Auditor Report of Chase Bright Steel Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of CHASE BRIGHT STEEL LIMITED ("the Company"), which comprise the Balance Sheet as at March 31,2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

The Company Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular No. 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies use and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the company as at March 31, 2014;

(b) In the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (hereinafter referred to as "the Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanation given to us, we give in the Annexure a statement on the matters specified in Paragraphs 4 and 5 of the Order.

ii. As required by Section 227(3) of the Act, we report that:

a. We have 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 appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the Books of Accounts.

d. In our opinion, the Balance sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards notified under the Act read with the General Circular No. 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 to the extent applicable.

e. On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274of the Act.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT [Referred in Paragraph (i) under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the member of CHASE BRIGHT STEEL LIMITED on the financial statements for the year ended March 31,2014.]

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the fixed assets have been physically verified by the management, according to a phased programme designed to cover all the fixed assets at least once during the year, which in our opinion, is at reasonable intervals having regard to the size of the Company and nature of its assets. As informed to us, no material discrepancies were noticed on such verification.

(c) In our opinion, and according to the information and explanation given to us, the Company has not disposed off a substantial part of its fixed assets during the year so as to affect its going concern.

(ii) (a) The management has conducted physical verification of inventories during the year.

In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventories and the discrepancies noticed on physical verification between the physical stocks and book records were not material and have been properly dealt with in the books of account

(iii) (a) As per information furnished, the Company has not granted any loans, secured or unsecured to companies, firms other parties listed in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clauses (b), (c) and (d) of paragraph 4(iii) of the said Order are not applicable.

(b) The company has taken unsecured loans from five parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 378.10 lakhs and the year-end balance of loans taken from such parties was Rs. 350.10 lakhs.

(c) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions for such loans, are not, prima facie, prejudicial to the interest of the Company.

(d) The Company is regular in repaying the principal amounts as stipulated.

(iv) In our opinion, and according to the information and explanation given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system.

(v) (a) On the basis of the audit procedures performed by us and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices / rates which are reasonable having regard to the prevailing market price / rates at the relevant time.

(vi) In our opinion and according to the information and explanation given to us, the Company has not accepted any deposits from the public and hence the question of complying with the directives issued by the Reserve Bank of India, the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Rules framed thereunder are not applicable.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of section (1) of section 209 of the Act and are the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanation given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service-tax, custom duty, excise and other material statutory dues, as applicable to it, with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth-tax, service-tax, sales- tax, customs duty and other material statutory dues were in arrears, as at March 31,2014 for a period of more than six months from the date they became payable except Income-tax dues of Rs. 5.71 lakhs and NMMC Cess of Rs. 18.09 lakhs.

(c) According to the information and explanations given to us, there are no dues of income-tax, sales-tax service tax, custom duty, excise duty and cess which have not been deposited on account of any dispute.

(x) As on March 31,2014, the accumulated losses of the Company are not more than 50% of its net worth. The Company has incurred cash losses during the year ended on that date but not in the immediately preceding financial year.

(xi) According to the information and explanations given to us and records of the Company examined by us, the Company has not defaulted in repayment of dues, if any, to a financial institution or bank. Further, the Company has not issued any debentures and hence clause 4 (xi) of the Order, to that extent, is not applicable.

(xii) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore the provisions of Clause 4(xii) of the Order are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund, nidhi, mutual benefit fund or a society. Accordingly, paragraph 4(xiii) of the said Order is not applicable.

(xiv) According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanation given to us by the management, the proceeds from the term loans availed were, prima facie, have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the funds raised on short term basis have not been utilised for long term investment.

(xviii) According to the information and explanations given to us, as the Company has not made any preferential allotment of shares during the year, Accordingly, Clause 4(xviii) of the Order is not applicable.

(xix) According to the information and explanations given to us, as the Company has not issued any debentures, the question of creating security or charge in respect thereof does not arise.

(xx) As the Company has not raised any money by way of public issues during the year, the provisions of Clause 4(xx) of the Order are not applicable.

