Ashiana Ispat Limited

Report on the Audit of the Financial Statements

QUALIFIED OPINION

We have audited the accompanying Standalone IND AS Financial Statements of Ashiana Ispat Limited (“the Company”), which comprise the Balance sheet as at March 31, 2025, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of material accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the ‘Basis for Qualified Opinion’ section of our report, the aforesaid financial statements give the information required by the Companies Act, 2013, as amended (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian accounting standards (Ind AS) specified under Sec 133 of the Act read with the Companies (Indian Accounting Standards) rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

BASIS FOR QUALIFIED OPINION

1. We draw attention to Note No. 48 of the financial statements, “The company has requested confirmation for the balances of Trade Payables amounting to Rs.1,910.06 lakhs, Trade Receivables amounting to Rs.3,706.42 lakhs and Advances to Supplier amounting to Rs.3,396.98 lakhs from the respective parties. However, the company has not received any confirmation from the parties.”

Further, Independent confirmations were also sought for Trade Receivables, Trade Payables and Advances to Supplier on test check basis as part of the audit procedures to assess the accuracy of figures of Trade Receivables, Trade Payables and Advances to Supplier, however no responses have been received till the date of report.

In the absence of confirmations for balances, we were unable to obtain sufficient and appropriate audit evidence regarding these balances. As a result, we could not verify the completeness, existence, and accuracy of these balances as reported in the financial statements. In our opinion this matter is material but not pervasive to the financial statements

2. The Company has made advances to suppliers outstanding as at 31^st March,2025 amounting to Rs. 3,396.98 lakhs. The company has not provided us with any supporting documents or evidence in respect of these advances. In the absence of adequate documentary evidence, we are unable to verify the authenticity, completeness, and business purpose of the advances, and consequently, we are unable to comment on the recoverability of these amounts as reflected in the financial statements. In our opinion this matter is material but not pervasive to the financial statements

3. As represented by the Management, physical verification of inventory was carried out by the management as on March 31, 2025. However, the Company did not provide stock movement reconciliation up to the date of the audit, nor were any arrangements made for independent physical verification of inventory. Consequently, we are unable to comment on the current status and condition of the inventory. In our opinion this matter is material but not pervasive to the financial statements

We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our Qualified opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note No. 52 of the financial statements, " The Company approached SBI under the OneTime Settlement (OTS) scheme. Following negotiations, SBI agreed to settle the outstanding loan of Rs.

4.749.47 lakhs at Rs.4,310.00 lakhs. The Company has repaid this amount in the financial year 2025-26

from advances received against the sale of company assets......”

We also draw attention to Note No. 53 of the financial statements, “The Company was unable to meet its financial obligations towards banks and financial institutions and was classified as a Non-Performing Asset (NPA) during the period. These events and conditions indicate the existence of material uncertainty regarding the Company’s ability to continue as a going concern. However,...”

Since substantial assets including Factory land & Building, Plant & Machinery and other assets have been sold, a material uncertainty exists that may raise significant doubt about the company’s ability to continue as a going concern.

Emphasis of Matters

We Draw attention to the following matters in the Notes to the Financial Statements:

1) We draw attention to Note No. 46 of the financial statements, “Trade Receivables amounting to Rs. 660.80 lakhs are due from companies undergoing proceedings under the Corporate Insolvency Resolution Process (CIRP) with the National Company Law Tribunal (NCLT). The company's claim has been admitted and accepted by the NCLT. However, management of the Company believes and acknowledges that these companies are financial worthy and have sufficient net worth and has financial capabilities. Therefore, it was classified as Disputed trade receivables considered as good.”

Our Opinion is not Modified in the said matter.

2) We draw attention to Note No. 47 of financial statements, “A creditor has filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, before the Hon’ble National Company Law Tribunal (NCLT) against the company, seeking recovery of an outstanding amount of Rs.187.00 lakhs. The claim was disposed by the Hon’ble NCLT, Jaipur but it was again opened, and the respondent Ashiana Ispat Limited filed the reply before Hon’ble NCLT, Jaipur raising the question on the maintainability of the case and matter is pending before the Hon’ble NCLT, Jaipur.” Our Opinion is not Modified in the said matter.

3) We draw attention to Note No.49 of the financial statements, “During the year, the Company assessed the recoverable value of its plant and machinery in accordance with the provisions of Indian Accounting Standard (Ind AS) 36 - Impairment of Assets, due to the plant being non-operational since the end of the second quarter of the financial year 2024-25. The prolonged disruption in production, arising from relocation and ongoing modifications, had adversely impacted the economic value of the plant. In view of this, the Company engaged a registered valuer to determine the fair value of its assets. The valuer determined the Fair Value at Rs. 908.00 lakhs as against book value of Rs. 2,677.06 lakhs. Further during the FY 2025-26 the company in order to pay its liability with SBI entered into an agreement to sell the entire Plant & Machinery at Rs. 710.00 lakhs accordingly an impairment loss of Rs.1,967.06 lakhs was recognised during the F. Y 2024-25. " Our Opinion is not Modified in the said matter.

