RCI Industries and Technologies Limited Report on the Audit of the Standalone Financial Statements

Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code, 2016 (IBC)

The Application was filed by the Standard Chartered Bank (Singapore) Limited (Operational Creditor) under section 9 of the Insolvency and Bankruptcy Code, 2016 (Code) for commencement of Corporate Insolvency Resolution Process (CIRP) in the matter of RCI Industries & Technologies Limited (“Corporate Debtor” or “Company”). Hon’ble National Company Law Tribunal (NCLT) New Delhi vide its order dated November 25, 2022 in C.P (IB) No. 2688 of 2019, commenced the CIRP in the matter of Corporate Debtor and appointed Mr. Brijesh Singh Bhadauriya as Interim Resolution Professional (IRP) subsequently confirming him as the Resolution Professional ("RP") under the provisions of the Code. The said order was uploaded on the website and available to the RP on November 30, 2022.

We have been informed by RP, the directors, Statutory auditors and compliance officer of the company were not cooperative in providing the desired information and documents promptly to the RP, The RP was forced to filing of Intervention application under section 19(2) of the IBC, 2016 before the Hon’ble NCLT-the adjudicating authority (being IA No: 1396/2023 on 03.03.2023) to provide necessary direction to the directors, auditors and compliance officer of the company to provide the desired information and documents to the RP.

Qualified Opinion

We have audited the accompanying standalone financial statements of RCI Industries and Technologies Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2025, 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 standalone financial statements, including material accounting policy information and other explanatory information (hereinafter referred to as the “standalone financial statements”).

In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matters 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 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, and loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

A. The Company has not maintained a proper Fixed Asset Register. Major details such as cost of assets, accumulated depreciation of previous years, actual purchase dates, invoice numbers, vendor names, and appropriate descriptions of assets are not available in the depreciation chart provided to us.

Further, during our audit, we observed the following:

• Significant discrepancies were noted in the depreciation chart, including non-availability of certain assets, existence of assets not recorded, mismatches in descriptions/models, absence of asset tags, and weak internal controls.

• As per the report of the independent Chartered Engineer appointed by the Resolution Professional, certain items of Plant & Machinery were found to be idle, non-functional, redundant, and materially overstated. Further, the Chartered Engineer has also reported that various items of Plant & Machinery were missing as on the CIRP date. Also, machinery purchased from Devi Metals was overstated by 40—50%, second-hand machinery by 40-50%, and new machinery by 30—35%.

• Supporting documents such as invoices, purchase orders, and ownership proofs for major items of Plant & Machinery were not made available to us. Accordingly, we were unable to verify capitalization, ownership, and valuation of such assets.

• Certain vehicles recorded in the books are registered in the names of third parties, raising doubt over the Company’s ownership rights in respect of such assets.

• Scrap and redundant assets were identified; however, no provision or write-off has been recognized in the financial statements.

• As per the Forensic Audit Report dated 16.08.2023, the Corporate Debtor has manipulated asset classification by routing transactions through accounts such as “Creation of Fixed Assets" and “Creation of Assets ”, thereby converting fixed assets into current assets and vice versa. These practices, carried out at periodic intervals, appear to have been adopted to manipulate financial ratios and facilitate submissions made to lenders against credit exposures. Such irregular accounting treatment indicates potential misstatement of financial statements and noncompliance with applicable accounting standards.

Because of the significance of the matters described above, we were unable to obtain sufficient appropriate audit evidence to verify the existence, ownership, valuation, and completeness of the balance of Property, Plant and Equipment (PPE) and depreciation reported in the financial statements.

B. As per the report of the independent Chartered Engineer appointed by the Resolution Professional, certain items recorded under Capital Work-in-Progress (CWIP) in the books of account and the depreciation register provided by the erstwhile management were not physically available at the Plant as on the date of commencement of the Corporate Insolvency Resolution Process (CIRP).

The financial impact of these discrepancies has not been quantified or recognized in the accompanying financial statements. Accordingly, we were unable to obtain sufficient appropriate audit evidence regarding the existence and valuation of CWIP as reported in the financial statements.

C. The Company holds equity investments in certain group companies. In accordance with Ind AS 109 “Financial Instruments", such investments are required to be measured at fair value through profit or loss as at the balance sheet date and the resulting gain/loss should be recognized in the financial statements. However, no such fair valuation has been carried out by the management.

Further, we have not been provided with agreements relating to these investments, nor have we been provided with the financial statements of the investee companies. In the absence of fair valuation and sufficient appropriate audit evidence, we are unable to determine the correctness of the carrying value of these investments and the consequential impact on the financial statements, including the Statement of Profit and Loss and related disclosures.

