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Auditor Report of Electrotherm (India) Ltd.

Mar 31, 2015

We have audited the accompanying Standalone financial statements of Electrotherm (India) Limited('the Company'), which comprises the balance sheet as at 31st March 2015, the Statement of Profit and Loss and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation of these Standalone 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 the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these Standalone Financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 the 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 financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, 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 on the financial statements.

Matter of Emphasis and Qualification

1. We draw attention to Note No. 2.27 of the accompanying Standalone Financial statements in respect of Winding up petitions and recovery cases against the company, Note No. 2.28 of the accompanying Standalone Financial statements in respect of filing of Reference to BIFR on account of erosion of the net worth of the company and Note No.2.30 relating to pending judgment of Hon'ble Supreme Court, all affecting the going concern's concept of the company.

2. We draw attention to Note No. 2.29(a) to (d) of the accompanying Standalone Financial statements, in respect of non- provision of long disputed advances/claims/liability against the company, on account of the reasons for recovery/realization/settlement as stated in said notes, and the Note No 2.29(f) of non- provision of interest on NPA accounts of banks of Rs. 933.01 Crore. The exact amounts of the said non provisions are not determined and accounted for by the company.

3. We draw attention to Note No. 2.31 of the accompanying Standalone Financial statements in respect (a) writing Off of the Old Balances of advances, Trade Receivables and Inventories (b) assignment of Debts of the Some of the Bankers to Edelweiss Asset Reconstruction Company Limited and (c) non provision of diminution in the value of Investments in the Subsidiaries and other additional disclosures in relation to Standalone Financial statements of the Company.

4. We draw attention to Note No. 2.39 of the accompanying Standalone Financial statements in respect of third party balance confirmations, its classification in respect of nature of realization of the amount and provision thereof.

5. We draw attention toNote No. 1 of Note No. 2.09 of the accompanying Standalone Financial statements in respect of change in the method of depreciation on account of introduction of Schedule II of the Companies Act, 2013.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, read with the points stated in the Emphasis of Matter and Qualification, the Standalone 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 31st, 2015;

(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

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub- section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable for the year.

2. As required by Section 143 (3) of the Act, we broadly 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;

(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 account;

(d) in our opinion, the aforesaid Standalone Financial statements, read with Note No 2.31(e) of the notes to Accounts relating to accounting of Deferred Tax Liability/Asset, comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) on the basis of the written representations received from the directors as on 31st March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and

(f) 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 Standalone financial statements, to the extent possible. However attention is drawn on Note no. 2.27 to 2.30, 2.32 and 2.31 (n) to the standalone financial statements;

(ii) there are no long term contracts including derivative contracts and accordingly no provision is required to be made for any loss from the same; and

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended on March 31,2015..

[ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF ELECTROTHERM (INDIA) LIMITED, FOR THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED ON 31stMARCH 2015]

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

(b) The Company has a programme of physical verification of its fixed assets by which fixed assets are verified at regular intervals. In accordance with this programme fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(ii) (a) As informed to us, the inventory has been physically verified by the management during the year except goods in transit, material with third parties and old inventories. In our opinion, the frequency of such physical verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are 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. Discrepancies noted on physical verification of inventories (other than old unused inventory which have been written off during the year), were not material, and have been properly dealt with in the books of accounts.

(iii) As informed to us, the Company has granted loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013 ('the Act'). The rate of interest and the terms of repayment are not stipulated and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(iv) In our opinion and according to the information and explanations 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 sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) The Company has not accepted deposits from the public (other than exempted public deposits) and accordingly paragraph 3 (v) of the Order is not applicable.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost records under sub section (1) of section 148 of the Companies Act 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 same.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues with the appropriate authorities though there is slight delay in a few cases.

Further no undisputed amounts payable in respect of above dues were in arrears as at 31st March 2015 for a period of more than six months from the date they became payable.

