Auditor Report of Sanathan Textiles Ltd.

Mar 31, 2025

1. We have audited the accompanying standalone
financial statements of Sanathan Textiles Limited

(the ''Company''), which comprise the Standalone
Balance Sheet as at March 31, 2025, the Standalone
Statement of Profit and Loss (including Other
Comprehensive Income), the Standalone Statement
of Cash Flow and the Standalone Statement of
Changes in Equity for the year then ended, and notes
to the standalone financial statements, including
material accounting policy information and other
explanatory information.

2. In our opinion and to the best of our information
and according to the explanations given to us, 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 (''Ind AS'') specified under
section 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, and its profit (including other comprehensive
income), its cash flows and the changes in equity for
the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the
Standards on Auditing 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 (''ICAI'') together with the ethical requirements
that are relevant to our audit of the standalone
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.

Key Audit Matter

4. 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.

5. We have determined the matter described below to be
the key audit matter to be communicated in our report.

Key audit matter

How our audit addressed the key audit matter

Valuation of inventories Refer note 2.4 (xiii) to the accompanying standalone financial statements for the material accounting policy information on inventories and note 10 to the accompanying standalone financial statements for details of carrying value of inventories as at March 31, 2025. At the balance sheet date March 31, 2025, the Company held inventories comprising of raw materials, finished goods, work-in-progress, intermediate products and stores and packing materials aggregating to H 35,790 lakhs which represents 14.58 % of the total assets of the Company. Determination of cost of inventories for finished goods, intermediate products and work-in-progress involves determination of cost of direct raw materials, labour, allocation of variable overheads based on the actual use of production facilities and apportionable of fixed overhead expenditure based on the normal operating capacity.

Our audit procedures related to valuation of inventories included, but were not limited, to the following: • Assessed the appropriateness of the Company''s accounting policy and valuation method of inventories in accordance with Ind AS 2. • Evaluated the design and tested the operating effectiveness of key controls, including automated controls with the help of auditor''s experts around purchase of inventories, valuation of inventories, computation of overheads. • Discussed with management the rationale supporting assumptions and estimates used in carrying out the inventory valuation and corroborated the same to our understanding of the business.

Key audit matter	How our audit addressed the key audit matter
The valuation process which includes overhead allocation	•	Understood and assessed the management process
as above involves management judgements and estimation		of determining overhead absorption rates applied
around inputs used for overhead allocation based on		by verifying the appropriateness of underlying
various criteria, cost drivers, product mix, and allocation		variables used such as cost data, normal production
of expenses through various stages of production.		capacity, actual production data, bill of materials and
Considering the above-mentioned complexities,		stage of production.
materiality of amounts and management judgements	•	Verified the expenses considered as cost of
involved, valuation of inventories has been considered to		conversion including estimates for apportionment of
be a key audit matter for the current year audit.	•	such conversion cost to finished goods, intermediate products and work-in-progress, and ensured arithmetical accuracy of such workings. Performed substantive testing for samples of raw materials purchase transactions recorded during the year, and purchase transactions recorded before and after year end, to ensure such purchases are booked accurately and in the correct period, by verifying the underlying documents for such selected samples, which included contracts, purchase orders, invoices, shipping documents such as lorry receipts, etc.
	•	Performed analytical procedures on current year cost of goods sold based on gross profit margin analysis, and where appropriate, conducted further enquiries and testing.
	•	Evaluated the appropriateness and adequacy of the disclosures made in the accompanying standalone financial statements in accordance with the applicable accounting standards.

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

6. The Company''s Board of Directors are 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 will 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
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 Management and Those
Charged with Governance for the Standalone
Financial Statements

7. The accompanying standalone financial statements
have been approved by the Company''s Board
of Directors. The Company''s Board of Directors
are responsible for the matters stated in section
134(5) of the Act with respect to the preparation
and presentation of these standalone financial
statements that give a true and fair view of the
financial position, financial performance including
other comprehensive income, changes in equity and
cash flows of the Company in accordance with the
Ind AS specified under section 133 of the Act 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
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.

8. In preparing the standalone financial statements,
the Board of Directors 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 the Board of Directors
either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

9. 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

10. 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 Standards on
Auditing 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.