D. Company faces a material uncertainty related to Going Concern because of heavy losses incurred during the current and previous periods. Further, the net worth of the Company has been fully eroded. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. In our opinion, the financial statement however have been prepared by the management on a going concern basis for the reason as stated. Based on the information available, the Company is presently under the Corporate Insolvency Resolution Process (CIRP) initiated pursuant to the order of the Hon’ble National Company Law Tribunal (NCLT), New Delhi dated November 25, 2022. The Resolution Professional (RP) has invited and evaluated Resolution Plans, and the plan has been approved by the Committee of Creditors (CoC) and is pending approval before the Hon’ble NCLT. In view of the ongoing CIRP and the likelihood of resolution through the approval of a Resolution Plan, the financial statements of the Company have been prepared on a going concern basis. Accordingly, we conclude that the use of the going concern assumption in the preparation of the accompanying financial statements is appropriate under the given circumstances.

E. The Company’s net worth has been fully eroded and it is under severe financial stress. Based on the information and explanations given to us, and on the basis of financial ratios, ageing and expected realization of financial assets, payment schedules of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors’/Resolution Professional’s plans, and our examination of the evidence

supporting the assumption, there exists a material uncertainty indicating that the Company is not capable of meeting its liabilities existing as at the balance sheet date as and when they fall due within a period of one year from the balance sheet date.

F. A Transaction-cum-Forensic Audit was carried out for the period April 01, 2017 to November 25, 2022 (as the books of accounts for the period April 01,2015 to March 31,2017 have not been made available by the suspended director till date). The forensic auditor has reported preferential, undervalued, fraudulent, and extortionate transactions aggregating to ?369.71 crores, covered under Sections 43, 45, 50, and 66 of the Insolvency and Bankruptcy Code, 2016. Applications for reversal of these transactions have been filed before the Hon’ble National Company Law Tribunal (NCLT).

In view of the pending adjudication of these matters before the Hon’ble NCLT and absence of sufficient

appropriate audit evidence regarding the recoverability and ultimate impact of such transactions on the financial statements, we are unable to comment on the adjustments, if any, that may be required in the accompanying financial results.

G. We draw attention to the findings reported in the Forensic Audit carried out by an independent forensic auditor appointed by the Resolution Professional. As per the forensic audit report, the Corporate Debtor had sold land situated at Nalagarh on 31st December 2019, originally purchased for ?2.29 crores, to M/s AKJ Metals Private Limited for ?2.30 crores, resulting in a nominal gain of f 1 lakh.

The forensic auditor has observed that the fair market value of the said land, as per the Valuation Report dated 15th May 2023, was ?9.06 crores. Based on reverse calculation using the Cost of Inflation Index, the indexed cost was worked out at ?7.52 crores, resulting in an imputed loss/fraud of approximately ?5.22 crores, which has

neither been recognized in the books of account nor appropriately disclosed in the financial statements.

Further, it has been noted that the transaction involved related parties and entities having influence over the Corporate Debtor, indicating that the transaction may be prejudicial to the interests of the Company and its stakeholders.

H. The Company has received regulatory notices and summons from various government authorities, including the Serious Fraud Investigation Office (SFIO), Enforcement Directorate (ED), Directorate General of GST Intelligence (DGGST), and the Income Tax Department. Investigations by DGGST allege fraudulent availment of fake Input Tax Credit (ITC) amounting to approximately ?214 crores through paper invoices, dummy companies, and other contrived arrangements, purportedly under the direction of the erstwhile Managing Director.

Pending conclusion of the said investigations and proceedings, the management/Resolution Professional has not made any adjustments or disclosures of possible financial implications in the accompanying financial results. In the absence of sufficient appropriate audit evidence to evaluate the possible financial impact of such regulatory actions on the financial statements, we are unable to determine whether any adjustments are required to the carrying amounts of assets, liabilities, expenses and disclosures.

I. The Company has received notices and is subject to investigations by various agencies, including FIR No. 182/2022 registered by the Economic Offence Wing, New Delhi, and FIR No. 615/2023 registered by Police Station Madhav Nagar, Katni, M.P., in relation to allegations of fraud, misappropriation, and non-return of job work material. These matters are presently under investigation.

Pending the outcome of such investigations and in the absence of sufficient appropriate audit evidence, no adjustments have been made in the accompanying financial statements for any potential financial implications arising therefrom. Accordingly, we are unable to determine whether any adjustments are required to the carrying values of assets, liabilities, expenses, or disclosures.

