We ha™ audited the I inanehi -jai^ncnu pf ML.ACHAL HEFAA.CTOIUES LIMITED ("ibe Company"), which rorrprr¹.- ;hi» ESaLuoc Sheer ns ol Nf urcJi 31,2024. ilnStltSIWW of PiofiT und Lks. iJiilIuding Qfller tnconi.cj.rnc Ecntcmenl hjI' t'lvar^,*'-^ In hVcnJty and ifi* SMnftad uf

fish Flows tor [He year ended mi iliat date, and notes In n* (inane :,-stuitrMKnLi including a summary of lifirificim nuc^onitne poUdfB and other explanatory kfamthdafi [ Imn.'iiuiJtLf icferrcd !o us " the finonrioS jtatemen.ls^,v).

]n mir opinion and k» the best a-f our irinrmntHwi nnd BceorHin^ to iha txpljitatiotis gjvcn la us. csoqit idr (hceffeh of cite madet described Eil 1hc "EJasi* far OudiGed opiisiun" ]sarai;tajjJi ofour report, the pfitHsaU I'sanelal slate; inersls givs a inie and linr view in Lcinfamnty wiiti the accounting principles genepil ly accepled in India, of the state of oflaiss of 1lie (rtnnpany as at ilareh 3 i. 2024, Uk Loss and told iain:prd.LihivL^_ income. changes in Kpiriy nn.t "1= cash flew? f*r die year ended on Him dsde-

riasis fur (j-ualiljcJ Opinion

.. Tl-rt Coripany continues not |c» axjiLi-j InyjtaJnfidfll ^carrying veIji; of io/ig-blc assets, of Ky ^76.06 Ldca and Capitol work h progmw of fts 3H7JW Lacs in accordance with

Dspi-nsncnKi Chf Indian AccojnLiiig Standard 3ti on “Imps.....tint fit Assets’¹. Men cover, there

has been no mo^emem in lI« Capita] wtwk ia progress since 131.03.3014. We are unable Ln obtain sufticienl appr^p#iai.f audit evidence abetd Ihc recoverable itxiooni bf the Cc«(pin^'^,S l:mi|.^,.I : .l assets and capita! work in pR'Kpe^- Cowequcntlyr, ivl wt: unable to determine whelher any adjuiii : jhls to carrying value ace necessary and cMieqweitfl*] impacts on ke tinancia3 stHlrnLcnCS.

2. Eniplnyui; fttfilWkirt boodles arc ncccanted for in Ihc books on Hie h;Ls:s as prescribed foe Ln fh; ielcvar,i Act, and ntnL on Lite basis of actuarial vkiriUun as required under Indian Accoiunii'g Standard (hd -A S> I ^ issued tiy die Insriluie o." Chartered Accounlwn-s of Ir-'in iuid Lite Li-ibi lily is also not fn nded Howe vfr, ii 1 pbs*nw or" neccssfliy iiltun nol ion Iroi ng mode ;iv-ilabk io us fhe impact oF the same o.i the loss fdf Uii >uaf of ke camjsiJiy -and catTespoiidint sfjiiel lat liability canned be BicertaiiLCil nnd gmaitlificd

3 'ttit urtiv.pnny bad issued two kind of redeemable prtEtrtiKie shares a) t l!oiFtodeenif.ble Cfimulntive preEbrtOW shafe^ of As 10Q-‘- each Lully paid up jndb) (1% ftudeemutte PrcFctHicc S horcs ot’ Jt* lnn-'-euch fuEly piid itp.

a) UK piefcrcr.ee sbarev wane dec for h.\tenapLien on or bddre Seplc^nber 2(U3b kmi the same bos not been redeemed and ecuittiLues- to be disclosed as saich which is nbj Ýin accoidance wi1h Indian Account!on Slandud (fcd A5) ^2-1-ijiaticial Jnstiumenl. As per (T i*ndfi oF issue 1hc company wm rrt]uijed to nwotmt flat in line year under review a sum of

I Rs | ,65 I uts aa dividend payable Ip die pideraicc shiiichplders since Lhe swue luy H*t

' ' fkj been redeemed .ipfo Ihc v?mi uuSar review. Moreover, lhe company sbcuJd have

%, .Jff '

