1. We have audited the accompanying Standalone Financial Statements
of MODERN DENIM LIMITED (“the Company”) which comprise
the Balance Sheet as at 31^st March 2025, the Statement of Profit and
Loss (including other Comprehensive Income), the Statement of Changes
in Equity, the Statement of Cash Flow for the year then ended and notes
to the financial statements, including a summary of material accounting
policies and other explanatory information (hereinafter referred to as
“Standalone Financial Statements”).

2. In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter described
in the Basis for Qualified Opinion section of our report, 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, 2025, its Loss, Other Comprehensive
Income, its Cash Flows and Changes in Equity for the year ended on
that date.

Basis for Qualified Opinion

3. The Company has not recognised Dividend on cumulative redeemable
preference share on effective interest method as required by Ind AS 109
“Financial Instruments”. Dividend on cumulative redeemable preference
shares amounting to ? 110.75 Lakhs for the year (Previous year ? 110.75
Lakhs) has not been provided (Note No. 27.3). The total amount of
Dividend on cumulative redeemable preference shares not provided till
31st March 2025 amounts to ? 3780.86 Lakhs (up to previous Balance
Sheet date ? 3670.11 Lakhs) including Dividend Distribution Tax
Payable thereon of ? 569.12 Lakhs (Note No. 13.2). Had the Company
provided interest on financial liabilities in current year, Finance Cost &
Loss for the year would have been higher by ? 110.75 Lakhs and Other
Current Financial Liabilities & debit balance of Retained Earning under
the head Other Equity would have been higher by ? 3780.86 Lakhs
(upto previous Balance Sheet date ? 3670.11 Lakhs). A similar
qualification had been given in the previous year’s Auditor’s Report.

4. The company has not recognised interest in respect of certain Secured
and Unsecured Borrowings on effective interest method as required by
Ind AS 109 “Financial Instruments”. Interest on certain Secured and
Unsecured Borrowings amounting to ? 57.47 Lakhs for the year
(Previous year ? 123.46 Lakhs) (Note No. 27.1, & 27.2) has not been
provided. Had the Company provided interest on certain Secured and
Unsecured Borrowings in current year, Finance Cost & Loss for the
year would have been higher by ? 57.47 Lakhs (previous year ? 123.46
Lakhs) and Other Current Financial Liabilities & debit balance of
Retained Earning under the head Other Equity would have been higher
by ? 2357.79 Lakhs (upto previous Balance Sheet date ? 2300.32 Lakhs).
A similar qualification had been given in the previous year’s Auditor’s
Report.

5. The Company has not measured Non-Current Borrowing of ? 6984.00
Lakhs (P.Y. ? 6374.00 Lakhs) initially at fair value as required by Ind
AS 109 “Financial Instruments”. Had the Company fair valued the
same; Interest Income, Finance Cost & Non-current Borrowings would
have been higher and Other Current Finance Liabilities would have
been lower by ? 517.63 Lakhs (Previous year ? 441.13 Lakhs). However,
there is no effect in Statement of Profit & Loss for the year as well as

Debit balance of Other Equity (Refer Note no. 13.5, 22.1 & 27.4). A
similar qualification had been given in the previous year’s Auditor’s
Report.

6. As a Consequence of the matters reported at para 3 to 5 above, non¬
compliance the explicit and unreserved statement of the compliance
with Ind AS as stated in note no.1A(a) is not in accordance with Ind
AS-1" Presentation of Financial Statements”.

7. We conducted our audit in accordance with 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 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 Companies
Act, 2013 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 qualified opinion.

Material uncertainty related to Going Concern

8. We draw attention to Note 42 of the standalone financial statements
disclosing the material uncertainties that may affect the company from
being able to continue as a going concern which are as under.

a. BIFR had declared the company as a sick company and after
abatement of BIFR, Scheme of Compromise, Arrangement and
Amalgamation u/s 230-232 of the Companies Act, 2013 is under
process of approvals from concerned authorities.

b. Company’s net worth is fully eroded and has a negative net worth of
? 6639.80 Lakhs (Previous year ? 6071.20 Lakhs). The company
has neither the intention to liquidate nor the intention to cease its
operation nor is compelled to do so. The financial statements have,
therefore, been prepared on going concern basis. Our opinion is not
qualified in respect of this matter.

Emphasis of Matters

9. Emphasis of Matters are as under

(a) As described in Note 12.1, 13.1, 13.2, 16.2, 16.4, 18.2 & 18.3 to
the Standalone Financial Statement, on the basis of Expert opinion
obtained by the company, the amounts of Equity Share application
money pending for allotment, Cumulative Redeemable Preference
share, Non-Convertible Debenture (NCD) and interest accrued on
NCD, are not required to be transferred to Investor Education
Protection Fund (IEPF).