(xxi) Based on the audit procedure performed and information and explanations given to us by the management, we report that no fraud (i.e. intentional material misstatements resultant from fraudulent financial reporting and misappropriation of assets) on or by the Company has been noticed or reported during the course of our audit.

For A. J. MEHTA & ASSOCIATES

Chartered Accountants Firm Registration No. 106179W

(ATUL J. MEHTA)

Place : Mumbai Proprietor

Dated : May 30, 2014 Membership No.: 36959

---

Mar 31, 2012

We have audited the attached Balance Sheet of CHASE BRIGHT STEEL LTD. as at March 31, 2012 the Statement of Profit and Loss account and also the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors' Report) Order, 2003 (CARO 2003) (as amended) issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(ii) 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.

(iii) The Balance Sheet, the Statement of Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account of the Company;

(iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss Account and the Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in the section 211(3C) of the Companies' Act, 1956 to the extent applicable;

(v) On the basis of written representations received from the directors, as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies' Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the "Significant Accounting Policies" and the Notes thereto and subject to Note No. 31 relating to non provision for doubtful debts of 10,09,374/, give the information required by the Companies' Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(b) in the case of the Statement of Profit and Loss Account, of the Profit for the year ended on that date; and

(c) in the case of the Cash Flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our Report of even date)

On the basis of the records produced to us for our verification / perusal, such checks as we considered appropriate and in terms of information and explanations given to us on our enquiries, we state that

(1) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, all the assets have been physically verified by the management at reasonable intervals during the year. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial / major part of Fixed Assets during the year.

(2) (a) As explained to us, the inventories have been physically verified by the management at regular intervals during the year and at the close of the year.

(b) In our opinion and according to the information and explanations given to us the procedures of physical verification of inventories followed by the management as explained to us are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt within the books of account.

(3) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, Clauses (b), (c) and (d) of paragraph 4(iii) of the Order are not applicable.

(b) The company has taken loans from six parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance involved during the year was Rs. 362.10 lakhs and the year end balance of loans taken from such parties was 350.10 lakhs

(c) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies and other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(d) The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest, wherever applicable.

(4) In our opinion and according to the information and explanations given to us, there are in general adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and also with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) (a) On the basis of the audit procedures performed by us and according to the information and explanations provided by the management, the contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party have been made at prices / rates which are reasonable having regard to the prevailing market price / rates at the relevant time.

(6) In our opinion and according to the information and explanation given to us, the Company has not accepted any deposits from the public and consequently the directives issued by the Reserve Bank of India, the provisions of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed thereunder are not applicable.

(7) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(8) We have broadly reviewed the books of account maintained by the Company in respect of products, where pursuant to the rules made by the Central Government of India, the maintenance of Cost Records has been prescribed under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(9) (a) According to records of the Company, and on the basis of our examination of the books of accounts and other records, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, Employee's State Insurance, Income - tax, Service tax, Sales tax / VAT, Customs Duty, Excise Duty and other material statutory dues applicable to it but there have been some delays in few instances. However, according to information and explanation given to us, there is no liability towards Investor Education & Protection Fund, Wealth- tax for the year under audit.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at March 31, 2012 for a period of more than six months from the date they became payable except Income-tax dues of Rs. 25.20 lakhs and NMMC Cess of Rs. 21.41 lakhs.

(c) According to the information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, excise duty, service tax or custom duty which have not been deposited on account of any dispute.

(10) As on March 31, 2012, the accumulated losses of the Company are not more than 50% of its net worth. The Company has not incurred cash losses during the year ended on that date and in the immediately preceding financial year.

(11) Based on our audit procedure and on the basis of information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions or banks. Further, the Company has not issued any debentures and hence clause 4 (xi) of the Order, to that extent, is not applicable.

(12) In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(13) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the company.

(14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the company.

(15) According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.

(16) To the best of our knowledge and belief and according to the information and explanation given us, the proceeds from term loans availed were, prima, facie, applied by the Company during the year for the purpose for which the loans were obtained.

