MARSHALL MACHINES LIMITED

Report on the Audit of Financial Statements

Qualified Opinion

1. We have audited the accompanying Standalone Financial Statements of MARSHALL MACHINES LIMITED ("the Company"), which comprise the balance sheet as at 31^st March 2024, and the statement of Profit and Loss, statement of changes in equity and statement of cash flows for the year ended on that date, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information. (hereinafter referred to as "the Standalone Financial Statements").

2. Except for the effects / possible effects of our observations stated in para 3 (Basis of Qualified opinion), in para 4 (Emphasis of Matters) & in para 5 ( Key Audit Matters) below, 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 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, and its financial performance? and its cash flows for the year ended on that date.

- Basis for Qualified Opinion

A. As per the Financial Statements, out of Total Trade Receivables of Rs. 3,528.26 Lacs, the Trade Receivables amounting to Rs. 612.71 Lacs are pending for realization for more than 3 years and Rs. 165.98 Lacs are pending for realization for more than 2 years but less than 3 years. During the Year under audit, Company had sent communications to its Debtors to confirm the Balances as on 31.12.2023. Out of Total 198 Debtors count amounting to Rs. 3,528.26 Lacs, as on 31.12.2023 only 6 Debtors with an outstanding amount of Rs. 1,673.65 Lacs have confirmed their Balances. However, the Management of the Company is of the view that the unconfirmed Trade Receivables are good and fully realizable. Balances of Sundry Debtors which have not been confirmed are subject to confirmation and reconciliations.

B. The Balances of HDFC Bank Limited are duly reconciled with the bank statements produced and verified by us as on 31.03.2024. However, No Balance Confirmation Certificate of HDFC Bank Limited as on 31st March, 2024 is available with the Company. The Company had written to the bank seeking to provide Certificate of Balance Confirmation and Status of Company's Accounts. However the Bank has not provided any information. Further a letter seeking confirmation of the balances as on 31.03.2024 and the status of the account was also written by us but no response has been received till date. As per the Books of Accounts there is an overdue amount in the account amounting to Rs. 16.78 Lacs. As per the last communication received from HDFC bank Limited vide Certificate dated 20^th March 2024, the Bank had confirmed that the account is not NPA as on 18.03.2024 but

asked the Company to arrange credits amounting to Rs. 31.22 Lacs in order to avoid account becoming NPA due to inadequate churning in the account. Under such circumstances, in the absence of such confirmation we are unable to comment on its current status as a Standard Asset in theBank.

We have conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics.

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

4. Emphasis of Matter

Attention is drawn to the following matters:

1. In respect of Inventories during the Year under audit, the management has engaged an Independent Chartered Accountancy firm for the Physical Verification and Valuation of Inventory as on 31.03.2024 as per IND AS 2. The firm has submitted its Inventory Valuation report dated 01.05.2024.

In our opinion, the comparative inventory holding levels, in view of steep decline In the Turnover of the Company as compared to earlier years are higher.

2. During the Year under audit, the Company has arranged funds through Right Issue of its shares. Initial offer of the Right Issue was for an amount of Rs. 4,562.88 Lacs but it was under subscribed and the Company received an amount of Rs. 4,189.35 Lacs from the proceeds of the Right Issue.

i) There has been delay in the completion of the work undertaken by the company out of the Proceeds of Right Issue. We have been informed by the Company that the delay has been informed to NSE vide letter dated 10^th June, 2024. Details of Amount Utilized from the Right Issue Proceeds with Original Date of Completion and the Revised Date of Completion of Work as per the Management Certificate is asfollows:

The above Utilized amounts are on account of Advance Payments made by the Company before the actual completion of work by the Suppliers and such payments are not as per the original terms and conditions of their respective agreements with the suppliers.

ii) The Company has transferred the Right Issue Proceeds from Kotak Mahindra Bank Limited Escrow Account to Kotak Mahindra Bank Limited Current Account instead of HDFC Bank Limited where the Company is availing its Cash Credit facilities.

iii) The Company has transferred Funds out of its Right Issue Proceeds to its Director and Other Parties Bank account to make payments as follows.

