Auditor Report of Kothari Industrial Corporation Ltd.

Mar 31, 2025

We have audited the accompanying financial statements
of KOTHARI INDUSTRIAL CORPORATION LIMITED

(“the Company”), which comprise the Balance Sheet
as at March 31,2025, the Statement of Profit and Loss
(including Other Comprehensive Income), the Statement
of Changes in Equity and the 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, 2025, the Loss and total comprehensive
income, changes in equity and its cash flows for the
year ended on that date except for the matters as
discussed in the basis of 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. During the financial year 2023-24, the Company
has sold its land and plant and machinery located
in its factory in Ennore to Coromandel International
Limited for Rs. 48,95,00,000 and Rs. 1,33,00,000
respectively. We were informed that the sale
registration is still pending with the Sub Registrar
office for assessment of market value for stamp
duty purposes. Subject to this, the Company has
computed capital gains on the sale consideration
as per the sale deed. Pending the final order of the
SRO, we are unable to comment on the correctness
of the computation of the capital gains in line with
the relevant provisions of the Income Tax Act 1961.
To this extent, the provision for Current income tax
may undergo revision depending on the outcome
of the order of the competent authority against the
writ petition. The Company plans to seek a valuation
from the Income Tax Valuation Officer and pursue
further steps, including appeals, if required.

2. For the land held by the Company in Gujarat valued
at cost Rs. 1,85,174 we are unable to comment on
the title of the Company as sufficient audit evidence
viz sale deed/allotment letter was not provided. This
was also reported by us in the previous year.

3. Year-end direct balance confirmation in respect of
trade receivables Rs. 4,13,85,015, trade payables
Rs. 3,39,58,473, vendor advances Rs. 7,19,50,858,

Continued...

advances from customers Rs. 1,63,37,105 and
other advances/deposits Rs. 26,32,927 have not
been provided for our verification. In the absence of
such confirmations, we are unable to ascertain any
consequential effect of errors/disputes, if any, that
may impact the financial results for the year.

4. The Company has recorded its closing inventory
at Rs. 7,18,53,535 as of 31^st March 2025. In the
absence of stock valuation reports, a detailed
assessment of the valuation’s correctness and its
effect on financial reporting for FY 2024-25 could
not be ascertained. Further, the Company does
not have a system of identifying and recording
non-moving and slow-moving inventories as a
result of which we are unable to comment on the
impact of such items in the accompanying financial
statements.

5. Out of the total related party balances of
Rs. 11,63,11,633, sufficient audit evidence for
nature of such transactions by way of loan/deposit
agreements, balance confirmations was not
provided for Rs. 4,90,000. Hence, we are unable to
substantiate the correctness and existence of these
loans & advances.

6. Attention is drawn to Note No 41(7)(n), 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.

7. 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 Write 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.

Emphasis of matter

1) Attention is drawn to Note No 42 wherein the
Company has Subsequent to the submission
of financial results under Regulation 33 of SEBI
(LODR) for FY 2024-25, the Company has
regrouped certain items in the audited financial
statements presented in this Annual Report. These
changes have been made to enhance clarity and
align with the requirements of Schedule III and Ind
AS disclosures. The regrouping does not impact the
previously reported loss or total equity for the year
ended 31^st March 2025.

2) Attention is drawn to Note No 4 wherein the
Company has liquidated its stake in subsidiary
company Kothari Marine International Limited as
a result of which the Company has not presented
consolidated financial statements.

Our opinion in the above matter remains unmodified.

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.