We have audited the financial statements of NILACHAL REFRACTORIES LIMITED ("the Company”), which comprise the Balance Sheet as at March 31, 2024, 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 notes to the financial statements including a summary of 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 lo the explanations given to us, excepl for theeffect of the matter described in the “Basis for Qualified opinion” paragraph of our report, the aforesaid financial statements give a true and fair view in conformity with the accounting principles generally accepted in India, of the slate of affairs of the Company as at March 31, 2024, the Loss and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opi uion

1. The Company coniinues not to assess impairment of carrying value of tangible assets of Rs 378.06 Lacs and Capital work in progress of Rs 3147.04 Lacs in accordance wiLh requirements of Indian Accounting Standard 36 on “Impairment of Assets”. Moreover, there has been no movement in the Capital work in progress since 31.03.2014. We are unable to obtain sufficient appropriate audit evidence about the recoverable amount of the Company’s tangible assets and capital work in progress. Consequently, we are unable tn determine whether any adjustments to carrying value are necessary and consequential impacts on die financial statements.

2. Employee Retirement benefits are accounted for in the books on the basis as prescribed for in ihe relevant Act, and not on the basis of actuarial valuation as required under Indian Accounting Standard (Ind AS) 19 issued by the Institute of Chartered Accountants of India and the liability is also not funded. However, in absence of necessary information being made available to us the impact of the same o.i the loss for the year of the company and corresponding effect on liability cannot be ascertained and quantified.

3. The company had issued two kind of redeemable preference shares a) l l%Redeemable Cumulative preference shares of Rs 100/- each fully paid up andb) 0% Redeemable Preference Shares of Rs. 100/-each fully paid up.

a) 11% preference shares were due for redemption on or before September 2000 but the ___ same has not been redeemed and continues to be disclosed as such which is not in

©accordance with Indian Accounting Standard (Ind AS) 32-Financial Instrument. As per terms of issue the company was required to accounl for in the year under review a sum of \ Rs 1.65 Lacs as dividend payable to the preference shareholders since the same lias not

/ been redeemed upto the vear under review. Moreover, the company should have

accounted for the accumulated cumulative dividend on preference shares up to 3 L.03.2023 amounting to Rs 70.08Lacs which remains unaccounted. Had the same been accounted for, the loss for the year would have been higher by Rs 1.65 Lacs and the reserve and surplus would have been lower by Rs 71.73 Lacs.

b) In respect of 0% Redeemable Preference Share of Rs. 100/- each die company was required redeem the same at 10% premium upto a passage of 36 months from the date of issueand in addition pay a premium of Rs 10/ for every completed financial year after passage of 36 months from I he date of issue Li ll the redemption of preference share. Accordingly, the company was requi red to account for in Lhe year under review a sum of Rs 282.22 Lacs as premium to be paid on redemption of such preference shares since the same has not been redeemed in the year under review. Moreover, the company should have accounted for a cumulative premium payable on redemption of preference shares upto 31.03.2023 amounting to Rs 210L.53I.acs which remains unaccounted. Had Lhe same been accounted for. the loss for the year would have been higher by Rs 282 .22 lakh and the reserve and surplus would have been lower by Rs 2383.75 lacs.

We conducted our audit in accordance with Standards on Auditing (SAs) specified under section Ý43(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Compiiny in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICATs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Material Uncertainty Related to Going Concern

We draw attention to Not? No. 31 (e) of the Financial Statement, regarding preparation of Financial Statements on Going Concern basis for the reasons stated therein. The Company has incurred a net loss of Rs.649.66 lakhs (Previous Year: Rs. 179.48 lakhs) during Lhe year ended March 31,2024 and as of that date, the Company’s current liabilities exceed its current assets by Rs. 1283.02 lakhs. As on 51⁵¹ March 2024 the company’s total liabilities exceeds its total assets leading to a negative net worth of Rs. 592.13 Lacs. The Company continues to incur losses and there is considerable decline in the level of operations.

These events or conditions as set forth herein above, indicate that a material uncertainty exisis that may cast significant doubt on the Company’s ability to continue as a going concern.

Our opinion is not modified in respecL of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the financial year ended on March31, 2024. These matters weie addressed in Lhe 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. In addition to the matter described iri the basis for advcise opinion paragraph and Emphasis of Matter paragraph herein above, we have determined the matters described below' to be the key audit matters to be communicated in our report. _

Information other than the Financial Statements anil 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 and Director's Kepon including Annex ares to Director's Report but does not include the financial statements and our audiioi 's report theieon.