Our opinion is not qualified in respect of this matter.

(b) As described in Note 16.4 & 18.4 to the Standalone Financial
Statement, the company has filed

Scheme of Compromise, Arrangement and Amalgamation u/s 230¬
232 of the Companies Act, 2013 seeking the waiver/relief for
repayment of public fixed deposit and interest accrued thereon. Based
on the expected relief from NCLT and Expert opinion taken by the
company, the company considers no amount as due to be transferred
to IEPF.

Our opinion is not qualified in respect of this matter.

Key Audit Matters

10. 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.

11. Key audit matter identified in our audit in respect of Valuation and
Existence of High Inventory Levels as follows:

[Refer Note 1 A(g) , 5 & 24]

Information other than the Financial Statements and Auditor’s Report
thereon

12. The Company’s management and Board of Directors are responsible
for 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 and other information in the Company’s annual report, but
does not include the standalone financial statements and our auditor’s
report thereon. The other information is expected to be made available
to us after the date of this auditor’s report.

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 identified above when it
becomes available 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.

When we read the Annual Report, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to
those charged with governance and as may be legally advised.
Responsibilities of Management and Those Charged with Governance
for the Standalone Financial Statements

13. 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 statement 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 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 the
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.

14. 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.

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

Auditor’s Responsibilities for the Audit of the Standalone Financial

Statements

16. 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.

17. 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 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 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.

18. 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.

19. 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.

20. From the matters communicated with those charged with governance,
we determine those matters that were of most significance in the audit
of the standalone financial statements of the current year 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

21. As required by the Companies (Auditor’s Report) Order, 2020 (“the
Order”) issued by the Government of India in terms of Section 143(11)
of the Act, we give in the “Annexure A”, a statement on the matters
specified in paragraphs 3 and 4 of the Order, to the extent applicable.

22. Further to our comments in Annexure A, 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) Except for the effects of the matter described in the Basis for Qualified
Opinion paragraph, 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, the Statement of
Cash Flow and Statement of Changes in Equity dealt with by this Report
are in agreement with the books of account.

d) Except for the matters stated in paragraph 3 to 6 of the Report under
basis for qualified opinion, In our opinion, the aforesaid standalone
financial statements comply with accounting standards as specified
under Section 133 of the Act.

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

f) On the basis of the written representations received from the directors
as on 31st March, 2025 and taken on record by the Board of Directors,
none of the directors is disqualified as on 31 st March, 2025 from being
appointed as a director in terms of Section 164(2) of the Act.

g) The Qualification relating to the maintenance of accounts and other
matters connected therewith are as stated in the basis for Qualified
Opinion paragraph above.

h) With respect to the adequacy of the internal financial controls with
reference to Standalone Financial Statements of the Company and the
operating effectiveness of such controls, refer to our separate Report in
“Annexure B”. Our report expresses an unmodified opinion on the
adequacy and operating effectiveness of the Company’s internal financial
controls with reference to Standalone Financial Statement.

i) The company has paid/provided for managerial remuneration in
accordance with the requisite approvals mandated by 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 standalone Ind AS financial statements.
(Refer Note 34 to the financial statements);

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

iii. There is no default in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by
the company during the year ended on 31st March, 2025. (Refer
Notes 12.1, 13.1, 13.2, 16.2, 16.4, 18.2 & 18.3 to the financial
statements).

iv. (i) 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
persons or entities , including foreign entities (“Intermediaries”)
with the understanding, whether recorded in writing or otherwise,
that the Intermediaries shall, whether, directly or indirectly lend
or invest in the 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.

(ii) 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 the other persons or entities
identified in any manner whatsoever by or on behalf of the
Funding Parties (“Ultimate Beneficiaries”) or provide any
guarantee, security or the like on behalf of the Ultimate
Beneficiaries.

iii) Based on such audit procedures as 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 (i) and (ii) of Rule 11(e) of the Companies (Audit and
Auditors) Rules, 2014, as mentioned at para (iv)(i) and (iv)(ii)

above, contain any material mis-statement.

v. The company has not declared or paid any dividend during the year
as prescribed under Section 123 of the Act.

vi. Based on our examination which included test checks, the company
has used an accounting software for maintaining its books of account
which has a feature of recording audit trail (edit log) facility and
the same has operated throughout the year for all relevant
transactions recorded in the software. Further, during the course of
our audit we did not come across any instance of audit trail feature
being tampered with. Additionally, the audit trail has been preserved

by the company as per the statutory requirements for record retention
the date of implementation of edit log feature.

For J. T. Shah & Co.

Chartered Accountants
[Firm Regd. No. 109616W]

Place : Ahmedabad (A.K. Panchal)

Date : 28.05.2025 Partner

[M. No. 116848]
UDIN:25116848BMKYUH7284