3. There are number of pending cases against the Company in various Courts of law. The Company has mentioned the cases in the respective Note of the Standalone Financial Statements. The amount under dispute has already been booked in the books of accounts of the company Except in One case which has been shown under Contingent liability. However, no interest has been provided in the books of accounts since the decision of the cases are pending and in the opinion of the Directors the cases will be in the favour of the company. Directors of the Company have certified that except the mentioned cases, there are no other cases on the company in any forum.

4. With reference to the comments in our Independent Audit Report (Part B) CARO-2020 under the clause IX (a) (i), In our opinion the company is not regular in repayment of its loans and interest thereon to the financial Institutions and banks. The loan instalments have been delayed many times during the year {for individual instances refer clause IX a (i) of Annexure B of this report (The CAR0-2020 report order)}. But loans of Tata Capital Financial Services Limited, Hero Fincorp Limited, Aditya Birla Finance limited and Deutsche Bank have been classified as Substandard I written off for an amount of Rs.

53.44 Lacs, Rs. 80.87 Lacs, Rs. 8.04 Lacs and Rs. 8.93 Lacs respectively as on date of audit report. Letter of Credits taken from the bank, in four number of cases have not been paid so far after the due date. All these four cases of Letter of credits are delayed for more than one year.

5. Company has taken Trade Advances from its Customers amounting to Rs. 364.34 Lacs. This includes advances of Rs. 296.85 Lacs which are more than a year old. Balances of Sundry Advances are subject to confirmation and reconciliations.

6. Company has not deposited the Tax Deducted at Source amounting to Rs. 51.53 Lacs which has been deducted on account of payments in respect of Right Issue Expenses.

Our opinion is not modified in the matters mentioned in this above Para-4 5. 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 wedo not provide a separate opinion on these matters.

1. Company has not realized its Foreign Debtor amounting to Rs.106.55 Lacs within the time prescribed under the regulations of the FEMA Act, 1999. Subject to which penalty under the provisions of Act may be levied on violation. According to the Directors the delay was due to the dispute arising during the Covid2019 times which could not be resolved.

2. As per Note No. 14 of the Standalone Financial Statements, sundry creditors amounting to Rs. 2404.50 Lacs are due for more than 180 days, which include the creditors which are subject to the provisions of section 16(2) of the CGST Act, 2017, Input Tax Credit of GST which has been taken against such unpaid creditors has to be reversed and further the Interest and penalty may be levied on such amounts.

Our opinion is not modified in the matters mentioned in this above Para-5

Information other than the Standalone Financial Statements and Auditors' Report thereon The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report, but does not include the standalone financial statements and our auditors' report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

The Company's Board of Directors are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("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, and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial 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, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to doso.

The Board of Directors are also responsible for overseeing the company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably

be expected to Influence the economic decisions of users taken on the basis of these financial statements.

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

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

• 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 to those charged with governance, we determine those matters that were of most significance in the audit of Standalone 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 preclude 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 Section 143(3) of the Act, wereport 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, statement of changes in equity and the Cash Flow Statement dealt with by this report are in agree with the books of account.

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on 31st March, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2024 from being appointed as a director in terms of Section 164(2) of theAct.

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

g) 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, in our opinion and to the best of our information and according to the explanations given to us:

(I) The Company has disclosed impact of its pending litigations in the books of accounts except interest on such pending amounts which may arise in future has not been disclosed in the Note no 29A of the Standalone Financial Statements, which would impact its financial position.

(II) The Company does not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

(IV) a) The management has represented that, to the best of its knowledge and belief, 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 sources

or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (intermediaries^), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The management has represented, that, to the best of its knowledge and belief, 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, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub-clause (a) and (b) contain any material mis-statement.

(v) The company has not declared or paid any dividend during the year in contravention of the provisions of section 123 of the Companies Act, 2013.

(h) With respect to the other matters to be Included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

2. As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government of India in times of Section 143(11) of the Companies Act 2013, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the order.

For S. Sood & Co.

Chartered Accountant Firm Registration No. 010801N

Sanjay Sood

Partner

Membership No. 089457 UDIN: 24089457BKALFT7717 Place: Ludhiana Dated: 14th June, 2024