Key Audit Matter	Principal Audit Procedures
The Evaluation of the Company as a going concern and the consequent classification of the assets as “held for sale”	The Company has been making losses in the previous years which has eroded the networth and the current liabilities exceeds the current assets. The Company is in the process of expansion of business and has entered into business contracts with various customers in India and abroad. The Company has provided for our verification the contracts in support of the assumption of going concern on the basis of which the accompanying financial statements have been drawn.
Acquisition of stakes from Mr. Rafiq Ahmed	The Company has entered into an agreement to acquire 30% equity stake in Phoenix Kothari Footwear Limited (PKFL) from Mr. Rafiq Ahmed for a total consideration of ''99.06 crores (7,80,02,900 shares at Rs 12.70 per share). PKFL is a reputed contract manufacturer for global footwear brands such as CROCS and Adidas. This strategic investment is aimed at strengthening KICLs global supply chain presence and supporting PKFL’s growth and innovation initiatives in the footwear sector. We have considered the valuation report provided by an independent valuer for this purpose.
Acquisition of M/s Parveen Roadways, proprietorship of Mr Rafiq Ahmed.	The Company has acquired Parveen Roadways, a sole proprietorship firm engaged in logistics and railway-related services, for a consideration of ''24.04 crores through a business transfer agreement dated 8th April 2025. The business includes over 100 vehicles (such as tippers, trailers, buses, and forklifts) and a workforce of approximately 500 employees. Major clients include Integral Coach Factory, Southern Railways, Port Trusts, and Aavin Milk Factory. We have considered the valuation report obtained from an independent valuer. However, since the effective date of the agreement and the subsequent addendum is 1th April 2025, the assets and liabilities of Parveen Roadways as on 31 st March 2025 will be accounted in the books of the Company in FY 2025-26.

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 the 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 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 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 the 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 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 REGULATORY
REQUIREMENTS

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,
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.

f. In our opinion and to the extent of information
made available to us, managerial remuneration
for the year ended 31^st March 2025 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 41 of
the standalone financial statements.

ii. The Company has made provision, as
required under the applicable law or
accounting standards,for materialforeseeable
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, 2025
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)

"^a“ ^: Members^. 240553

^{Ua,ed: 30052025} UDIN : 25240553BMLXEN6062

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Mar 31, 2024

KOTHARI INDUSTRIAL CORPORATION LIMITED Report on the Standalone Financial Statements Qualified Opinion

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, 2024, 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 standalone financial statements”).

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 (“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 31,2024, the Profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date except for the matters as discussed in the basis of opinion para.

Basis for Qualified Opinion

We conducted our audit of the standalone 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 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 (ICAI) together with the independence requirements that are relevant to our audit of the standalone 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 standalone financial statements.

1. During the year, the Company has sold its land and plant and machinery located in its factory in Ennore to Coromandel International Limited for Rs. 48,95,00,000 and Rs 1,33,00,000 respectively. We were informed that the sale registration is still pending with the Sub Registrar office for assessment of market value for stamp duty purposes. Subject to this, the Company has computed capital gains on the sale consideration as per the sale deed. Pending the final order of the SRO, we are unable to comment on the correctness of the computation of the capital gains in line with the relevant provisions of the Income Tax Act 1961. To this extent, the provision for income tax may undergo revision depending on the outcome of the order of the competent authority against the writ petition.

2. For the land held by the Company in Gujarat valued at cost Rs. 1,85,174 since only Form 7 was made available, we are unable to comment on the title of the Company as sufficient audit evidence viz sale deed/allotment letter was not provided.

3. Year-end direct balance confirmation in respect of promoter loans, trade receivables, trade payables, vendor advances, advances from customers and other advances/deposits have not been provided for our verification and record for all the parties. In the absence of such confirmations, we are unable to ascertain any consequential effect of the above in the financial results for the year.

4. Out of the long-term loans and advances of Rs. 9,79,06,905, sufficient audit evidence by way of loan/deposit agreements, balance confirmations was not provided for Rs. 55,73,959. Hence, we are unable to substantiate the correctness and existence of these loans & advances.

5. The Company has receivable in GST account as per books of Rs. 4,98,493 which has not been reconciled with the GST portal. Further, there is a debit balance in GST payable account in the books amounting to Rs. 16,37,333 as against a liability of Rs. 10,73,896 in the GST return filed for the month of March 2024. We are unable to verify the same in the absence of reconciliation by the Company. Due to such statutory non-compliance, we are unable to comment on the actual recoverability and payment of the dues against such balances.

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 Write 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 favor of the Company, could give rise to a liability and consequential loss, which could not be ascertained at the balance sheet date.

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 of the current period. 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter

Principal Audit Procedures

The Evaluation of the Company as a going concern and the consequent classification of the assets as “held for sale”

The Company has been making losses in the previous years which has eroded the networth and the current liabilities exceeds the current assets. The Company is in the process of expansion of business and has entered into business contracts with various customers in India and abroad. The Company has provided for our verification the contracts in support of the assumption of going concern on the basis of which the accompanying standalone financial statements have been drawn.

MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE 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 standalone 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 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 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 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 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 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 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 standalone 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 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 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 standalone 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, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 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, no managerial remuneration for the year ended 31st March 2024 has been paid/provided by the Company 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 standalone financial statements - Refer Note 19 of the standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards,for materialforeseeable 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 36.

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 37.

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.

Place : Chennai Dated: 29.05.2024

l. According to the information and explanations provided to us, the Company has maintained its books of accounts in an accounting software that does not maintain a feature to view the audit trail (edit log). Hence, we were unable to examine the edit log in the accounting software maintained by the Company. However, in our opinion, except for the matters stated in the basis of opinion para, proper books of accounts stating the true and fair state of affairs of the Company as required under Section 128(1) of the Companies Act 2013 has been maintained by the Company for the financial year ended 31^st March 2024.

For M/s. Ray & Ray

Chartered Accountants Firm Reg.No.301072E

(V. Raman)

Partner

Membership No. 019839

---

Mar 31, 2014

We have audited the accompanying financial statements of Kothari Industrial Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 13th dated September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion

The Company has not provided for the following amounts in the accounts :-

a) Interest payable to a trade creditor amounting to Rs.161.33 lacs and interest payable on an advance amounting to Rs.74.39 lacs.

b) Any further amount payable to State Bank of India (Assignee : Kotak Mahindra Bank) in addition to the liability provided for in the books of accounts (grouped under Long-term borrowings) since the said sum has not been finally quantified.

c) The effect of such non-provision of (a)and (b) above on the profit or loss of the Company as well as on the true and fair view of the state of affairs of the Company as at 31st March 2014 is not ascertainable.

Opinion

In our opinion and to the best of our information and according to the explanations given to us except for the effect/ possible effects of the matters described in the "Basis for Qualified Opinion" paragraph, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2014; b) In the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2) As required by section 227(3) of the Act, we report that:

a) Except for the effect of the matters described in para "Basis for Qualified Opinion", we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

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

d) Except for the matters described in para "Basis for Qualified Opinion", in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

Referred to in paragraph 1 under the heading "Report on other Legal and Regulatory Requirements" Section of our report even date.

1. In Respect of Fixed Assets:

a) the company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information.

b) as explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

c) in our opinion and according to the information and explanations given to us, the company has not disposed off substantial part of its fixed asset during the year and the going concern status is not affected.

2. In Respect of Inventories:

a) inventories have been physically verified during the year by the management at reasonable intervals. In our opinion the frequency of verification is reasonable.

b) in our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed during physical verification between the physical stocks and the book records were not material.

3. a) The company has not granted any loans, secured/unsecured, from companies, firms (or) other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

b) The company has not taken any loans during the year from parties listed in the register maintained under section 301 of the Companies Act, 1956.

4 In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the aforesaid internal controls.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to us and in our opinion, the company has not made any transactions exceeding the value of five lakhs rupees in pursuance of contract or arrangements entered in the register maintained u/s 301 of the Companies Act. 1956.

6. The Company has not accepted any deposits from public. Hence the directions issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act 1956 and the Companies (Acceptance of Deposits) Rules, 1975 do not apply.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the company pursuant to the companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government of India under Section 209(1)(d) of the Companies Act, 1956, and are opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. a) The Company is not regularly depositing undisputed statutory dues including provident fund, service tax, income tax (tax deducted at source), professional tax and property tax.

b) According to the information and explanations given to us, the extent of arrears outstanding as on 31st March 2014 for a period of more than six months from the date they became payable, as certified by the Management is as under :-

Service Tax 18.88

Income Tax (TDS) 25.50

Provident Fund 1.01

Professional Tax 14.07

Property Tax 42.18

c) According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty, Value Added Tax and Cess which have not been deposited on account of disputes are given below.

10 The Company has accumulated losses at the end of the financial year which are more than 50% of its net worth of the Company. The Company has incurred cash loss during the current year as well in the immediate preceding financial year also.

11. Based on our examination of the books and on the information and explanation given by the management, the company has defaulted in repayment of dues to financial institutions and banker(s) and the matter is pending adjudication before the Hon''ble Debt Recovery Tribunal, Chennai.

12. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

14. Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have been maintained of the transaction and contracts in relation to shares, debentures and other instruments and timely entries have been made in those records. We also report that the company has held the shares, securities in its own name

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions during the year.

16. According to the information and explanations given to us, the Company has not taken any term loan during the year.

17. According to the information and explanations given to us and on an overall examination of the financial statement of the Company, funds raised on short term basis have, prima facie, not been utilized for long term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act.

