We have audited the accompanying financial statements
of Shanthi Gears Limited (“the Company”), which
comprise the Balance Sheet as at March 31, 2025,
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
summary of material accounting policies and other
explanatory information (hereinafter referred to as the
“financial statements”).

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 (“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, its profit (including other comprehensive income),
changes in equity and its cash flows for the year ended
on that date.

Basis for Opinion

We conducted our audit of the 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 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 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 opinion.

Key Audit Matters

Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the financial statements for the year ended
March 31, 2025. 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. We
have determined the matter described below to be the
key audit matter to be communicated in our report.

Timing of Revenue Recognition (as described in
Note 3.8 of the Financial Statements)

The Company deals with the designing, manufacturing,
supply and servicing of gears and gear boxes. The type
of customers varies across these segments, ranging
from dealers to Original Equipment Manufacturers, their
suppliers, and Industrial Customers. The Company
recognizes revenue from sale of goods at a point in time
based on the terms of the contract with customers which
may vary case to case. Terms of sales arrangements
with various customers, including Incoterms, determine
the timing of transfer of control and require judgment in
determining the timing of revenue recognition. Due to the
judgement relating to the determination of point of time
in satisfaction of performance obligations with respect
to the sale of products, this matter is considered as Key
Audit Matter.

How our Audit Addressed the Key Audit Matter

Our audit procedures included the following:

• Evaluated the appropriateness of the revenue
recognition accounting policies in compliance with
the accounting standards.

• Tested the design and operating effectiveness
of relevant key controls with respect to revenue
recognition on a sample basis.

• Tested the design, implementation and operating
effectiveness of the Company’s general IT controls
and key application controls over the Company’s
IT systems which govern revenue recognition in the
general ledger accounting system.

• Performed substantive testing of selected samples
of revenue transactions, recorded during the year by
testing the underlying documents.

• Performed analytical procedures on revenue
recognised during the year to identify and inquire on
unusual variances, if any.

• Tested revenue transactions, both near and after
the reporting date and tested whether the timing of
revenue was recognized in the appropriate period
with reference to shipping records, sales invoices
etc for sample transactions.

• Assessed the disclosures for compliance with
applicable accounting standards.

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

The Company’s Board of Directors is responsible
for the other information. The other information
comprises the information included in the Director’s
Report, Management Discussion and Analysis
including annexures to the Board Report, Corporate
Governance and Business Responsibility and
Sustainability Reporting but does not include the
financial statements, and our 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.

Responsibilities of Management and Those Charged
with Governance 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 financial position, financial performance including
other comprehensive income/(loss), 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 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 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 are 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.

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

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 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
2(h) (vi) below on reporting under Rule 11(g).

(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) In our opinion, the aforesaid 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) On the basis of the written representations
received from the directors as on March 31,2025
taken on record by the Board of Directors, none of
the directors are disqualified as on March 31,2025
from being appointed as a director in terms of
Section 164(2) of the Act.

(f) The reservation relating to the maintenance of
accounts and other matters connected therewith
are as stated in paragraph 2(b) above on reporting
under Section 143(3) (b) and paragraph 2(h) (vi)
below on reporting under Rule 11(g).

(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 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 financial statements - Refer Note 29a to
the 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 has been no delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund by
the Company.

iv.

(1) The Management has represented that,
to the best of its knowledge and belief,
as disclosed in Note 39(iv) 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.

(2) The Management has represented, that,
to the best of its knowledge and belief,
as disclosed in Note 39(v) 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, 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.

(3) Based on the audit procedures performed
that have been considered reasonable
and appropriate in the circumstances, and
accordingto the information and explanations
provided to us by the 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 misstatement.

. The interim dividend declared and paid by
the Company during the year and until the
date of this audit report is in accordance with
section 123 of the Companies Act 2013.

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. (Refer Note 12(iv)
to the financial statements).

(a) The Company has used two accounting
software for maintaining its books of
account which has a feature of recording
the audit trail (edit log) facility. With respect
to one software, the audit trail feature was
enabled for additional tables effective
October 2024 for the relevant transactions

at the application level. Further, the audit
trail (edit log) feature was enabled at the
database level effective October 2024 to
log any direct data changes. The audit trail
feature which was enabled at the application
level and data base level, as mentioned
above, has operated throughout the period,
post its enablement. The audit trail was
not tampered with, post enablement of the
audit trail. Additionally, the audit trail has
been preserved by the Company as per the
statutory requirements for record retention,
to the extent it was enabled and recorded
in previous year - Refer Note 40 to the
Financial Statements.

(b) With respect to software used to record
payroll transactions, the audit trail feature was
enabled at the application level throughout
the year. We are unable to comment on
whether the audit trail feature was enabled
at the database level throughout the year.
The audit trail feature was not tampered with
throughout the year. Additionally, the audit
trail has been preserved by the Company
as per the statutory requirements for record
retention, to the extent it was enabled and
recorded in previous year - Refer Note 40 to
the Financial Statements.

3. 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 of the Act and the rules thereunder.