(b) On the basis of information furnished to us, following are the details of outstanding dues in respect of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax or cess, which have not been deposited / adjusted / reversed on account of any dispute:-

Amount Name of the Statute Nature of dues (in Crore Period to which the Rupees) amount relates

EXCISE DUTY 12.23 APR-09 TO MAR-10

EXCISE DUTY 0.004 28-12-2005

EXCISE DUTY 16.65 DEC-05 TO DEC-08

EDUCATION CESS 0.41 JAN-09 TO JAN-10

EXCISE DUTY 175.00 APR-05 TO MAR-10

EDUCATION CESS 0.17 JAN-11 TO MAR-11

Central Excise Act,1944 1 EXCISE DUTY (ADVANCE 22.41 MAR-11 TO DEC-11 LICENCE)

SERVICE TAX 1.84 APR-07 TO MAR-08

EXCISE DUTY 68.62 OCT-07 TO SEPT-12

EXCISE DUTY 0.12 APR-08 TO JULY-11



SERVICE TAX 3.57 2009-10 TO 2013-14

Sub Total 301.02

CVD 7.27 MAR-11 TO DEC-11

INTEREST 6.95 MAY-07 TO FEB-08

Customs Act,1962

INTEREST 5.26 JAN-08 TO MAY-08

CUSTOM DUTY 0.83 MAR-12 TO JAN-13

Sub Total 20.31

Income Tax 6.38 Assessment Year (2010-2011) Income Tax Act, 1961

Income Tax 25.17 Assessment Year (2011-2012)

Sub Total 31.55

VAT 17.94 Assessment Year (2009-2010)& (2010-2011)

VAT 20.95 Assessment Year (2010-2011) Central Sales Tax Act, CST 1956 11.15 Assessment Year (2010-2011)

Sub Total 50.04

Grand Total 402.92

Name of the Statute Nature of dues Forum Where Dispute is pending

ASST. COMMISSIONER, GANDHIDHAM EXCISE DUTY (MATTER WAS REMANDED BY CESTAT, AHMEDABAD)

EXCISE DUTY COMMISSIONER, CENTRAL EXCISE, RAJKOT

EXCISE DUTY CESTAT, AHMEDABAD

EDUCATION CESS CESTAT, AHMEDABAD

EXCISE DUTY CESTAT, AHMEDABAD

EDUCATION CESS CESTAT, AHMEDABAD

Central Excise Act,1944 1 EXCISE DUTY (ADVANCE COMMISSIONER, CENTRAL EXCISE, LICENCE) RAJKOT

SERVICE TAX COMMISSIONER, CENTRAL EXCISE, RAJKOT

EXCISE DUTY COMMISSIONER, CENTRAL EXCISE, RAJKOT

EXCISE DUTY CESTAT, AHMEDABAD

COMMISSIONER, CENTRAL EXCISE, SERVICE TAX GANDHIDHAM,KUTCH

Sub Total CVD CESTAT, AHMEDABAD

INTEREST CESTAT, AHMEDABAD

Customs Act,1962

INTEREST ADDITIONAL COMMISSIONER, MUNDRA

CUSTOM DUTY CESTAT, AHMEDABAD

Sub Total

Income Tax (Commissioner of Income Tax) (Appeals)

Income Tax Act, 1961

Income Tax (Commissioner of Income Tax) (Appeals)

Sub Total

VAT Joint Commissioner, Mumbai (Mazgaon)

VAT Joint Commissioner, Rajkot

Central Sales Tax Act, CST 1956 Joint Commissioner, Rajkot

(c) The amount required to be transferred to investor education and protection fund has been transferred within time in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under.

(viii) The Company has accumulated losses at the end of the reporting period and the said accumulated losses at the end of the year has exceeded fifty percent of the net worth of the company and it has cash losses in the current year and also in the immediately preceding financial period.

