Sai Silks (Kalamandir) Ltd Auditor Reports

Independent Auditors Examination Report on the Restated Statement of Assets and Liabilities as at March 31, 2023, March 31, 2022 and March 31, 2021, the Restated Statement of Profit and Loss (including Other Comprehensive Income), Restated Statement of Changes in Equity, Restated Cash- flow Statement, Summary Statement of Significant Accounting Policies and Other Explanatory Information for each of the years ended March 31, 2023, March 31, 2022 and March 31, 2021.

To

The Board of Directors

Sai Silks (Kalamandir) Limited

6-3-790/8, Flat No: 1, Bathina Apartments,

Ameerpet, Hyderabad Telangana-

500016India

Dear Sirs,

1. We have examined the attached Restated Financial Information of Sai Silks (Kalamandir) Limited(the "Company" or "Issuer"), comprising the Restated Statement of Assets and Liabilities as at March 31, 2023, March 31, 2022 and March 31, 2021, the Restated Statements of Profit and Loss (including other comprehensive income), the Restated Statement of Changes in Equity, the Restated Cash Flow Statement for each of the years ended March 31, 2023, March 31, 2022 and March 31, 2021 a Summary of Significant Accounting Policies and other explanatory information (collectively, the "Restated Financial Information"), as approved by the Board of Directors of the Company at their meeting held on September 06, 2023 for the purpose of inclusion in the Red Herring Prospectus ("RHP") and Prospectus (collectively referred to as "Offer Documents") prepared by the Company in connection with its proposed Initial Public Offer of equity shares ("IPO") prepared in terms of the requirements of:

a) Section 26 of Part I of Chapter III of the Companies Act, 2013, as amended (the "Act");

b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (the "ICDR Regulations") ; and

c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India ("ICAI"), as amended from time to time (the "Guidance Note").

2. The Companys Board of Directors is responsible for the preparation of the Restated Financial Information for the purpose of inclusion in the RHP to be filed with Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited and the Registrar of Companies, Telangana in connection with the proposed IPO. The Restated Financial Information have been prepared by the management of the Company on the basis of preparation stated in note 2(a) to the Restated Financial Information. The Companys Board of Directors responsibility includes designing, implementing and maintaining adequate internal control relevant to the preparation and presentation of the restated financial information. The Board of Directors are also responsible for identifying and ensuring that the Company complies with the Act, ICDR Regulations and the Guidance Note read with SEBI Regulations, as applicable in connection with the IPO.

3. We have examined such Restated Financial Information taking into consideration:

a) The terms of reference and terms of our engagement agreed upon with you in accordance with our engagement letter dated 03 May, 2022 in connection with the proposed IPO of equity shares of the Company;

b) The Guidance Note also requires that we comply with the ethical requirements of the Code of Ethics issued by the ICAI;

c) Concepts of test checks and materiality to obtain reasonable assurance based on verification of evidence supporting the Restated Financial Information; and

d) The requirements of Section 26 of the Act and the ICDR Regulations.

e) Our work was performed solely to assist you in meeting your responsibilities in relation to your compliance with the Act, the ICDR Regulations and the Guidance Note read with SEBI Regulations, as applicable, in connection with the proposed IPO.

4. These Restated Financial Information have been compiled by the management from:

a) Audited Ind AS financial statements of the Company for the year ended March 31, 2023, prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meeting held on July 13, 2023.

b) Audited Ind AS financial statements of the Company for the year ended March 31, 2022, prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Act read with Companies (Indian

Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meeting held on May 28, 2022. The comparative information for the year ended March 31, 2021 included in such financial statements have been prepared by making Ind AS adjustments to the audited financial statements of the Company as at and for the year ended March 31, 2021, prepared in accordance with the accounting standards, notified under the Section 133 of the Act ("Indian GAAP") which was approved by the Board of Directors at their meeting held on July 05, 2021

c) The audited special purpose Ind AS financial statements as at and for the years ended March 31, 2021 and March 31, 2020 prepared on the basis as described in Note 2(a) to the restated financial information, which have been approved by the Board of Directors at their meeting held on June 15, 2022.