19. During the period covered by our audit report, the Company has not issued any debentures.

20. The Company has not raised any money by way of public issues during the year.

21. Based upon the audit procedures performed and based on the available information and explanations given by the management we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For M/s. B.B.Naidu & Co. Chartered Accountants Firm Reg.No:002291S (A.Sekar) Place: Chennai Partner Date: 28th May 2014 Membership No. :18784

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Mar 31, 2012

We have audited the attached Balance Sheet of M/s Kothari Industrial Corporation Ltd., Chennai - 600034 as of 31st March, 2012, Statement of Profit and Loss for the year ended on that date annexed thereto and the Cash Flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditor's Report) Order, 2003 and amended by the Companies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

3. Attention is invited, without qualifying our Report to note no.1 to the accounts mentioning the reasons by the management for presenting the accounts on principles applicable to a "Going Concern” and regarding note no.17 regarding non-provisioning of interest on mortgage loans payable to an institution and a lender which are presently not quantifiable since the matters are under negotiation / appeals.

4. Further to our comments in the annexure referred to above, we state that:

(i) In our opinion, proper books of account as required by law have been maintained so far as appears from the examination of those books

(ii) The Balance Sheet and the Statement of Profit and Loss and the Cash Flow Statement referred to in this report are in agreement with such books of account referred to in paragraph (i) above.

(iii) In our opinion, the Balance Sheet, the Statement of Profit and Loss and Cash Flow Statements dealt with this report comply with the Accounting Standards referred to in Section 211 (3c) of the Companies Act, 1956.

(iv) In our opinion, the said accounts together with the accounting policies and notes on accounts and read with para 3 above, give the information required under the Companies Act, 1956 in the manner required.

5. On the basis of written representations received from the Directors as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2012 from being appointed as a Director in terms of clause(g) of sub-section(l) of Section 274 of the Companies Act, 1956. '

6. We report that the financial statements give a true and fair view on the following:

(i) the Balance Sheet gives the state of the company's affairs as at 31st March, 2012

(ii) the Statement of Profit & Loss gives the Profit for the year.

(iii) the Cash flow statement for the year ended 31st March, 2012, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE PERIOD ENDED 31.03.2012

1) (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the fixed assets have been physically verified by the Management in a phased manner according to the Company's procedure.

(c) During the year the Company has not disposed of any major part of its fixed assets affecting the going concern aspect of the Company.

2) (a) The inventories have been periodically physically verified during the year by the Management and in our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed during physical verification between the physical stocks and the book records were not material.

3) (a) The Company has not granted any loan during the year to any party listed in the Register maintained under Section 301 of the Companies Act.1956.

(b) The company has not taken any loan during the year from parties listed in the register maintained under section 301 of the Companies Act, 1956.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods and there are no major weaknesses in such internal control.

5) Based on the Register maintained under Section 301 of the Companies Act, transactions exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6) The Company has not accepted any deposits from the public during the year.

7) The internal audit is being carried out by an external firm of Chartered Accountants, which in our opinion is commensurate with the size of the company -and nature of its business.

8) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9) (a) According to the records of the Company, the company has not deposited with appropriate authorities undisputed statutory dues i.e., Income Tax (Tax Deducted at Source) and Provident Fund aggregating to Rs.84.60 lakhs.

(b) According to the information and explanation given to us, no undisputed amounts payable in respect of income-tax, sales-tax, customs duty and excise duty were outstanding as at 31sl March 2012 for a period of more than six months from the date they became payable.

(c) According to the records of the company, there are statutory dues which have not been deposited on account of disputes with statutory authorities, as furnished below:

Details of Dispute Nature of Forum of Dispute Period Amount Dispute Rs.in Lakhs

I - Tamilnadu TNGST &CST D.C.C.T. Appeals 1988-89 to 872.97 Branch Transfer of Fertilisers STAT and 1991-92 Non-receipt of ‘C' Forms and High Court Stay Disputed tax on sulphur loan

II - Karnataka

Turnover tax on NPK Mixture KST STAT - Stay 1996-97 3.87

III - Kerala

Disputed rate of tax KGST STAT - Stay 2001-02 0.05

Total 876.89

Remanded back to

Assessing Authorities : D.C.C.T. Appeals, 1985-86 to 77.42

Branch Transfer of fertilizers, TNGST & CST STAT and High Court Non-receipt of ‘C' Forms and Disputed Taxes

10) The Company has accumulated losses at the end of the financial year which are more than 50% of its net worth of the Company. The Company has not incurred cash loss during the current year but has incurred cash loss in the immediate preceding financial year.