(ix) Based on our audit procedures and on the information and explanations given by the management we are of the opinion that the company has defaulted in repayment of dues to financial institution and Banks of Rs.1768.87 Crore (other than debts assigned by State Bank of India, Bank of India, Bank of Baroda, Canara Bank, State Bank of Travancore to Edelweiss Asset Reconstruction Company Ltd), from 2011.The said defaulted amounts does not include the amount of interest not provided by the company of Rs. 933.01 Crore on the NPA accounts.

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

(xi) During the year under consideration, the company has not taken term loans.

(xii) During the course of our examination of the books and records of the company, carried out in accordance with generally accepted practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

FOR MEHTA LODHA & CO. (FIRM REGD. NO.: 106250W) CHARTERED ACCOUNTANTS

PRAKASH D.SHAH Place : Ahmedabad Partner Date : 26th May, 2015 Membership No. 34363




Mar 31, 2014

We have audited the accompanying financial statements of Electrotherm (India) 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 six months period ended on 31st March 2014, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956, read with the General Circular 8/2014 dated April 4 2014 issued by the Ministry of Corporate Affairs. 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 the 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 entity''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, read with the points stated in the Emphasis of Matter and Qualification, the 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 6 months period ended on that date; and

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

Emphasis of Matter and Qualification

1. We draw attention to Note No. 2.27 of the accompanying financial statement in respect of Winding up petition and recovery cases against the company, Note No. 2.28 of the accompanying financial statement in respect of restructuring of the debts of the company and filing of Reference to BIFR and Note No.2.30 relating to pending judgment of Hon''ble Supreme Court, all affecting the going concern''s concept of the company.

2. We draw attention to Note No. 2.29 of the accompanying financial statement in respect of non provision of long disputed advances and claims/liability against the company and on account of the reasons for recovery/realization/non provision as stated in said notes, the exact amount of the said non provisions are not determined and accounted for by the company.

3. We draw attention to Note No. 2.31 of the accompanying financial statement in respect of additional disclosures in relation to financial statements of the Company.

4. We draw attention to Note No. 2.39 of the accompanying financial statement in respect of third party balance confirmation and its classification, non provision of interest on NPA accounts of banks of Rs. 698.66 Crore, erosion of net worth of the company, indication of impairment of Capital Work in Progress, doubtful trade receivables, obsolete old stocks and other issues and the balance amount of the same is not exactly quantified for the reporting aspect.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 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, statement of profit and loss, and cash flow statement dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the balance sheet, statement of profit and loss, and cash flow statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956; ("the Act") read with the General Circular 8/2014 dated April 4 2014 issued by the Ministry of Corporate Affairs.

(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 274 of the Companies Act, 1956.

[ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF ELECTROTHERM (INDIA) LIMITED, FOR THE SIX MONTHS PERIOD ENDED ON 31st MARCH, 2014.]

(1) (a) We have been informed that, the company is in process of updating the records showing particulars of quantity and situation of fixed assets.

(b) As informed to us, the company has formulated a programme of physical verification of all the fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, the physical verification has been carried out by the management during the period of the fixed assets at Palodia plant and as informed to us, no material discrepancies were noticed on such physical verification. In our opinion, the fixed assets of other Plants are required to be physically verified and to be reconciled with the records.

(c) None of the substantial part of fixed assets has been disposed off during the period.

(2) (a) As informed to us, during the period the management has conducted physical verification of the inventories and in our opinion the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are broadly reasonable and adequate having regard to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventory. As informed to us, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(3) (a) As informed to us, the company has taken unsecured loan from the Companies, Firms and other parties (except foreign associates) listed in the register maintained under section 301 of the Companies Act, 1956. The aggregate of loan outstanding from seven such parties as on the last day of the period is Rs. 5.36 Crore. The rate of interest and the terms of repayment are not stipulated and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(b) As informed to us, the company has given loans to the Companies, Firms and other parties (except foreign associates) listed in the register maintained under section 301 of the Companies Act. The aggregate of loan outstanding of three such parties as on the last day of the period is Rs. 10.21 Crore. The rate of interest and the terms of repayment are not stipulated and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(4) In our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchases of inventory and fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that transactions that need to be entered into the register maintained under section 301 of the Companies Act 1956, have been so entered.