4) We draw attention to Note No. 50 of the financial statements, “The Company’s production came to a standstill at the end of the second quarter of the financial year 2024-25 due to the relocation of certain sections of the plant to its own land. This relocation required significant modifications, which disrupted the production of iron bars. The ongoing modifications have resulted in a closure of operations, leading to financial losses during the year.” Our Opinion is not Modified in the said matter.

5) We draw attention to Note No. 51 of the financial statements, “The total outstanding borrowings from banks and financial institutions as of March 31, 2025, amounted to Rs.6,954.02 lakhs, including Rs. 4,749.47 lakhs due to the State Bank of India (SBI). The Company has defaulted on repayment obligations, resulting in the classification of these borrowings as Non-Performing Assets (NPA) by the respective lenders. The management is actively engaged in discussions with the lenders for restructuring the loan facilities and taking necessary steps to regularize the accounts. Further, the Company has settled the loan of SBI under a One-Time Settlement (OTS) scheme and repaid the amount in accordance with the agreed terms. Consequently, no provision has been made for interest accrued on loans other than SBI, if any, up to March 31,2025.” Our Opinion is not Modified in the said matter.

We draw attention to Note No. 52 of the financial statements, “The Company approached SBI under the OneTime Settlement (OTS) scheme. Following negotiations, SBI agreed to settle the outstanding loan of Rs.

4.749.47 lakhs at Rs. 4,310.00 lakhs. The Company has repaid this amount in the financial year 2025-26 from advances received against the sale of company assets. This event has been recognized as a subsequent adjusting event in the financial statements for the year ended March 31,2025, and an amount of Rs. 439.47 lakhs has been recognized as "Other Income" in the Statement of Profit and Loss for the same period.” Our Opinion is not Modified in the said matter.

6) We draw attention to Note No. 53 of the financial statements, “The Company was unable to meet its financial obligations towards banks and financial institutions and was classified as a Non-Performing Asset (NPA) during the period. These events and conditions indicate the existence of material uncertainty regarding the Company’s ability to continue as a going concern. However, the management is actively addressing these concerns and is confident of arranging sufficient liquidity through restructuring of existing loan terms, monetization of non-core assets, collections from sale of inventory, mobilization of additional funds, and other strategic initiatives. Based on the current financial position, future business plans, available financial resources, and other relevant factors, management has assessed that the Company will be able to continue as a going concern. Accordingly, these financial statements have been prepared on a going concern basis.” As stated in Material Uncertainty Relating to Going Concern Section of the Report, since substantial assets including Factory land & Building, Plant & Machinery and other assets have been sold, a material uncertainty exists that may raise significant doubt about the company’s ability to continue as a going concern.

7) We draw attention to Note No. 54 of the financial statements, “The Company entered into an agreement with M/s Kamdhenu Limited on December 26, 2002, whereby the Company became the prior user, adopter and proprietor of the mark AL KAMDHENU GOLD, the company was also granted the rights to use the trademark “KAMDHENU” for a period of 99 years. Subsequently, in January 2021, a fresh license agreement was executed, allowing the Company to use the trademarks “KAMDHENU/ KAMDHENU NXT” for a period of 80 years.

During the year, Kamdhenu Limited attempted to wrongfully terminate the Company’s rights to use the trademarks “KAMDHENU/ KAMDHENU NXT” via a letter dated September 19, 2024. In response to this, the Company is pursuing appropriate legal remedies against Kamdhenu Limited and extensively pursuing its mark AL KAMDHENU GOLD. The Company believes that there shall be no impact on the operations of the company due to the wrongful acts of Kamdhenu Limited.” Our Opinion is not Modified in the said matter.

8) We draw attention to Note No. 55 of the financial statements, “The Company is involved in ongoing litigation with Kamdhenu Limited regarding the protection of the Company's rights over its trademark ‘AL KAMDHENU GOLD’. The Company has filed a suit bearing no. CS(COMM) 130/2025 before the Delhi High Court. The Company is actively pursuing its rights and will update stakeholders as and when necessary.” Our Opinion is not Modified in the said matter

9) We draw attention to Note No. 56 of the financial statements, “During the year, Kotak Mahindra Bank filed a case against the Company alleging involvement in fraudulent activities. The Company firmly denies these allegations and is actively pursuing the matter. Management is confident that the proceedings lack merit and anticipates that the case will be dismissed.” Our Opinion is not Modified in the said matter.

10) We draw attention to Note No. 57 of the financial statements, “During the year, complaints were filed with the Securities and Exchange Board of India (SEBI) regarding the Company’s preferential allotment of equity shares amounting to Rs. 211.75 lakhs. The complainants have alleged fraudulent activities and nonpayment of refunds related to the said allotment. The Company has submitted detailed responses to SEBI, denying the allegations and providing the necessary clarifications. The Company affirms that no amount was received towards the preferential allotment and, on the contrary, the amount received was in the nature of a short-term loan. As at the date of these financial statements, the matter remains under regulatory review, and the management is of the view that it will be resolved in favour of the Company. The Company has appropriately disclosed this amount under “Short-Term Borrowings” in the Balance Sheet.” Our Opinion is not Modified in the said matter.