11) Based on our examination of the books and on the information and explanation given by the management, the company has defaulted in repayment of dues to financial institutions and banker(s) and the matter is pending adjudication before the Hon'ble Debt Recovery Tribunal, Chennai. .

12) The Company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

13) In our opinion, according to the information and explanation given to us. the nature of activities of the company does not attract in special statute applicable to Chit Fund and Nidi/Mutual Benefit Fund / Societies.

14) Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have been maintained of the transaction and contracts in relation to shares, debentures and other instruments and timely entries have been made in those records. We also report that the company has held the shares, securities in its own name.

15) The company has not given guarantee for loans taken by others from banks and financial institutions during the year. -

16) Accordingly to the information and explanations given to us, the Company has not taken any term loan during the year.

17) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment. However, the Company has raised short term loans and utilized the same for repaying long term debts.

18) Based on our examination of record and the information provided to us by the Management we report that the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Sec.301 of the Act.

19) The Company has not issued any debentures during the year.

20) The Company has not raised any money by public issues during the period covered by our audit.

21 ) Based upon the audit procedures performed and based on the available information and explanations given by the management we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For B.B. NAIDU & CO Regn.No.002291S Chartered Accountants

A.SEKAR

Place:Chenrtai Partner

Date : 29.05.2012 Membership No.18784

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Mar 31, 2010

We have audited the attached Balance Sheet of M/s Kothari Industrial Corporation Ltd., Chennai - 600034 as of 31st March, 2010, the Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow statement for the year ended on that date. These financial statements are the responsibility of the Companys management: Our responsibility is to express an opinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditors Report) Order, 2003 and amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government in terms of sub- section (4A) of Section 227 of the Companies Act, 1956. We enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

3. Attention is invited, without qualifying our Report to note no.1 in Schedule No.16 to the accounts mentioning the reasons by the management for presenting the accounts on principles applicable to a "Going Concern".

4. Further to our comments in the annexure referred to above, we state that:

(i) In our opinion, proper books of account as required by law have been maintained so far as appears from the examination of those books



(ii) The Balance Sheet and Profit and Loss Account and the Cash Flow Statement referred to in this report are in agreement with such books of account referred to in paragraph (i) above.

(iii) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statements dealt with this report comply with the Accounting Standards referred to in Section 211 (3c) of the Companies Act, 1956 .

(iv) In our opinion, the said accounts together with the accounting policies and notes on accounts and read with para 4 above, give the information required under the Companies Act, 1956 in the manner required.

5 On the basis of written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of sub-section(l) of Section 274 of the Companies Act, 1956.

6. We report that

(i) the Balance Sheet gives a true and fair view of the state of the companys affairs as at 31st March, 2010

(ii) the Profit & Loss Accounts gives true and fair view of the loss for the year.

(iii) In the case of the Cash flow Statement for the year ended 31st March, 2010, the cash flows for the year ended on that date.



ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE PERIOD ENDED 31.03.2010



1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b)AII the fixed assets have been physically verified by the Management in a phased manner according to the Companys procedure.

2. (a) The inventories have been periodically physically verified during the year by the Management which in our opinion, the frequency of verification is reasonable.

(b)The procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed during physical verification between the physical stocks and the book records were not material.

3. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b)The procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company has maintained proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material and the same has been properly dealt with in the accounts.

4. (a) The Company has not granted any loan during the year to any party listed in the Register maintained under Section 301 of the Companies Act. 1956.

b) The Company has not taken any loan from parties listed in the register maintained under section. 301 of the Companies Act 1956.

5. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods and there are no major weaknesses in such internal control.

6 Based on the Register maintained under Section 301 of the Companies Act transactions exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

7. The Company has not accepted any deposits from public during the year

8. The internal audit is being carried out by an external firm of Chartered Accountants, which in our opinion is commensurate with the size of the company and nature of its business.

9. The maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 does not apply to any of the products of the company.

10. (a) According to the records of the Company, the company has not fully deposited with appropriate authorities undisputed statutory dues i.e., Income Tax amounting to Rs.8.77 lakhs.