5. For the purpose of our examination, we have relied on:

a) Auditors report issued by us dated July 13, 2023 on the Ind AS financial statements of the Company as at and for the year ended March 31, 2023 as referred in Paragraph 4 above which included an Emphasis of Matter paragraph as mentioned below;

Emphasis of Matter:

We draw your attention to the followings forming part of the financial statements without modifying our opinion in respect of:

Note No: 37(a)(6), The Income Tax Department ("ITD") conducted a "search, survey and seizure operation" pursuant to authorizations issued under Sections 132 and 133A of the Income Tax Act, 1961 at the Registered and Corporate Office of the Company and certain stores and warehouses, across Telangana, Karnataka, Tamil Nadu and Andhra Pradesh beginning from May 2, 2023. During such searches, amongst others, the following were found (i) cash (that was not seized); and (ii) certain documents and hardware copies (that were seized by the authorized officers of the ITD). Similar searches were also conducted on the residence of the Promoters, Nagakanaka Durga Prasad Chalavadi and Jhansi Rani Chalavadi, other Whole-time Directors of the Company, Kalyan Srinivas Annam and Doodeswara Kanaka Durgarao Chalavadi, Chief Financial Officer of the Company, Konduri Venkata Lakshmi Narasimha Sarma and certain other Key Managerial Personnel.

During the searches at their residences, amongst others, following were found

(i) cash (that was not seized);

(ii) jewellery and other precious metals (that were not seized);

(iii) inventory of bank accounts and lockers in relation to the Promoters (that were not seized); and (iv) various documents (that were seized by the authorized officers of the ITD).

During this process, ITD also issued notices of summons, under Section 131 of the Income Tax Act, 1961, to the Promoters, other Whole-time Directors and some of the Key Managerial Personnel, to produce books of accounts and other relevant information and documents, which were duly provided. However, proceedings under search, survey and seizure operations are yet to be concluded, during which the Company, Promoters, Directors and Key Managerial Personnel may be required to share other additional documents or information as may be asked by the ITD from time to time. There are currently no tax demands levied consequent to such operations.

Our opinion is not modified in respect of these matters.

b) Auditors report issued by us dated May 28, 2022 on the financial statements of the Company as at and for the year ended March 31, 2022 as referred in Paragraph 4 above; and

c) Auditors report issued by us dated June 15, 2022 on the special purpose Ind AS Financial statements as at and for the years ended March 31, 2021 and March 31, 2020 as referred in Paragraph 4 above, which included an Emphasis of Matter paragraph as mentioned below:

Emphasis of Matter Basis of Accounting and Restriction on Distribution and Use

We draw your attention to Note 2(a) to the special purpose Ind AS financial information, which describes the purpose and basis of preparation. The Special purpose Ind AS financial statements have been prepared by the company solely for the purpose of preparation of the Restated financial information as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended ("the ICDR Regulations") in relation to the proposed initial public offering of the company and to comply with other relevant SEBI Regulations in connection with the IPO. As a result, the Special purpose Ind AS financial statements may not be suitable for any other purpose and are not financial statements prepared pursuant to any requirements under Section 129 of the Companies Act, 2013. The Special purpose Ind AS financial statements cannot be referred to or distributed or included in any offering document or used for any other purpose except with our prior consent in writing. Our report is intended solely for the purpose of preparation of the restated financial information and to comply with relevant SEBI regulations and is not to be used, referred to or distributed for any other purpose without our prior written consent.

Our opinion is not modified in respect of this matter.

d) For the purpose of Special purpose audit report referred in para 5(c) above, we have relied on Auditors report issued by the previous auditors dated July 05, 2021 and September 04, 2020 on the financial statements of the Company as at and for the years ended March 31, 2021 and 2020.

The audits for the financial years ended March 31, 2021 and March 31, 2020 were conducted by the Companys previous auditors, M/s. Kannegolla Krishna Rao and Company, Chartered Accountants ("the Previous Auditors").

