We have audited the accompanying standalone
financial statements of Sarla Performance Fibers
Limited (“the Company”), which comprise the
Standalone Balance Sheet as at 31^st March 2026, the
Standalone Statement of Profit and Loss (including
Other Comprehensive Income), the Standalone
Statement of Changes in Equity and the Standalone
Statement of Cash Flows for the year then ended and
notes to the standalone financial statements, including
a summary of Material accounting policies 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, the
aforesaid standalone financial statements give the
information required by the Companies Act, 2013
(“the Act”) in the manner so required and except for
the impact of matter referred in the Basis for Qualified
Opinion section of our report, give a true and fair view
in conformity with the Indian Accounting Standards
specified under Section 133 of the Act read with the
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 31^st March, 2026, the profit and other
comprehensive income, changes in equity and its cash
flows for the year ended on that date.

Basis for Qualified Opinion

We draw attention to Note No. 53 and 54 on Exceptional
Items wherein the Company has recognized loss of Rs.
5,433.16 (net of reversal of impairment provision of Rs.

2,280.10 lakhs carried out in earlier years) on sale of 1%
Non-Cumulative Redeemable Preference Shares held
in its wholly owned subsidiary, Sarla Flex Inc.

For the sale and write off of the loss for the above
transaction and subsequent receipt of the sales
proceeds the company has applied for the necessary
approvals from the regulators and the same is still
awaited as on date of our audit report.

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 independence requirements
that are relevant to our audit of the standalone financial
statements under the provisions of the Act and the
Rules made thereunder, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements and the ICAI's 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.

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

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

The Company's Management and Board of Directors
are responsible for the preparation of the other
information. The other information comprises the
information included in the Management Discussion
and Analysis, Directors' Report including Annexures
to Directors' Report, and Corporate Governance,
but does not include the standalone financial
statements and our auditor's report thereon. The
other information as above is expected to be made
available to us after the date of this audit 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 identified above when it becomes
available and, in doing so, consider whether such
other information is materially inconsistent with the
standalone financial statements, or our knowledge
obtained during the course of our 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. When we read the other information, 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

The Company's Management and 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 state of affairs, profit/loss and other
comprehensive income, changes in equity and cash
flows of the Company in accordance with the Ind AS
and other 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 of the appropriate accounting
software for ensuring compliance with applicable laws
and regulations including those related to retention of
audit logs 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 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, 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 management either intends
to liquidate the Company or to cease operations, or
has no realistic alternative but to do so.

The Management and Board of Directors are 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 financial
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
standalone 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 and Board of Directors;

• Conclude on the appropriateness of
Management and Board of Directors' use
of the going concern basis of accounting in
preparation of standalone financial statements
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;

• 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;

Materiality is the magnitude of misstatements in the
standalone financial statements that, individually or
in aggregate, makes it probable that the economic
decisions of a reasonably knowledgeable user of the
standalone financial statements may be influenced.
We consider quantitative materiality and qualitative
factors (i) in planning the scope of our audit work
and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in
the standalone financial statements.

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 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

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 A" a statement on the matters

specified in paragraphs 3 and 4 of the Order, to

the extent applicable.

As required by Section 143(3) of the Act, based

on our audit we report that:

a) We have sought and, except for the
matters 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 purpose of our audit;

b) Except for the possible effects of the matter
described in the Basis for Qualified Opinion
paragraph above, in our opinion proper
books of account as required by law have
been kept by the Company so far as appears
from our examination of those books

c) The Standalone Balance Sheet, the
Standalone Statement of Profit and Loss
(including other comprehensive loss),
the Standalone Statement of Changes in
Equity and the Standalone Statement of
Cash Flows 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, in our opinion, the
aforesaid standalone financial statements
comply with the Ind AS;

e) On the basis of the written representations
received from the directors as on 31^st
March, 2026 taken on record by the
Board of Directors, none of the director
is disqualified as on 31^st March, 2026 from
being appointed as a director in terms of
Section 164(2) of the Act;

f) 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 B” to this report. Our
report expresses modified opinion on the
adequacy and operating effectiveness of the
Company's internal financial controls with
reference to Standalone financial statements;

g) 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 as
on March 31, 2026 on its financial
position in its standalone financial
statements (Refer Note No. 46.1 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;

iii. There has been no delay in
transferring amounts, 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 it's knowledge and belief,
as disclosed in note no. 55
(7) to the standalone financial
statements, no funds (which
are material either individually
or in the aggregate) 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
or entity, 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,
as disclosed in note no. 55
(8) to the standalone financial
statements, no funds (which
are material either individually
or in the aggregate) have been
received by the Company
from any person or entity,
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 such audit procedures
that we have 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 (i) and (ii) of
Rule 11(e), as provided under iv
(a) and iv (b) above, contain any
material misstatement.

v. The final dividend paid by the
Company during the year in respect of
FY 2024-2025 is in accordance with
Section 123 of the Act to the extent it
applies to payment of Dividend

As stated in Note no. 22.6 to the
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
proposed is in accordance with
section 123 of the Act to the extent it
applies to declaration of dividend.

vi. Based on our examination, which
included test checks, the company
has used accounting software for
maintaining its books of account which
has the feature of recording audit trail
(edit logs) facility and the same has
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
instances of audit trail feature being
tampered with and the audit trail has
been preserved by the company as
per the statutory requirements for
record retention.

3. With respect to the matter to be included in the
Auditor's Report under Section 197(16) of the Act: