We have audited the standalone financial statements
of Varroc Engineering Limited ("the Company"), which
comprise the Balance sheet as at March 31, 2026, 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 Standalone 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
standalone 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 accounting principles generally
accepted in India, of the state of affairs of the Company as
at March 31,2026, its profit including other comprehensive
income, its cash flows and the changes in equity for the
year ended on that date.

Basis for Qualified Opinion

As disclosed in Note 55(a) to the standalone financial
statements, during the current year, the Company
received a settlement offer from Beste Motor Co. Ltd.
and TYC Brother Industrial Co. Ltd. ("TYC Parties") alleging
breach of Transition Management Agreement (‘TMA' or
‘agreement') in respect of certain income amounting
to H 209.89 million recognised by the Company under
‘Revenue from operations' during the year ended March
31, 2026, as received from Chongqing Varroc TYC Auto
Lamps Co., Ltd. (erstwhile joint venture). Subsequently, the
Company also received a ‘Statement of Claim' under the
arbitration proceedings with TYC Parties on the aforesaid
matter and on certain additional claims/breaches under
the aforesaid TMA against which the Company has filed
Statement of defense in March 2026.

Pending disposal of the arbitration proceedings and in
the absence of sufficient appropriate audit evidence, we

are unable to comment on the said income recognised
in the books and consequential impact including of the
additional claims/breaches, if any, on the profit before tax,
tax expense, profit after tax, total comprehensive income
and earnings per share for the year ended March 31,2026
and retained earnings as at March 31,2026.

We conducted our audit of the standalone 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
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 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 audit opinion on the standalone
financial statements.

Emphasis of Matter

We draw attention to the following matters:

a. Note 55(b) of the standalone financial statements
regarding an arbitration initiated by OPmobility
Lighting Holding, France ("OPmobility") at the ICC
International Court of Arbitration alleging breaches
of certain covenants under the Securities Purchase
Agreement entered with OPmobility. Pending disposal
of the arbitration proceedings and basis the legal
opinion obtained, the management of the Company
believes that no provision is considered necessary in
the standalone financial statements.

b. Note 50 of the standalone financial statements
which describes the effects of the Orders received
by the Company from GST Appellate Authorities. The
Company is in the process of filing further appeals
against the aforesaid Orders, pending conclusion of
which no adjustments have been made in respect of
these matters in the standalone financial statements.

Our opinion on the standalone financial statements is not
modified in respect of the above matters.

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 for the financial year
ended March 31, 2026. 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. In addition to the matter described in the ‘Basis
for Qualified Opinion' section we have determined the
matters described below to be the key audit matters to

be communicated in our report. For each matter below,
our description of how our audit addressed the matter is
provided in that context.

We have fulfilled the responsibilities described in the
Auditor's responsibilities for the audit of the standalone
financial statements section of our report, including in
relation to these matters. Accordingly, our audit included
the performance of procedures designed to respond to
our assessment of the risks of material misstatement of
the standalone financial statements. The results of our
audit procedures, including the procedures performed
to address the matters below, provide the basis for
our audit opinion on the accompanying standalone
financial statements.

Other Information

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 standalone financial statements and our
auditor's report thereon. The Annual Report 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
and, in doing so, consider whether such other information
is materially inconsistent with the standalone financial
statements or our knowledge obtained in the 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.

Responsibilities of the Management for the
Standalone 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 standalone 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 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,
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.

The Board of Directors is also responsible for overseeing the
Company's financial reporting process.

Auditor's Responsibilities for the Audit of the
Standalone Financial Statements

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.

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 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 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 with those charged with
governance, we determine those matters that were of
most significance in the audit of the standalone financial
statements for the financial year ended March 31,2026 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 sub-section (11) of
section 143 of the Act, we give in the "Annexure 1" 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 matter
described in the Basis for Qualified Opinion
paragraph, 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 matters stated in the paragraph (j)
(vi) below on reporting under Rule 11(g);

(c) 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;

(d) Except for the possible effects of the matter
described in the Basis for Qualified Opinion
paragraph above, in our opinion, the aforesaid
standalone financial statements comply with the
Accounting Standards specified under Section
133 of the Act, read with Companies (Indian
Accounting Standards) Rules, 2015, as amended;

(e) The matter described in the Basis for Qualified
Opinion paragraph and the matters described
in the Emphasis of Matter 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 March 31,2026
taken on record by the Board of Directors, none
of the directors is disqualified as on March 31 ,

2026 from being appointed as a director in terms
of Section 164 (2) of the Act;

(g) The modification relating to the maintenance of
accounts and other matters connected therewith
are as stated in the paragraph (b) above on
reporting under Section 143(3)(b) and paragraph
(j)(vi) below on reporting under Rule 11(g);

(h) With respect to the adequacy of the internal
financial controls with reference to standalone
financial statements and the operating
effectiveness of such controls, refer to our
separate Report in "Annexure 2" to this report;

(i) In our opinion, the managerial remuneration for
the year ended March 31, 2026 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 standalone financial statements

- Refer Note 50 to the standalone
financial statements;

ii. The Company has made provision,
as required under the applicable law
or accounting standards, for material
foreseeable losses, if any, on long-term
contracts including derivative contracts

- Refer Note 22 and 26 to the standalone
financial statements;

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
note 52 to the standalone 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, 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 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 the 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 mis-statement.

v. As stated in note 44(b) to the standalone
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. Further, 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
1 23 of the Act to the extent it applies to
payment of dividend.

vi. Based on our examination which included test
checks, the Company has used SAP accounting
software for maintaining its books of account
which has a feature of recording audit trail (edit
log) facility in respect of the application and the
same has operated throughout the year for all
relevant transactions. We did not come across
any instance of the audit trail feature being
tampered with in respect of this accounting
software. Normal/Regular users are not granted
direct database or super user level access.
However, changes to the database by a super
user specifically does not carry the feature of a
concurrent real time audit trail. Additionally, the
audit trail of prior year has been preserved by
the Company as per the statutory requirements
for record retention to the extent it was enabled
and recorded in the respective year.

The Company has used a software for payroll
processing which is operated by third-party software
service provider. Based on our examination which
included test checks and the Service Organization
Controls (SOC) report, the software has a feature
of recording audit trail (edit log) facility at the
application layer, and the same has operated
throughout the year for all relevant transactions
except that, audit trail feature is not enabled for
direct changes to data when using certain access
rights. Further, during the course of our audit we did
not come across any instance of audit trail feature
being tampered with, in respect of the software
where the audit trail has been enabled.

Additionally, the audit trail of prior year has
been preserved by the Company as per the
statutory requirements for record retention to
the extent it was enabled and recorded in the
respective year.

(Refer Note 53 to the standalone
financial statements)

For S R B C & CO LLP

Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003

per Mustafa Saleem

Partner

Membership Number: 136969
UDIN: 26136969TPWTZA5834

Place of Signature: Pune

Date: May 27, 2026