(b) According to the explanations given to us, the transaction of purchase of goods materials and service and sale of goods, materials and service made in pursuance of contracts agreements entered in the register maintained under section 301 of the companies Act, 1956 and aggregating Rs. five lakhs or more in respect of each party are reasonable having regard to the prevailing market prices for such goods or services or prices at which transactions for similar goods or services have been entered with other parties except where comparable quotations are not available having regard to the specialized nature of the materials purchased by the company.

(6) In our opinion and according to the information and explanation given to us, the company has not accepted deposits from the public as per the directives issued by the Reserve Bank of India and the provisions of section 58A, section 58AA and any other relevant provisions of the Act and the rules framed there under.

(7) The Company has an Internal Audit Department system; however, the same is required to be further strengthened with regard to the scope, reporting and its compliance so that it can be commensurate with size and nature of business of the company.

(8) The Central Government of India has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the Products of the Company and on the basis of the explanation given and our broad review of the records maintained, prima facie the company has maintained cost records for the said Products. The contents of these accounts and records have not been examined by us.

(9) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employee''s state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Customs Duty, Excise Duty and cess were in arrears as at 31st March, 2014 for a period of more than six months from the date they become payable.

(c) On the basis of information furnished to us, following are the details of outstanding dues in respect of Sales Tax, Income Tax, Custom Duty, Wealth Taxes, Excise Duty and Cess which have not been deposited on account of any dispute:-

NAME OF THE FORUM WHERE DISPUTE IS PENDING AMOUNT (Rs. STATUTORY DUES In Crore)

Excise Duty Customs Excise and Service Tax 175.58 Appellate Tribunal

Excise Duty Dy. Commissioner/Commissioner of 121.93 Excise and Custom

Excise Duty Directorate General Of Central 1.30 Excise Intelligence -Ahmedabad

Custom Duty Dy. Commissioner/Commissioner of 13.78 Customs

Custom Duty The Additional Director General, 7.27 Directorate of Revenue Intelligence, Zonal Unit, Ahmedabad

VAT Joint Commissioner (Rajkot) 5.94

VAT Joint Commissioner (Mazgaon, Mumbai) 17.94

Income Tax Commissioner of Income Tax (Appeals) 25.17

(10) The accumulated losses at the end of the reporting period have exceeded fifty percent of the net worth of the company and it has incurred cash losses in current period and in the immediately 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 defaulted in repayment of dues (including interest) to financial institution and banks and as informed to us, details relating to extent of defaults is not readily available with the company and therefore its relevant details cannot be reported.

(12) We are of the opinion, that the company has not granted any 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 and therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 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 and accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 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) According to the Cash Flow Statement and other records examined by us as well as information and explanations given to us, during the period under consideration no new term loan has been taken by the company.

(17) According to the Cash Flow Statement and other records examined by us as well as information and explanations given to us on an overall basis, we report that funds raised on short term basis have not prima-facie been used for long term investment.

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

(19) The company has not issued any debentures and accordingly, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(20) During the period, the company has not raised any money through a public issue and accordingly the provisions of clause 4(xx) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

(21) During the course of our examination of the books and records of the company, carried out in accordance with generally accepted practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the period, nor have we been informed of such case by the management.

For Mehta Lodha & Co. (Registration No.106250W) Chartered Accountants

Prakash D.Shah Place : Ahmedabad Partner Date : 27th May, 2014 Membership No. 34363


Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of ELECTROTHERM (INDIA) LIMITED ("the Company"), which comprise the Balance Sheet as at 30th September 2013, 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

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 accounting principles generally accepted in India, including the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ("the Act"), which as per the clarification issued by the Ministry of Corporate Affair continue to apply under section 133 of the Companies Act,2013 (which has suspended section 211(3C) of the Companies Act,1956 w.e.f.12th September 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 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. 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 broadly 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, read with the points stated in the Emphasis of Matter and Qualification and Notes to accounts of the financial statements, the 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 30th September 2013;

(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.