(17) According to the Cash Flow Statement and records examined by us and according to the information and explanations given to us, on overall basis, funds raised on short term basis have, prima facie, has not been used during the year for long term investment.

(18) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(19) The Company has not issued any debentures. Accordingly, clause 4(xix) of the Order is not applicable.

(20) The Company has not raised any money by way of public issue during the year.

(21) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For A. J. MEHTA & ASSOCIATES

Chartered Accountants Firm Registration No. 106179W

(ATUL MEHTA)

Place : Mumbai Proprietor

Dated : August 14, 2012 Membership No.: 36959

---

Mar 31, 2011

We have audited the attached Balance Sheet of CHASE BRIGHT STEEL LTD. as at March 31,2011 the Profit and Loss account and also the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining. on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors' Report) Order, 2003 (CARO 2003) (as amended) issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit:

(ii) 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.

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account of the Company;

(iv) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in the section 211 (3C) of the Companies' Act, 1956 to the extent applicable:

(v) On the basis of written representations received from the directors, as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies' Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the "Significant Accounting Policies" and "Notes to Accounts" and other notes appearing else where in the accounts and subject to Note No. 5 of Schedule 20 relating to non provision for doubtful debts of Rs. 10,09,374/-, give the information required by the Companies' Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2011;

(b) in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and

(c) in the case of the Cash Flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph 3 of our Report of even date)

On the basis of the records produced to us for our verification / perusal, such checks as we considered appropriate and in terms of information and explanations given to us on our enquiries, we state that

(1) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, all the assets have been physically verified by the management at reasonable intervals during the year No material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial part of Fixed Assets during the year.

(2) (a) As explained to us, the inventories have been physically verified by the management at regular intervals during the year and at the close of the year.

(b) In our opinion and according to the information and explanations given to us the procedures of physical verification of inventories followed by the management as explained to us are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt within the books of account.

(3) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, Clauses (b), (c) and (d) of paragraph 4(iii) of the Order are not applicable.

(b) The company has taken loans from seven parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance involved during the year was Rs. 362.49 lakhs and the year end balance of loans taken from such parties was Rs. 296.46 lakhs.

(c) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies and other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima lacie, prejudicial to the interest of the company.

(d) The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest, wherever applicable.

(4) In our opinion and according to the information and explanations given to us, there are in general adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and also with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) (a) On the basis of the audit procedures performed by us and according to the information and explanations provided by the management, the contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party have been made at prices / rates which are reasonable having regard to the prevailing market price / rates at the relevant time.

(6) The Company has not accepted any deposits from the public and consequently the directives issued by the Reserve Bank of India, the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Rules framed thereunder are not applicable.

(7) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(8) According to information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 in respect of the manufacturing activities carried on by the Company and therefore, clause 4(viii) of the Order is not applicable.

(9) (a) According to records of the Company, and on the basis of our examination of the books of accounts and other records, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, Employee's State Insurance, Income-tax, Service tax, Sales tax/VAT, Customs Duty, Excise Duty and other material statutory dues applicable to it but there have been some delays in few instances. However, according to information and explanation given to us, there is no liability towards Investor Education & Protection Fund, Wealth- tax for the year under audit.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at March 31,2011 for a period of more than six months from the date they became payable except Income-tax dues of Rs.88 lakhs and NMMC Cess of Rs. 25.56 lakhs.

(c) According to the information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, excise duty, service tax or custom duty which have not been deposited on account of any dispute.

(10) As on March 31, 2010, the accumulated losses of the Company are more than 50% of its net worth. The Company has not incurred cash losses during the year ended on that date and in the immediately preceding financial year.

(11) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or banks. Further, the Company has not issued any debentures and hence clause 4 (xi) of the Order, to that extent, is not applicable.

(12) In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(13) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the company.

(14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the company.

(15) According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.

(16) The Company has raised new loans during the year. The loans so raised have been utilized for the purpose for which they were raised.

(17) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the Company has utilised short term funds towards financing of losses incurred in the past.

(18) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(19) The Company has not issued any debentures. Accordingly, clause 4(xix) of the Order is not applicable.