(b) According to the information and explanation given to us, no undisputed amounts payable in respect of income-tax, sales-tax, customs duty and excise duty were outstanding as at 31.3.2010 for a period of more than six months from the date they became payable.

(c) According to the records of the company, there are dues of sales tax, income-tax, customs duty/wealth-tax, excise duty/cess which have not been deposited on account of disputes with statutory authorities, which is furnished below:





Details of Dispute Nature of Forum of Dispute Period Amount

Dispute Rs. in

Lakhs Tamilnadu TNGST &CST D.C.C.T. Appeals 1988-89 872.97

Branch Transfer of to Fertilisers STAT and 1991-92

Non-receipt of C Forms and High Court Stay

Disputed tax on sulphur loan

II - Kamataka

Turnover tax on NPK Mixture KST STAT - Stay 1996-97 3.8 III - Kerala

Disputed rate of tax KGST STAT - Stay 2001-02 0.05

Total 876.89



REMANDED BACK TO

ASSESSING AUTHORITIES D.C.C.T. Appeals, 1985-86 to 77.42

Branch Transfer of fertilizers, TNGST & CST STAT and High Court 1997-98

Non-receipt of C Forms and

Disputed Taxes



11. The Company has accumulated losses, however such accumulated losses of the Company are not more than its net worth as at the end of the financial year. The Company has incurred cash losses during the current financial year.

12. Based on our examination of the books and on the information and explanation given by the management, the company has defaulted in repayment of dues to financial institutions and banker(s) and the matter is pending adjudication before the Honble Debt Recovery Tribunal, Chennai.

13. The Company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

14. In our opinion, according to the information and explanation given to us. the nature of activities of the company does not attract in special statute applicable to Chit Fund and Nidi/Mutual Benefit Fund / Societies.

15. Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have been maintained of the transaction and contracts in relation to shares, debentures and other instruments and timely entries have been made in those records. We also report that the company has held the shares, securities in its own name.

16. The company has not given guarantee for loans taken by others from banks and financial institutions during the year.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

18. Based on our examination of record and the information provided to us by the Management we report that the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Sec.301 of the Act.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by public issues during the period covered by our audit.

21. Based upon the audit procedures performed and based on the available information and explanations given by the management we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



For B.B. NAIDU & CO

Regn.No.002291S

Chartered Accountants



A.SEKAR

Place:Chennai Partner

Date : 24.08.2010 Membership No. 18784

---

Jun 30, 2003

We have audited the attached Balance Sheet of Kothari Industrial Corporation Limited as at 30th June 2003 and Profit & Loss Account of the Company for the period ended on that date annexed thereto both of which we have signed under reference to this report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with auditing standards generally accepted in India. The standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. We have broadly obtained all the information and explanations, excepting Granite Division (refer note no. 10(ii) ), which to the best of our knowledge and belief were necessary for the purpose of our audit.

2. In our opinion, proper books of account as required by law, have been kept by the Company with the exception of those relating to Granite Division so far as appears from our examination of those books.

3. The Balance Sheet and the Profit and Loss Account and Cash Flow Statement dealt with by this Report are in agreement with such books referred to in Paragraph 2 above.

4. In our opinion, the Balance Sheet and Profit and Loss Account and Cash flow statement dealt with by this report comply with the Accounting Standards referred in sub-section (3 C) of section 211 of the Companies Act 1956. With the exception of non observance of accrued basis of accounting referred to in this specific qualifications listed in para 7 of this report.

5. In view of the Company not having redeemed the debentures and repaid the term loan to

financial institutions and certain matured fixed deposits for a period exceeding three years, we report that all the Directors are disqualified as on 30.6.2003 from being appointed as Directors in any other Public Limited Company in terms of Section 274(1) (g) of the Companies Act, 1956. The Company has been advised by counsel that there is no bar from the defaulting Directors of the Company from being reappointed Directors in the same defaulting Company.

6. In our opinion, the said accounts together with the accounting policies and notes in Schedule No. 17, give the information required under the Companies Act, 1956 in the manner so required.