11) We draw attention to Note No. 58 of the financial statements, “During the year, the Company accepted Short-term loans amounting to Rs. 211.75 lakhs from various parties, which was in contravention of the provisions of Sections 73 to 76 of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014.

Further, certain advances from customers amounting to Rs. 12.26 lakhs have remained outstanding for more than 365 days and, in accordance with Rule 2(1)(c)(xii)(a) of the Companies (Acceptance of Deposits) Rules, 2014, such amounts fall within the definition of “deemed deposits.” Accordingly, these also constitute non-compliance with the aforesaid provisions of sections 73 to 76 of the companies Act, 2013.

The Company is in the process of obtaining necessary legal and regulatory clarifications and is taking appropriate steps to regularize the said non-compliances. These amounts have been disclosed under “Short-Term Borrowings” and “Current Liabilities” in the financial statements as applicable. Our Opinion is not Modified in the said matter.

12) We draw attention to Note No. 59 of the financial statements, “During the year, due to financial constraints, the company has not deposited statutory dues, including Employee Provident Fund (EPF) amounting to Rs. 6.76 lakhs, Employee State Insurance (ESI) amounting to Rs. 1.62 lakhs, and Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) amounting to Rs. 11.76 lakhs.”

Our Opinion is not Modified in the said matter.

13) We draw attention to Note No. 60 of the financial statements, “During the year, as the banks classified the Company’s loan accounts as Non-Performing Assets (NPA), the Company had no access to its banking facilities. Consequently, to meet its day-to-day operational requirements and expenses during the period when the bank accounts remained inoperative, payments were made through the group companies of the Company.”

Our Opinion is not Modified in the said matter.

14) We draw attention to Note No. 61 of the financial statements, “In accordance with applicable IND AS-2 the valuation of inventories of Raw material and consumables is made at the lower of cost or net realizable value (NRV), as against the earlier policy of valuation at cost. As a result, thereof the value of inventories was reduced by Rs. 417.17 lakhs.” Our Opinion is not Modified in the said matter.

15) We draw attention to Note No. 63 of the financial statements, “During the year, due to financial constraints, the Company was unable to fully comply with the provisions of the Companies Act, 2013 including Section 177 relating to appointment of Audit Committee, Nomination and remuneration committee and Stakeholders committee and appointment of Women Director and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company is taking necessary steps to regularize the shortcomings and ensure compliance with the applicable provisions of the Companies Act,2013 and SEBI regulations.”

Our Opinion is not Modified in the said 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 for the financial year ended March 31,2025. 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.

In addition to the matters described in the ‘Basis of Qualified Opinion and Emphasis of Matter Sections ,We have determined the matters described below to be the key audit matters :

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

The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report 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 such 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 this other information, we are required

to report that fact. We have nothing to report in this regard.

Responsibilities of Management 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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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.

Those 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 are 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. 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 with reference to financial statements 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 financial statements for the financial year ended March 31,2025 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.

Other Matter

The audit of the financial statements of the Company for the year ended March 31,2024, was carried out and reported by the erstwhile statutory auditors Khiwani & Co., Chartered Accountants, having firm registration no. 002589N, who had expressed Qualified opinion on those financial statements vide their report dated May 30, 2024, whose report have been furnished to us and which have been relied upon by us for the purpose of audit of the financial statements.

Our opinion is not modified in respect of the above matter.

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 the “Annexure

A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and, except for the matters described in the Basis for Qualified Opinion section above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

(b) Except for the possible effects of the matter described in the Basis for Qualified Opinion section above, 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 Company does not have any branch offices and accordingly, the provisions of Section 143(8) of the Act relating to audit of branch accounts are not applicable.

(d) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

(e) In our opinion and according to the information and explanation given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion and Emphasis of Matter sections in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended

(f) 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.

(g) Except for the matters as described above under the Basis for Qualified opinion and Emphasis of Matter sections we have not come across any matter of financial transactions which have any adverse effect on the functioning of the company.

(h) With respect to the adequacy of the internal financial controls with reference to financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure B” to this report.

(i) In our opinion, the managerial remuneration for the year ended March 31,2025 has been paid/provided by the company to its directors in accordance with the provisions of Section 197 read with Schedule V to the act.

(j) 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 No. 47, 54, 55, 56 & 57 of the financial statement.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There was no amount which are 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, 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 persons or entities, 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, no funds have been received by the Company from any persons or entities, 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 such audit procedures performed that have been considered reasonable and

appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.

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

vi. Based on our examination, the company has not used accounting software for maintaining its books of accounts which has a feature of recording audit trail (edit log) facility. (Refer Note No. 64 of the financial statements)

For KHIWANI SOOD & ASSOCIATES

Chartered Accountants FRN: 040433N

Place: New Delhi CA. Rajesh Kumar Khiwani

Date: November 22, 2025 Partner

UDIN: 25081792BMNWBC3242 M.No. 081792