Emphasis of Matter and Qualifications

1. We draw attention to Note No. 2.27 of the accompanying financial statements in respect of winding up petitions filed by the creditors and recovery cases against the company and the Note No. 2.28 of the accompanying financial statements in respect of restructuring of the debts of the company and which may affect the going concern''s concept of the company upon final outcome of the said pending petitions/cases.

2. We draw attention to Note No. 2.29 of the accompanying financial statements in respect of non provision of long disputed advances, doubtful trade receivable, claims/ liability against the company and in absence of full information with the company, the exact amount of the same is not quantified.

3. We draw attention to Note No. 2.39 of the accompanying financial statements in respect of third party balance confirmations, grouping & classification, Disclosure of Gross Amounts, non provision of interest on NPA accounts of banks, indication of impairment of assets and other related issues, resulting into effect on the results/affairs, as given in the said Notes.

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 sub section (4A) of section 227 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* and read with the 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 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement broadly comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 which as per the clarification issued by the Ministry of Corporate Affair continue to apply under section 133 of the Companies Act,2013(which has suspended section 211(3C) of the Companies Act,1956 w.e.f.12th September 2013);

(e) On the basis of written representations received from the directors as on 30th September 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 30th September 2013, from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956.

(Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date of Electrotherm (India) Limited)

(1) (a) The company is in process of updating the records showing particulars of quantity and situation of fixed assets.

(b) As informed to us, the company has formulated a program of physical verification of all the fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, the physical verification has been carried out by the management during the year of the fixed assets at Palodia plant and as informed to us, no material discrepancies were noticed on such physical verification.

(c) None of the substantial part of fixed assets has been disposed off during the year.

(2) (a) As informed to us, during the year the management has conducted physical verification of the inventories, except of the inventories as stated in Note No. 2.39(e) and further in our opinion the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by management is broadly reasonable and adequate having regard to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the company has maintained records of inventory. As informed to us, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(3) (a) As informed to us, the company has taken unsecured loan from the Companies, firms and other parties (except foreign associates) listed in the register maintained under section 301 of the Companies Act, 1956. The aggregate of loan outstanding from seven such parties as on the last day of the year is Rs. 61.63 Million. The rate of interest and the terms of repayment are not stipulated and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(b) As informed to us, the company has given loans to the companies firms and other parties (except foreign associates) listed in the register maintained under section 301 of the Companies Act, 1956. The aggregate amount of loan outstanding of six such parties is Rs.118.37 Million. The rate of interest and the terms of repayment are not stipulated and other terms and conditions are not prima facie prejudicial to the interest of the company.

(4) In our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchases of inventory and fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that transactions that need to be entered into the register maintained under section 301 have been so entered.

(b) In respect of transactions with parties with whom transactions exceeding value of Rs. 5 Lacs have been entered into during the financial year, are at the prices which are reasonable having regard to the prevailing market prices at the relevant time, except in case of transactions where we are unable to comment owing to the unique and specialized nature of the items and absence of any comparable prices, whether the transactions are made at the prevailing market prices at the relevant time or not.

(6) In our opinion and according to the information and explanation given to us, the company has not accepted deposits from the public as per the directives issued by the Reserve Bank of India and the provisions of section 58A, section 58AA and any other relevant provisions of the Act and the rules framed there under.

(7) The Company has an Internal Audit Department system; however, the same is required to be further strengthened with regard to the scope, reporting and its compliance so that it can be commensurate with size and nature of business of the company.

(8) The Central Government of India has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the products manufactured by the company and on the basis of the explanation given and our broad review of the records maintained, prima facie the company has maintained cost records for the said Products. The contents of these accounts and records have not been examined by us.

(9) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it except Central Sales Tax Liability and VAT liability where slight delay in payment has been observed.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Customs Duty, Excise Duty and cess were in arrears as at 30th September, 2013, for a period of more than six months from the date they become payable.

