We have audited the financial statements of Vardhman Special
Steels Limited (the Company) which comprise the balance
sheet as at 31 March 2026, and the statement of profit and
loss (including other comprehensive income), statement of
changes in equity and statement of cash flows for the year then
ended, and notes to the financial statements, including 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, the aforesaid financial
statements give the information required by the Companies
Act, 2013 (Act) 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 31
March 2026, and its profit and other comprehensive income,
changes in equity and its cash flows for the year ended on
that date.

Basis for Opinion

We conducted our audit in accordance with the Standards
on Auditing (SAs) specified under Section 143(10) of the Act.

Revenue Recognition

See Note 2(o)(i) and 29 to the financial statements

Our responsibilities under those SAs 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
opinion on the financial statements.

Key Audit Matter

Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

Other Information

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
Management Discussion and Analysis, Board's Report including
Annexures to Board's Report, Business Responsibility and
Sustainability Report, Corporate Governance and Shareholder's
Information, but does not include the financial statements and
auditor's report thereon.

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

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

Management's and Board of Directors Responsibilities for
the Financial Statements

The Company's Management and Board of Directors are
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 state of affairs, profit/ loss
and other comprehensive income, changes in equity and cash
flows 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. 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 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 Management and
Board of Directors are 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 do so.

The Board of Directors is 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. 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 the Management and Board of
Directors.

• Conclude on the appropriateness of the Management
and Board of Directors use of the going concern basis of

accounting in preparation of financial statements 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 of the
current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such
communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order,
2020 (the Order) issued by the Central Government of
India in terms of 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.

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

a. We have sought and obtained all the information and
explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit.

b. In our opinion, proper books of account as required
by law have been kept by the Company so far as it
appears from our examination of those books, except
for the following:

• Matter stated in paragraph 2(B)(f) below on
reporting under Rule 11(g) of the Companies
(Audit and Auditors) Rules, 2014 and

• We are unable to comment on whether the back¬
up of the books of account and other relevant
books and papers in electronic mode for the
period from 1 July 2025 to 31 March 2026 was
kept on a daily basis due to unavailability of
supporting documents related to the same.

c. The balance sheet, the statement of profit and
loss (including other comprehensive income), the
statement of changes in equity and the statement of
cash flows dealt with by this Report are in agreement
with the books of account.

d. In our opinion, the aforesaid financial statements
comply with the Ind AS specified under Section 133 of
the Act.

e. On the basis of the written representations received
from the directors of the Company as on 31 March
2026 and 03 April 2026 taken on record by the Board
of Directors of the Company, none of the directors
of the Company is disqualified as on 31 March 2026
from being appointed as a director in terms of Section
164(2) of the Act.

f. The qualification relating to the maintenance of
accounts and other matters connected therewith are
as stated in the paragraph 2A(b) above on reporting
under Section 143(3)(b) of the Act and paragraph
2B(f) below on reporting under Rule 11(g) of the
Companies (Audit and Auditors) Rules, 2014.

g. 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 Annexure B.

5. 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:

a. The Company does not have any pending litigations
which would impact its financial position.

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

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

d(i) The management has represented that, to the best
of its knowledge and belief, as disclosed in the Note
49(v) to the financial statements, 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 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.

(ii) The management has represented that, to the best
of its knowledge and belief, as disclosed in the Note
49(vi) to the financial statements, 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 directly
or indirectly, lend or invest in 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 the audit procedures 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 (i) and (ii) of Rule 11(e), as provided
under (i) and (ii) above, contain any material
misstatement.

e. The final dividend paid by the Company during the
year, in respect of the same declared for the previous
year, is in accordance with Section 123 of the Act to
the extent it applies to payment of dividend.

As stated in Note 47.2 to the financial statements, the
Board of Directors of the Company have proposed
final dividend for the year which is subject to the
approval of the members at the ensuing Annual
General Meeting. The dividend declared is in
accordance with Section 123 of the Act to the extent
it applies to declaration of dividend.

f. Based on our examination which included test
checks, except for the instances mentioned below,
the Company has used accounting softwares for

maintaining its books of account which have a feature
of recording audit trail (edit log) facility and same
has operated throughout the year for all relevant
transactions recorded in the respective softwares:

In respect of one accounting software used for
maintenance of purchase, production & sales records
(operated from 1 April 2025 till 30 June 2025), the
edit logs for changes made to the audit trail feature
was not available throughout the period and hence,
we are unable to determine whether changes to the
audit trail feature were made during the period of its
operation.

In respect of the accounting software used for
maintenance of books of accounts (operated from 1
July 2025 till 31 March 2026), the feature of recording
audit trail (edit log) facility was not enabled at the
application level for certain tables/fields relating to
financial reporting, purchase to payables, revenue
to receivables, fixed asset management, payroll,
production and inventory and other allied areas of
accounting software. Further, the audit trail feature
was not enabled at the database level to log any
direct data changes.

Further, where audit trail (edit log) facility was
enabled and operated throughout the year and
except for sub-paragraph (a) above, we did not come
across any instance of the audit trail feature being
tampered with.

Additionally, except where the audit trail was
not enabled in the prior years, the audit trail has
been preserved by the Company as per statutory
requirements for record retention..

C. With respect to the matter to be included in the Auditor's
Report under Section 197(16) of the Act:

In our opinion and according to the information and
explanations given to us, the remuneration paid by the
Company to its directors during the current year is in
accordance with the provisions of Section 197 of the Act.
The remuneration paid to any director is not in excess
of the limit laid down under Section 197 of the Act. The
Ministry of Corporate Affairs has not prescribed other
details under Section 197(16) of the Act which are required
to be commented upon by us.

For B S R & Co. LLP

Chartered Accountants
Firm's Registration No.: 101248W/W-100022

Shweta Kumar

Partner

Place: Gurugram Membership No.: 509822

Date: 28 April 2026 ICAI UDIN: 26509822VQPRTX7751