST portal and GSTR-2B with the
balances recorded in the books. In the absence
of such reconciliation, we are unable to verify the
accuracy of the GST input credit and output liability,
or to comment on the actual liability and credit
available to the Company for future adjustments.

4. Out of the total recorded inventory of Rs. 17.02
crores, detailed stock valuation reports for
Rs. 10.98 crores was not made available to us.
Further, the Company’s current system does not
separately track non-moving and slow-moving
inventories. Accordingly, the financial statements
reflect the inventory balance as reported and we are
unable to comment on the potential impact of such
items in the financial statements.

5. As per information available from the TRACES
portal, there is a default of Rs. 7.12 lakhs relating
to tax deducted at source under the Income tax Act,
1961. This indicates non compliance with statutory
requirements and may attract further interest and
penalties.

6. The proceedings initiated by the Collector of Nilgiris
for repossession of certain plots of land in Coonoor
earmarked for public use has been challenged by
the company on a Writ Petition filed before Madras
High Court and the matter is pending adjudication.
Decision, if any, by the Madras High Court which
does not go in favour of the Company, could give
rise to a liability and consequential loss, which
could not be ascertained at the balance sheet date.

7. The Company has recorded closing liability of
statutory deductions (employer and employee
contributions) under Provident Fund (PF) Rs. 40.68
lakhs, Employees’ State Insurance (ESI) Rs. 9.38
lakhs and Professional Tax (PT) Rs. 30.03 lakhs
as part of its payroll process. Final reconciliation
workings to match the salary payable of Rs. 2.56
crores as per the books with the payroll records, and
to align these deductions with the corresponding
payments to employees and statutory authorities,
were not made available for our review. Accordingly,
our procedures were limited to the information
provided by management Hence, we are unable to
comment whether any differences exists in respect
of such deductions and remittances.

Emphasis of matter

We draw attention to Note No 44(5)(n) of the financial
statements, wherein the Company has not made
provision for the royalty to be paid to Royer Group
for the period from July 2025 to June 2026 since
negotiations were ongoing and the Management is
optimistic of obtaining a waiver.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters 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
forming our opinion thereon, and we do not provide a
separate opinion on these matters. We have determined
the matters described below to be the key audit matters
to be communicated in our report.

Information Other than the Financial Statements and
Auditor’s Report Thereon

The Company’s Board of Directors is responsible for
the preparation of the other information. The other
information comprises the information included in the
Management Discussion and Analysis, Board’s Report
including Annexures to Board’s Report, Business
Responsibility Report, Corporate Governance and
Shareholder’s Information, but does not include the
financial statements and our auditor’s report thereon.

Our opinion on the 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 financial statements, our responsibility is
to read the other information and, in doing so, consider
whether the other information is materially inconsistent
with the financial statements or our knowledge obtained
during the course of our audit or otherwise appears to
be materially misstated.

MANAGEMENT’S RESPONSIBILITY FOR THE
FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for
the matters stated in section 134(5) of the Act with
respect to the preparation of these financial statements
that give a true and fair view of the financial position,
financial performance, total comprehensive income,
changes in equity and cash flows of the Company
in accordance with the Ind AS and other accounting
principles generally accepted in India. 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 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 thefinancial 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 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 thefinancial 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 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 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 thefinancial 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 consolidated
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 REGULATORYREQUIREMENTS

1. As required by the Companies (Auditor’s 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 “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, based on
our audit 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
the Statement of Cash Flows dealt with by this
Report are in agreement with the relevant books
of account.

d. In our opinion, the aforesaid financial statements
comply with the Ind AS specified under Section
133 of the Act.

e. On the basis of the written representations
received from the directors as on March 31,
2026 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 Act.

f. In our opinion and to the extent of information
made available to us, managerial remuneration
for the year ended 31 ^st March 2026 that has
been paid/provided by the Company is in
accordance with the provisions of Section 197
read with Schedule V to the Act.

g. 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 a modified
opinion on the adequacy and operating
effectiveness of the Company’s internal financial
controls over financial reporting.

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 has disclosed the impact of
pending litigations on its financial position in
its financial statements - Refer Note 40 of
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;

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

i. In our opinion and to the best of our knowledge
and belief and as represented to us by the
Company, other than as disclosed in the notes
to the accounts, no funds have been advanced
or loaned or invested (either from borrowed
funds or share premium or any other source
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 as per Clause (e)(i) of
Rule 11 of Companies Audit and Auditors Rules,
2014. Refer Note No. 38 to the accompanying
financial statements.

j. In our opinion and to the best of our knowledge
and belief and as represented to us by the
Company, other than as disclosed in the notes
to the accounts, 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, 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 as per
Clause (e)(ii) of Rule 11 of Companies Audit
and Auditors Rules, 2014. Refer Note No. 39 to
the accompanying financial statements.

Based on such audit procedures as considered
reasonable by us, we have not come across anything to
believe that the representations made by the Company
for Clause (i) & (j) as above contain any material
misstatement

k. No dividend has been declared or paid by the
Company during the year.

l. Based on our examination, which included test
checks, the Company has used accounting
software systems for maintaining its books of
account for the year ended 31^st March, 2026
which have the feature of recording audit trail
(edit log) facility and the same has operated
throughout the year for all relevant transactions
recorded in the software systems. Further,
during the course of our audit we did not come
across any instance of the audit trail feature
being tampered with, and the audit trail has
been preserved by the Company as per the
statutory requirements for record retention.

For M/s. Ray & Ray

Chartered Accountants
Firm Reg.No.301072E
(Swetha Srinivasan)

Partner

Membership No. 240553
UDIN : 26240553WJAGOM2019