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Auditor Report of Crimson Metal Engineering Company Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Crimson Metal Engineering Company 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.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company''s 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 Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. 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.

AUDITORS'' 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 misstatement.

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 used 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 profit of the Company for the year ended on that date; and

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2003 (the Order) issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. 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 purpose 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 the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013

e. On the basis of the written representations received from the directors as on March 31, 2014, 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 Section 274(1)(g) of the Act.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of CRIMSON METAL ENGINEERING COMPANY Limited on the accounts of the company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

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

(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 are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, 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. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has taken loans from a individual of Rs. 0.31Lakhs covered in the register maintained under Section 301 of the Companies Act, 1956.

(c) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from an individual covered 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 amount as stipulated and has been regular in the payment of interest.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeding five lakhs rupees in financial year therefore requirement of reasonableness of transactions does not arises.

6. According to the explanation & information given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (vi) of paragraph 4 of the order are not applicable to the Company.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act,1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities.

(b)According to the information and explanations given to us there were no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty and cess were in arrears as on 31st of March, 2014 for a period of more than six months from the date they became payable.

10. The Company has an accumulated loss of Rs225.31lakhs and has not incurred cash loss during the financial year covered by our audit and in the immediate preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

12. 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. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not trading in Shares, Mutual funds & other Investments, therefore the provision of this clause of the company auditors'' (report) order, 2003 (as amended) is not applicable to the company.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has not issue any debenture till date. Hence the Provision of Clause 19 of the paragraph 4 of the order is not applicable to the company.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported to us during the year under report.



For ABHAY JAIN & CO., Chartered Accountants FRN : 000008S

(A.K. JAIN) Place : Chennai Partner Date : 30.05.2014 M. No. 70224


Mar 31, 2011

1. We have audited the attached Balances Sheet of M/S.CRIMSON METAL ENGINEERING COMPANY LIMITED (Formerly Known as SRI SAARBATI STEEL TUBES LIMITED), as at 31st March 2011 and also the Profit & Loss Account and Cash Flow Statement of the company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956. and on the basis of such checks as we considered appropriate and according to information and explanation given to us, we setout in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in the annexure referred to above, 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 purpose of the audit.

b) In our opinion proper books of accounts as required by Law have been kept by the company, so far as appears from our examination of those books.

c) The Balance Sheet and Profit & Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit & Loss account and cash flow statement dealt with by this report have been prepared, in all material respects, in compliance with the applicable Accounting Standards referred to in section 211(3C) of the Companies Act, 1956.

e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as 31st march 2011 from being appointed as a director in terms section 274(1)(g) of the Companies Act 1956.

f) As stated in Note to accounts Point no 13 company has reduced its share capital to 40% to Rs.20353500 and share premium of Rs. 39088375 has been set off against accumulated losses. Subject to this, In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet of the state of affairs of the company as at 31st March, 2011; and

(ii) In the case of Profit and Loss Account, of the profit for the year ended on that date.

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF M/S. CRIMSON METAL ENGINEERING COMPANY LIMITED (Formerly known as SRI SAARBATI STEEL TUBES LIMITED), CHENNAI, THE ACCOUNT FOR THE YEAR ENDED ON 31st MARCH, 2011.

(i)(a) The Company records showing full particulars including quantitative details and situation of Fixed Assets have been lost and an FIR has been filed on 03.08.2003 in that regard. It was explained to us that record from 01.04.2003 is being made. Further, the Company is taking efforts to make the records of Fixed Assets for earlier period as much as possible.

(b) Some of the Fixed Assets were physically verified by the management randomly during the year in accordance with a programme of verification which, in our opinion, provides for physical verification of all assets at reasonable intervals. According to information and explanations given to us, no material discrepancies were noticed on such verification.

(c) None of the Fixed Assets have been revalued during the year.

(ii) (a) The Inventories of the company at its locations have been physically verified during the year by the management.

(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 nature of its business.

(c) The company has maintained proper records of inventories and the discrepancies noticed on verification between the physical stocks and the book records have been properly dealt with in the books of account.

(iii) (a) The company has taken loans secured or unsecured from an individual and two of the Corporate bodies for Rs.8.87 Crores.The Maximum amount involved during the year was Rs.12.34 Crores.

(b) As explained to us that Loans so taken is interest free and none of the conditions on which loan has been accepted is prejudicial to the interest of the company except the loan taken from Anudeep Towers (P) Ltd.The rate of Interest so paid is not prejudicial to the interest of the company.

(c) The company is regularly paying the principal amount as stipulated.

(d) There is no overdue amount of loan taken from parties listed in the register maintained under section 301 of the Companies Act ,1956.

(iv) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventories, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal Controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transaction 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 five lakhs rupees in respect of any party covered during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any fixed deposits from the public during the year.

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

(viii) We have already broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the central government for the maintenance of cost records under section 209 (I ) (d ) of the companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not carried out detailed examination of such accounts and records.

(ix) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including investor's education protection fund, Income Tax, Wealth Tax, customs duty, excise duty,cess and other material statutory dues applicable to it. However some delays were there in payment of provident fund, Employee state insurance during the year.

(b) According to the information and explanation given to us, the details of disputed sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited as on 31 st March 2011 on account of dispute are given below:

Nature of Nature of Amount Period to which Forum where Statute Dues (Rs in the amount the dispute is Lacs) relates Asst. pending Years

Sales Tax Sales Tax 1.5 Interest for the Sales tax Act year 1992-93 Department for waiver of interest as per BIFR order Dt.30.6.2011

Sales Tax Sales Tax 0.6 Interest for the - do - Act year 1993-94

Sales Tax Sales Tax 9.3 Interest for the - do - Act year 2002-03

Sales Tax Sales Tax 2.7 Interest for the - do - Act year 2003-04

Sales Tax Sales Tax 0.38 Interest for the - do - Act year 2004-05

Sales Tax Sales Tax 0.66 Interest for the - do - Act year 2005-06

Sales Tax Sales Tax 0.9 Interest for the - do - Act year 2001-02

Sales Tax Sales Tax 0.05 Interest for the - do - Act year 2002-03

Sales Tax Sales Tax 0.51 CST not allowed - do - Act

(x) The accumulated losses of the company exceed fifty percent of net worth at the end of the year. The company has not incurred cash loss during immediately preceding financial year.

(xi) In our Opinion and according to information and explanation given to us , there were no amounts due to a Financial Institution, Banks or Debenture Holders.As such Provision of clause 4(xi) of the company (Auditor's Report) Order 2003 are not applicable to the company..

(xii) The company has not granted any loan and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the company is not a chit fund or a nidhi/mutual benefit/society. Therefore, the provision of clause 4 (xiii) of the companies (Audit Report) Order 2003, are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiii) of the companies (Audit Report) Order 2003, are not applicable to the company.

(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanation given to us no terms loans raised by the company during the year.

(xvii) According to the information and explanations given to us and an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

(xviii)According to the information and explanations given to us, BIFR has ordered to the Company for preferential allotment of 2392857 equity shares of Rs.10/- each at a premium of Rs.4/- to parties and companies covered in the register maintained under section 301 of the Act. The Company has preferentially allotted shares accordingly.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

(xx) We verified the books of accounts of the company and report that the company has not raised any money by public issue during the year.

(xxi) 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 ABHAY JAIN & CO., Chartered Accountants

(A.K. JAIN) Partner M. No. 70224 FRN : 000008 S

Place : Chennai Date : 03.09.2011

 
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