7. Attention is invited to

i) Note No. 7(ii) relating to non provision for disputed sales tax demands aggregating to Rs.891.97 lacs

ii) Non provision for power tariff consequent to withdrawal of concessional power tariff relating to earlier years Rs.328.73 lacs (note 7(iii)

iii) An amount of Rs.659.77 lacs is due by a public company which is under liquidation. (Note 12(b) (i)) and overdue amount of Rs.842.58 lacs (Note 12(b)(iii)) both being related parties.

iv) The advances referred to in para (iii) above have been to companies with which there is no direct business nexus and the end use of these amounts by the receipient companies which, we are informed, are controlled by the promoters, his family members and associates, have not been made known to us to comment on the propriety of these transactions or the recoverability of these amounts.

v) Non provision for potential liability for unfulfilled export obligation pertaining to textile division amounting to Rs. 84.07 lacs. (Note 7(vii))

vi) Non provision for Overdue and Penal interest and other charges in respect of certain Non Convertible Debentures, which have become overdue for redemption. (Note 3(i)). Consequentially, the bank borrowings and outstanding liability to debenture holders, are understated in the Balance Sheet.

vii) Non incorporation of the transactions of the Granite Division during the year. (Note 10(ii)).

viii)The Company has yet to give effect to the order of City Civil Court, Chennai regarding refund of share monies. (Note 2(v)&(vi))

ix) The Company has not given effect to the consent decree filed with Supreme Court regarding disputed share allotment (Note 2 (vii))

x) The liability on account of shortfall. between the realisable value of certain leased machineries of Kothari Mill No.2 repossessed by the leasing company and the amount that would become ultimately payable, has not been quantified and provided for. (Note 17(a)).

xi) The Suspension of construction activities at Brewery Project in Andhra Pradesh (Note 18(i))

xii) Legal possession of certain plantation lands acquired is over due and yet to be registered by the company (Sch 5 Note 2)

xiii)We have not audited the unpaid dividend bank accounts of the company in the absence of complete details / bank statements and the consequential payments to the Investor Education and Protection Fund.

xiv)Non provision of interest on certain unsecured advances to related parties (Note 16(iii).

xv) Non provision of diminution in the value of investment in subsidiary M/s. Kothari (Madras) International Limited (Note No.19).

xvi)The company has not conducted Audit Committee meetings during the period.

xvii)Advances include Rs.273.70 Lacs due from Kothari Group Employees Gratutity Fund representing Gratutity paid directly to employees by the Company. In the absence of ascertainment of the quantum of gratutity liability either on acturial basis or otherwise, it has not been possible

to ascertain whether the gratutity liability has been recognised in full in the accounts and whether the amount of Rs.273.70 lacs shown as due from the Gratuity fund is recoverable in the absence of the accounts of the fund made available to us.

8. a. We are unable to express any opinion on

(i) the quantum of liability relating to item (i), (ii), (v) in paragraph (7),

ii) the realisability of the amounts referred to in paragraph (7) (iii) & (iv) above and

iii) the effect of impact of significant matters mentioned in paragraph (7) (vi),(vii), (viii), (ix) ,(x), (xi), (xii) and (xv) the quantum thereof not having been quantified or estimated by the company

iv) The effect of unadjusted shortfall between the revalued assets and the reduced Revaluation Reserve on account of periodical utilisation of the Reserve in the earlier years for absorbing capital losses on disposal of certain divisions in the past years amount not quantified by the management.

b. Considering developments which have taken place after the Balance Sheet date referred to in Note No. 26 and erosion in networth besides the exposure of the company in regard to guarantees issued by the company which might devolve on the company we are unable to express any opinion on the financial viability of the company. The future profitability would depend upon further financial assistance / restructuring scheme in the absence of which the presentation of the accounts on principles applicable to a going concern in our opinion is inappropriate.

c. The future survival of the Company would depend upon the successful resolution of certain winding up petitions filed by certain creditors before the various courts.

9. In view of our observations in paragraphs (7) and (8) above, and the consequent effect thereof on the Reserves and the Loss for the period both being not quantifiable, we

are unable to express our opinion on the true and fair view in the case of :-

(a) the Balance Sheet as at 30th June 2003 of the state of the Companys affairs as at 30th June 2003;

(b) the Profit and Loss Account for the period ended 30th June 2003 the Loss for the period ended on that date; and

(c) the Cash flow statement for the period ended 30th June 2003 the cashflows for the period ended on that date.

10. The company has not prepared Corporate Governance report and Management Discussion and Analysis report for our verification.