(20) The Company has not raised any money by way of public issue during the year.

(21) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For A. J. MEHTA & ASSOCIATES

Chartered Accountants Firm Registration No. 106179W

(ATUL MEHTA)

Proprietor Membership No.: 36959

Place: Mumbai Dated: August 06, 2011

---

Mar 31, 2010

We have audited the attached Balance Sheet of CHASE BRIGHT STEEL LTD. as at March 31,2010 the Profit and Loss account and also the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 (CARO 2003) (as amended) issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(ii) 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.

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account of the Company;

(iv) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow statement dealt with by this report comply with the Accounting Standards referred to in the section 211 (3C) of the Companies Act, 1956 to the extent applicable;

(v) On the basis of written representations received from the directors, as on March 31,2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the "Significant Accounting Policies" and "Notes to Accounts" and other notes appearing else where in the accounts and subject to Note No. 5 of Schedule 20 relating to non provision for doubtful debts of ? 10,09,374/-, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2010;

(b) in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and

(c) in the case of the Cash Flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our Report of even date)

On the basis of the records produced to us for our verification / perusal, such checks as we considered appropriate and in terms of information and explanations given to us on our enquiries, we state that

(1) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, all the assets have been physically verified by the management at reasonable intervals during the year. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off a substantial part of Fixed Assets during the year.

(2) (a) As explained to us, the inventories have been physically verified by the management at regular intervals during the year and at the close of the year.

(b) In our opinion and according to the information and explanations given to us the procedures of physical verification of inventories followed by the management as explained to us are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt within the books of account.

(3) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, Clauses (b), (c) and (d) of paragraph 4(iii) of the Order are not applicable.

(b) The company has taken loans from seven parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance involved during the year was ? 333.82. lakhs and the year end balance of loans taken from such parties was ? 322.30 lakhs

(c) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies and other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(d) The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest, wherever applicable.

(4) In our opinion and according to the information and explanations given to us, there are in general adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and also with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(5) (a) On the basis of the audit procedures performed by us and according to the information

and explanations provided by the management, the contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs Jn respect of any party have been made at prices / rates which are reasonable having regard to the prevailing market price / rates at the relevant time.

(6) The Company has not accepted any deposits from the public and consequently the directives issued by the Reserve Bank of India, the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Rules framed thereunder are not applicable.

(7) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(8) According to information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 in respect of the manufacturing activities carried on by the Company and therefore, clause 4(viii) of the Order is not applicable.

(9) (a) According to records of the Company, and on the basis of our examination of the bookS of accounts and other records, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, Employees State Insurance, income - tax, Service tax, sales tax / VAT, Customs Duty, Excise Duty and other material statutory dues applicable to it but there have been some delays in few instances. However, according to information and explanation given to us, there is no liability towards Investor Education & Protection Fund, Wealth- tax for the year under audit.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at March 31,2010 for a period of more than six months from the date they became payable except NMMC Cess of 719,24,420/-.

(c) According to the information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, excise duty, service tax or custom duty which have not been deposited on account of any dispute.

(10) As on March 31,2010, the accumulated losses of the Company are more than 50% of its net worth. The Company has not incurred cash losses during the year ended on that date and in the immediately preceding financial year.

(11) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions or banks. Further, the Company has not issued any debentures and hence clause 4 (xi) of the Order, to that extent, is not applicable.

(12) In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(13) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the company.

(14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the company.

(15) According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.

(16) The Company has raised new loans during the year. The loans so raised have been utilized for the purpose for which they were raised.

(17) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the Company has utilised short term funds towards financing of losses incurred in the past.

(18) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(19) The Company has not issued any debentures. Accordingly, clause 4(xix) of the Order is not applicable.

(20) The Company has not raised any money by way of public issue during the year.

(21) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For A. J. MEHTA & ASSOCIATES

Chartered Accountants

Firm Registration No. 106179W



Place: Mumbai

Dated : July 31,2010 (ATUL MEHTA)

Proprietor

Membership No.: 36959