J. Company borrowings were declared as non performing asset (NPA) during the year ended March 31, 2020. Due to this, we have not been provided with any document confirming balances, as at March 31,2025, for loans granted by financial institutions and banks, BG Invocation liability towards banks, bill discounting liability towards banks, certain current accounts and fixed deposits held by the Company. In the absence of such document, we cannot comment on the accuracy and completeness of these balances. The Company has not recognized interest expenses in its financial statement on its outstanding borrowings.

K. The Company has received multiple notices from the Income Tax Department, including:

• Notice under Section 221(1) dated July 31, 2025, from the Assistant Commissioner of Income Tax, Central Circle 32, Delhi, indicating substantial outstanding tax demands across several assessment years. The Company has been directed to show cause why penalty should not be levied for non-payment of these demands.

• Notice under Section 148A(3) dated June 28, 2025, for Assessment Year 2019—20, wherein the Income Tax

Department has alleged that the Company engaged in bogus sale-purchase transactions and claimed fraudulent Input Tax Credit (ITC) 18 and FY 2018-19. The corresponding

fake purchase transactions

to provide substantive documentary evidence and that the transactions with various entities were found to be merely on paper, with no actual movement of goods. As a result, income aggregating to ?915.00 crores is considered to have escaped assessment under Section 147 of the Act.

The Company has responded to the notices citing the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, due to its ongoing Corporate Insolvency Resolution Process (CIRP). However, the tax authorities have rejected this contention and proceeded with reopening the assessment.

We also understand that the Income Tax Department has filed claim before the RP as per the IBC, 2016 in respect of their claim as on the CIRP commencement date for Rs. 79,37,03,360/- raised till 12.12.2022 upto the Assessment Year 2020-21 and the said claim would be dealt with as per the Resolution Plan to be approved by the Han’ble NCLT in due course.

In the absence of sufficient and appropriate audit evidence regarding the resolution of these matters, the potential financial impact of penalties, tax liabilities, and adjustments arising from these proceedings cannot be reliably estimated. Accordingly, we are unable to determine the consequential effect, if any, on the financial statements for the year ended March 31, 2025.

This matter was also reported in the Independent Auditors’ Report on the standalone financial statements of the Company

for the year ended March 31, 2024 in previous year: - Refer All Paragraph of basis of qualified opinion above.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) 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 obtained by us is sufficient and appropriate to provide a basis for our qualified opinion.

Emphasis of Matter:

We draw attention to the following matters in the Notes to the standalone financial statements:

a) The Company has incurred continuous losses, its current liabilities exceed current assets, and it has defaulted in repayment of borrowings as well as in payment of certain regulatory and statutory dues. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.

b) The accounts, however, have been prepared by the management on a going concern basis, considering the reasons stated in the financial results and the approval of a resolution plan submitted by M/s JTL Industries Limited, the approval of a resolution plan submitted by M/s JTL Industries, which was approved by the Committee of Creditors in the 22nd Adjourned meeting held on 05th June, 2025 and Voting concluded on 17 August 2024.

c) The said resolution plan is pending approval by the Hon’ble National Company Law Tribunal (NCLT). Pending such approval, we are unable to obtain sufficient appropriate audit evidence regarding management’s use of the

going concern basis of accounting in the preparation of the standalone financial statements.

d) In view of the ongoing Corporate Insolvency Resolution Process (CIRP) and various matters pending before regulatory authorities, the outcome of which cannot presently be ascertained, a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern.

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 year ended March 31, 2025. 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.

We have determined that there are no key audit matters to communicate in our report.

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

a) The Company’s Board of Directors / resolution professional is responsible for the other information. The other information comprises the information included in the Director’s Report but does not include the financial

hereon.

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

c) 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 during the course of our audit or otherwise appears to be materially misstated.

d) 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 and Those Charged with Governance for the Standalone Financial Statements

The Company’s Board of Directors/Resolution professional 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, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards 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 standalone financial statement 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, 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.

Auditors’ 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.

We give in “Annexure A” a detailed description of Auditor’s responsibilities for Audit of the Standalone Financial Statements.

Other Matters:

(a) Attention is drawn to the fact that the figures for the quarter ended March 31, 2025 and corresponding quarter ended in previous year as reported in these standalone financial results are the balancing figures between audited figures in respect of the full financial year and published year-to-date figures upto the end of the third quarter of the current and previous financial year respectively. Also, the figures upto the end of the third quarter for the current and previous financial year had only been reviewed as required by the Listing Regulations.

(b) We were not the statutory auditors of the Company for the year ended March 31, 2022 and accordingly did not audit or express an opinion on the standalone financial statements of the Company for that year. Further, the standalone financial results for the quarters ended June 30, 2022 and September 30, 2022 were reviewed by the predecessor auditor.