In terms of the Manufacturing and Other Companies (Auditors Report) Order, 1988 and on the basis of such checks as we considered appropriate, we further state that:

1. a. The Company has maintained records

showing quantitative details and situation of fixed assets at divisions which are being updated to include additions/deductions during the period. All the assets have not been physically verified by the management during the year. However there is a regular programme of verification (with the exception of Granite Division) which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

b. No fixed assets have been revalued during the year.

2. a. As explained to us, the stocks of finished goods, raw materials, stores and spares at all locations (with the exceptions of Granite Division) have been physically verified by the Management at reasonable periods and those at stock points/third parties with reference to independent confirmations wherever received. The bulk stock of certain raw materials/ Finished goods in the Fertiliser Division are being verified during the lean period when such Stocks are less in quantity:

b. In our opinion, the procedures of physical

verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. In our opinion, the discrepancies noticed on verification between the physical stocks and the Book stocks, which were not material, were properly dealt with in the books of account after review.

d. The valuation of raw materials, semi- finished goods and stores has been at cost. Stocks of Finished goods comprising of Fertilisers have been valued this year at lower of Cost and net realisable value. Tea is valued as in the previous year at since net realised/ realisable value being a plantation product.

3. a. In our opinion, the rates of interest and the terms and conditions of loans obtained from companies, firms or other parties listed in the registers maintained under Section 301 of the Companies Act are prima facie not prejudicial to the interests of the Company. In view of the deletion of the Section 370 of the Companies Act there is no requirement to make a statement in this regard.

b. Loans and advances in the nature of loans, have been given to planter customers and employees who are repaying the principal amounts as stipulated and also are generally regular in payment of interest wherever applicable. Loans and advances includes overdue amount of Rs.120.99 lacs given to a public limited company under liquidation, listed in the register maintained under Section 301 of the Companies Act,1956, and Rs.1502.35 lacs to two companies, which are Related Parties, including one company which is under liquidation. There are no stipulations regarding time of repayment of these loans and no portion of Interest nor principal have been recovered during the year. These balances have not been confirmed.

4. In our opinion and according to the information and explanations given to us during the course of our audit, the internal

control procedures for the purchase of materials, stores, packing materials, components, plant and machinery, equipment and other assets and with regard . to sale of goods are adequate considering the size of the Company and the nature of its business (Except Granite division).

5. In our opinion and according to the information and explanations given to us, the transactions of purchase of goods and materials and sale of goods, materials and services, made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 of the Companies Act, 1956 and aggregating during the period to Rs.50000 or more in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods, materials or services or the prices at which transactions for similar goods, materials or services have been made with other parties.

6. Unserviceable or damaged stores, raw materials and trading stocks are determined at the close of the period and adequate amounts are being written off after review in the accounts. (Except Granite division).

7. The Company has complied with the provisions of Section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975, with regard to the deposits accepted from the public, with the exception certain delay in repayment of matured deposits together with interest amounting to Rs.0.46 lacs, (since paid)

8. In our opinion, reasonable records have been maintained by the Company for the sale and disposal of realisable scrap and by- products.

9. The internal audit was carried out by an external firm of Chartered Accountants and is commensurate with the size of the Company and the nature of its business.

10.According to the records produced and information given to us, we have seen that prima facie the cost records and the accounts as prescribed by the Central Government for Fertilisers, and Sulphuric Acid under Section 209(1)(d) of the Companies Act, 1956 have been made and maintained by the Company and no examination of such records and accounts has been carried out by us. Since Fertiliser and Sulphuric Acid Plants were not functioning during the period, no cost audit report was filed.

11. There have been delays in remitting Provident Fund and Employees State Insurance dues with appropriate authorities. The company has continued the default in remittances of these payments.

12.According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, customs duty and excise duty were outstanding as at 30th June 2003 for a period of more than six months from the date they became payable, with the exception of income tax amounting to Rs.2.57 lacs which has since been remitted.

13. In the absence of full details relating to certain expenses we are unable to affirm that no personal expenses of employees or directors have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice.

14. Without taking into the cumulative financial impact of the qualificatory remarks in the Audit report, we are unable to express our opinion that the Company is not a sick industrial company within the meaning of Clause (o) of sub-section (i) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

For M K DANDEKER & CO FOR B B NAIDU & CO Chartered Accountants Chartered Accountants

K J DANDEKER B SURENDER Membership No.18533 Membership No.6020 Partner Partner

Place : Chennai Date : 3rd September 2005