6. Based on our examination and according to the information and explanations given to us and based on the para 4 above, we report that the Restated Financial Information:

a) have been prepared after incorporating adjustments for the changes in accounting policies, material errors and regrouping/reclassifications retrospectively in the financial years ended March 31, 2022 and March 31, 2021 to reflect the same accounting treatment as per the accounting policy and regrouping / classifications followed as at end of the financial year ended March 31, 2023.

b) have been prepared in accordance with the Act, ICDR Regulations and the guidance note, as applicable.

c) There were no qualifications in auditors report on the audited financial statements of the Company for the financial year ended March 31, 2023, 2022 and 2021 which require any adjustments to the restated financial information. However, auditors report dated July 13, 2023 for the financial year ended March 31, 2023 referred to in paragraph 5(a) above and audit reports dated July 05, 2021 and September 4, 2020 referred to in paragraph 5(d) above includes emphasis of matter which do not require any adjustment to the restated financial information.

Following is the emphasis of matter para which was included in the Audit Report for the financial year ended March 31, 2023 referred to in paragraph 5(a) above

We draw your attention to the followings forming part of the financial statements without modifying our opinion in respect of:

Note No: 37(a)(6), regarding Search and seizure of operations in the premises was conducted in May 2023, by income tax department under section 132 of Income Tax Act,1961. Information and documents submitted to income tax department as per information called from time to time. Scrutiny proceedings are in progress and as on date neither income tax demand determined nor levied consequent to such operations.

Our opinion is not modified in respect of these matters.

Following is the emphasis of matter para which was included in the Audit Report for the financial years ended March 31, 2021 and March 31, 2020 by the previous auditors referred to in paragraph 5(d) above.

We draw your attention to Note No. 44 of the Financial Statements which describes Managements assessment of the impact of the COVID 19 pandemic on the operations and financial results of the company. Our opinion is not modified in respect of the above matter

Note No. 44 of the Financial Statements for the year ended March 31, 2021 and March 31, 2020 :

"The retail industry as a whole has been adversely impacted by the spread of COVID-19. The operations of the company were impacted to certain extent owing to the complete Lock down imposed from 22-03-2020. In this crisis, our priorities are to protect the employees and their families from COVID-19, besides our customers visiting our stores and the society associated with it. The company has begun restoration of store operations from last week of May-20 and has been opening the stores, as permitted by the Government and Local/Regulatory authorities, with controlled movement, maintaining social distancing, taking appropriate hygiene measures and following the directions of regulatory authorities. The Company believes that the pandemic is not likely to impact the recoverability of the carrying value of its assets. The Company is closely monitoring the developments and possible effects that may result from the current pandemic on its financial condition, liquidity and operations and is actively working to minimize the impact of this unprecedented situation. As the situation is continuously evolving, the eventual impact may be different from the estimates made as of the date of approval of these Results.

7. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

8. We have not audited any financial statements of the company as of any date or for any period subsequent to March 31, 2023. Accordingly, we do not express any opinion on the financial position, results of operations or cash flows of the Company as of any date or for any period subsequent to March 31, 2023.

9. The Restated Financial Information does not reflect the effects of events that occurred subsequent to the respective dates of the reports on the audited Ind AS financial statements / audited special purpose Ind AS financial statements mentioned in paragraph 4 above.

10. This report should not in any way be construed as a reissuance or re-dating of any of the previous audit reports issued by us or the Previous Auditors, nor should this report be construed as a new opinion on any of the financial statements referred to herein.

11. We have no responsibility to update our report for events and circumstances occurring after the date of the report.

12. Our report is intended solely for use of the Board of Directors for the purpose for inclusion in the RHP to be filed with Securities and Exchange Board of India, BSE Limited, National Stock exchange of India Limited and Registrar of Companies, Telangana in connection with the proposed IPO. Our report should not be used, referred to, ordistributed for any other purpose except with our prior consent in writing. Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come without our prior consent in writing.

For Sagar & Associates

Chartered Accountants

Firms Registration Number:003510S

CA. B. Aruna

Partner

Membership Number: 216454

UDIN: 23216454BGXEPC5280

Place: Hyderabad

Date: September 06, 2023