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 in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of tiiis other information, we are required to repoit thai 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 is responsible for the matters staled in section L34(5) of the Companies Act, 2013 {'The Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of die 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 mamLenance 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 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, the Board of Directors is responsible for assessing the Company's ability to continue as a going concent, 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 do so.

Those Board of Directors are also responsible lor overseeing the Company’s financial reporting process.

Auditor’s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statemenls 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 Standards on Auditing will always detect a material misstaLement when ii exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expeaed to influence the economic decisions of users taken on the basis of these financial statements.

As part ol an audit in accordance with Standards on Auditing, w^re exercise professional judgment and maintain professional scepticism 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 oblain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such conlrols.

Ý Evaluate the appjupriateness 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 stalements 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 ihe 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 malters, 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. ⁵

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremelv rare circumstances we determine that a matler should not be communicated in our report because the adverse consequences

ot doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

'' ^ArYT^{red by thc Com}P^anks (Auditor’s Report) Order, 2020, issued by the Central Government of I ndia in terms of sub-section (11) of section 143 of the Act (“the Order”), and on the basis of such checks of the books and records ofthe Company as we considered appropriate and according to the information and explanations given to us, we give in the “Annexure A’’ a statement on the matters specified in paragraphs 3 and 4 ofthe Order.

2. As required hy section 143 (3) of the Act, we report that:

a. Except for the matters described in the Basis for Qualified Opinion paragraph, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary lor the purpose of our audit;

b. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above and matter as described in clause O') (vi) below, in our opinion, proper books of account as required by Jaw have been kept by the Company so far as it appears from our examination of those books;

c. The Financial Statements dealt with by this Report are in agreement with the books of account-

d. Except for the effects ot the matter described in the Basis for Qualified Opinion paragraph

above, m our opinion, the aforesaid financial statements comply with the Indian Accounts Standards (Ind AS) specified under section 133 ofthe Act; ‘ °

e. The matters described in the Basis for Qualified Opinion paragraph above, in our opinion may hive adverse effect on the functioning of the Company!

t. On the basis of written representations received from the Directors taken on record by the Board ol 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; g. Refer reservation stated in clause (j) (vi) below, relating to maintenance of accounts, h With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexuie B;

i. No managerial remuneration for the year ended March 31, 2024 hasbeen paid/ provided by the Company to its directors and accordingly reporting for the provisions of section 197 read with Schedule V of the Act is not applicable,

J. With respecl to the other matters to be included in the Auditor’s Report in accordance with Rule 1 ofthe Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to tne best or our information and according to the explanations given to us:

i. Tne Company has disclosed the impact of pending litigation as at March 31, 2024 on its

financial position in ns Financial Statements- Refer Note no. 29(a) and 7.2 to the Financial statements.

^lhe Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable Josses.

in. There were no amounts wliicli were required to be transferred to tlie Investor Education and Protection Fund by the Company.

iv. (a) The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), widr the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The management has represented, that, to the best of its knowledge and belief, no funds have been received by the company from any person(s) or entity(ies), including toreign entities (“Funding Parties”), with 1he 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- (“Ullimate Beneficiaries”) or provide any guarantee, security or the uke on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures that have been considered reasonable and appropriate m the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

(v) The company has not declared or paid any dividend during the year.

(vi) Based on our examination, ihe company, has used accounting software for maintaining its books of account which has a feature of recording audit trail (edil log) facility except in respect of maintenance of inventory recordswherein the software did not have the audit 1rail feature. Further, the audit trail facility has been operating throughout the year for all relevant transactions recorded in the accounting sofiware except in respect of inventory transaction which is maintained in other software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with

As proviso to Rule 3( I) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11 (g) of the Companies (Audit and Auditors) Rules 20M on preservation of audit trail as per die statutory requirements for record retention* not applicable for the year ended March 31, 2024.

For JAIN SARAOCI & CO l.LP Chartered Accountants FRNi 305004 E/E300281

Place: Kolkata \0i ", *

Date: 30th May, 2024.

iVtanoj Keshan (Partner) Membership No. 055272 UDIN: 2U0 652.?lBtB I