We have been appointed by the Resolution Professional during the Corporate Insolvency Resolution Process (CIRP) to undertake the quarterly reviews of the remaining quarters of FY 2022-23, FY 2023-24 and FY 202425, and to conduct the statutory audits of the standalone and consolidated financial statements of the Company for the years ended March 31, 2023, March 31,2024 and March 31,2025.

(c) The forensic audit has reported that the Corporate Debtor has an outstanding balance with M/s Shilpi Cable Technologies Limited, amounting to ?48.36 crores, pertaining to transactions of earlier years. As per external investigations, including those by the Central Bureau of Investigation (CBI), M/s Shilpi Cable Technologies Limited and its promoters have been accused of allegedly cheating a consortium of banks to the extent of ,000 crores, involving misuse of Letters of Credit, diversion of funds, and excess payments. The Company’s books of account reflect no sales to this party, though payments were received in earlier years and adjusted against London Metal Exchange (LME) differences.

(d) The forensic audit has further reported that, as per the sanction letter issued by Union Bank of India dated October 29, 2018, an industrial land and building located at 108, HPSIDC, Baddi, Himachal Pradesh Ý Ý 173005, was to be mortgaged with the bank as prime security. However, the property has been alleged to have been sold by the Corporate Debtor to M/s AKJ Metals Private Limited, resultmg in a total loss of ?10.12 crores.

(e) The forensic audit has also observed that despite regular purchases of Plant and Machinery aggregating to ?6.60

crores during FY 2017-18 to FY 2020-21, no value addition in turnover was noticed; instead, turnover reduced

crores in FY 2017- -21). In the absence of

satisfactory explanations or supporting documents, the forensic audit has opined that these substantial payments towards machinery purchases, and additional expenses of ?77.42 lakhs booked under Repairs & Maintenance, indicate possible siphoning of funds by the Corporate Debtor.

(f) The forensic audit has further reported that the Corporate Debtor sold goods and job work services aggregating to ?13.88 crores during earlier periods to parties including M/s RN International (?12.39 crores) and M/s H H Metals (?1.49 crores) without realizing any consideration. Subsequently, such balances were written off in full

in FY 2021-22. The forensic audit has opined that these transactions were in the nature of fraud, as stock was removed from the books by recording sales for which no money was received.

(g) In addition to the above matters, the forensic audit report has also highlighted instances of fake sales and purchase transactions entered into by the Corporate Debtor, indicating further irregularities in the books of accounts.

Our opinion is not modified in respect of these matters.

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 “Annexure B” a statement on the matters

specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and except, for the possible effect of the matter described in the Basis for Qualified Opinion above, 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 except, for the effects of the matter described in the Basis of Qualified Opinion section above, 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 including other comprehensive income, the Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.

d. Except, for the matter described in the Basis of Qualified Opinion section above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.

e. The qualification / emphasis of matter relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion / Emphasis of Matter paragraph above.

f. As the Company is under the Corporate Insolvency Resolution Process (CIRP) pursuant to the provisons of the Insolvency and Bankruptcy Code, 2016, the powers of the Board of Directors have been suspended and are being exercised by the Resolution Professional pursuant to the Order of the Hon’ble NCLT dated 25.11.2022 which was received on 30.11.2022 Accordingly, we are unable to obtain the representations from the directors as required under Section 164(2) of the Companies Act, 2013. Hence, we are unable to comment on whether any of the directors of the Company are disqualified as on March 31, 2025 from being appointed as a director in terms of the said section.

The company was under the control and management of the suspended directors till the commencement of the CIRP and thereafter, the control vested in the Resolution Professional.

g. 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 C”.

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, 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 36 to the standalone 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv.

a. The Resolution Professional as represented that, to the best of his knowledge and belief, after taking over the management, 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.

b. The Resolution Professional has represented, that, to the best of his knowledge and belief, after taking over the management, 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, as on the date of this audit report, 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 Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

c. Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Resolution Professional /Management in this regard 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 (1) and (2) above, contain any material mis-statement.

v. The company has not declared or paid any dividend during the year and has not proposed final dividend for the year.

vi. Based on our examination, the Company has used accounting software for maintaining its books of account for the year ended March 31, 2025 which has the audit trail feature enabled throughout the year. (Refer Note 42)

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit

trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2025.

i. In our opinion, according to information, explanations given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 read with Schedule V of the Act and the rules thereunder.

For R Bansal & Co.

Chartered Accountants

ICAI Firm Registration No. 002736N

Ashwani Bansal Partner

Membership No. 529077

UDIN: 25529077BMOXNR9780

Place: Chandigarh Date: September 27th, 2025