11. As part of an audit in accordance with Standards
on Auditing, specified under section 143(10) of
the Act, 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 controls;

• Obtain an understanding of internal controls 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 Board of
Directors'' 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; and

• 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.

12. 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 controls that we identify during our audit.

13. 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.

14. 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 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

15. As required by section 197(16) of the Act, based
on our audit, we report that the Company has paid
remuneration to its directors during the year in

accordance with the provisions of and limits laid down
under section 197 read with Schedule V to the Act.

16. 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.

17. Further to our comments in Annexure A, as required
by section 143(3) of the Act based on our audit, we
report, to the extent applicable, 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 purpose of our audit of the accompanying
standalone financial statements;

b) Except for the matters stated in paragraph 17(h)
(vi) below on reporting under Rule 11(g) of the
Companies (Audit and Auditors) Rules, 2014
(as amended), 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 standalone financial statements dealt
with by this report are in agreement with the
books of account;

d) In our opinion, the aforesaid standalone financial
statements comply with Ind AS specified under
section 133 of the Act;

e) On the basis of the written representations
received from the directors and 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;

f) The modification relating to the maintenance
of accounts and other matters connected
therewith are as stated in paragraph 17(b) above
on reporting under section 143(3)(b) of the Act
and paragraph 17(h)(vi) below on reporting
under Rule 11(g) of the Companies (Audit and
Auditors) Rules, 2014 (as amended);

g) With respect to the adequacy of the internal
financial controls with reference to financial
statements of the Company as on March
31, 2025 and the operating effectiveness of
such controls, refer to our separate report in
Annexure B wherein we have expressed an
unmodified opinion; and

h) 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, as detailed in note 38(i) to
the standalone financial statements, has
disclosed the impact of pending litigations
on its financial position as at March 31, 2025;

ii. The Company did not have any long-term
contracts including derivative contracts for
which there were any material foreseeable
losses as at March 31, 2025;

iii. There were no amounts which were required

to be transferred to the Investor Education
and Protection Fund by the Company

during the year ended March 31, 2025.;

iv. a. The management has represented

that, to the best of its knowledge and
belief, as disclosed in note 47A to
the standalone financial statements,
no funds have been advanced or
loaned or invested (either from
borrowed funds or securities premium
or any other sources or kind of
funds) by the Company to or in any
person(s) or entity(ies), including
foreign entities (the ''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 (the
''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, as disclosed in note 47B to
the standalone financial statements,
no funds have been received by the
Company from any person(s) or
entity(ies), including foreign entities
(the ''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 as considered reasonable
and appropriate in the circumstances,
nothing has come to our notice that
has caused us to believe that the
management representations under
sub-clauses (a) and (b) above contain
any material misstatement.

v. The Company has not declared or paid
a ny dividend during the yea r ended
March 31, 2025; and

vi. As stated in note 46 to the standalone
financial statements and based on our
examination which included test checks,
except for matter mentioned below, the

Company, in respect of financial year
commencing on 1 April 2024, 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 been 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 other than the
consequential impact of the exceptions
given below. Furthermore, except for the
matter mentioned below, the audit trail has
been preserved by the Company as per the
statutory requirements for record retention.

Nature of exception noted	Details of Exception
Instances of accounting software	The accounting software used for maintenance of all accounting
maintained by a third party where	records by the Company is operated by a third-party software
we are unable to comment on the	service provider. In the absence of any information on existence
audit trail feature at database level	of audit trail (edit logs) for any direct changes made at the database level in the ''Independent Service Auditor''s Assurance Report on the Description of Controls, their Design and Operating Effectiveness'' (''Type 2 Report'' issued in accordance with SAE 3402, Assurance Reports on Controls at a Service Organization), we are unable to comment on whether audit trail feature with respect to the database of the said software was enabled and operated throughout the year.
Instances of non-preservation of	The audit trail from 1 July 2023 to March 31, 2024 has not been
the audit trail	preserved by the Company as per the statutory requirements for record retention.

For Walker Chandiok & Co LLP

Chartered Accountants
Firm''s Registration No.: 001076N/N500013

Rajni Mundra

Partner

Place: Mumbai Membership No.: 058644

Date: May 26, 2025 UDIN: 25058644BMODLB9642