(c) On the basis of information furnished to us, following are the details of outstanding dues in respect of Sales tax, Income tax, Custom duty, Wealth tax, Excise Duty and Cess, which have not been deposited on account of any dispute :

NAME OF THE STATUTORY DUES FORUM WHERE DISPUTE IS PENDING AMOUNT (Rs.In Million)

Excise Duty Customs Excise and Service Tax Appellate Tribunal 1755.80

Excise Duty Dy. Commissioner/Commissioner of Excise and Custom 1224.70

Excise Duty Directorate General Of Central Excise Intelligence 13.01 Ahmedabad

Custom Duty Dy. Commissioner/Commissioner of Customs 190.20

Custom Duty The Additional Director General, Directorate of 72.70 Revenue Intelligence, Zonal Unit, Ahmedabad

Vat Sales Tax Department 179.44

(10) The accumulated losses at the end of the reporting year have exceeded fifty percent of net worth of the company and it has incurred cash losses in current year and in preceding financial period.

(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 defaulted in repayment of dues (including interest) to financial institution and banks and as informed to us, details relating to extent of defaults is not readily available with the company.

(12) We are of the opinion that, 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 and therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 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 and accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

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

(16) According to the Cash Flow Statement and other records examined by us as well as information and explanations given to us, during the year under consideration no new term loan has been taken by the company.

(17) According to the Cash Flow Statement and other records examined by us as well as information and explanations given to us on an overall basis, we report that funds raised on short term basis have not prima facie been used for long term investment.

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

(19) The company has not issued any debentures and accordingly, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(20) During the year, the company has not raised any money through a public issue.

(21) During the course of our examination of the books and records of the company, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor we have been informed of such case by the management.

For Mehta Lodha & Co.

(Registration No.106250W)

Chartered Accountants

Prakash D.Shah

Date :22nd November, 2013 Partner

Place:Ahmedabad Membership No. 34363


Mar 31, 2011

1. We have audited the attached Balance Sheet of ELECTROTHERM (INDIA) LIMITED, as at 31st March, 2011, the Profit & 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.

2. 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.

3. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) Amended order 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanation given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, for the year under consideration.

4. Further to our comments as stated above in para (3) of this report and subject to notes on account & significant accounting policies, we further broadly report that:-

(i) 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;

(ii) 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;

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

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report, read with the notes to accounts and accounting policies, comply with the applicable accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the significant accounting policies and notes appearing thereon, 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:-

(a) in the case of balance sheet, of the state of affairs of the company as at 31st March, 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 AUDITOR'S REPORT

ANNEXURE REFERRED TO IN PARAGRAPH (3) OF THE AUDIT REPORT OF EVEN DATE OF THE MEMBERS OF ELECTROTHERM (INDIA) LIMITED, ON THE ACCOUNTS FOR THE YEAR ENDED ON 31ST MARCH, 2011.

(1) (a) The company has maintained records showing particulars of quantity and situation of fixed assets.

(b) As informed to us, the company has formulated a programme of physical verification of all the fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by the management during the year and as informed to us, no material discrepancies were noticed on such physical verification.

(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

(2) (a) As informed to us, during the year the management has conducted physical verification of the inventories (except good in transit and stock lying with third parties) and in our opinion the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management is broadly reasonable and adequate having regard to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventory. As informed to us, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(3) (a) As informed to us, the company has taken unsecured loan from the Companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956. The aggregate of loan outstanding of six such parties as on the last day of the year is Rs. 11.74 Millions. The rate of interest and the terms of repayment are not stipulated and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(b) As informed to us, the company has given loans to the companies firms and other parties listed in the register maintained under section 301 of the Companies Act. In respect of the said loans, the amount outstanding as on the last day of the year is Rs. 120.10 Millions. The rate of interest and the terms of repayment are not stipulated and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(4) In our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchases of inventory and fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that transactions that need to be entered into the register maintained under section 301 have been so entered.

(b) In respect of transactions with parties with whom transactions exceeding value of Rs. 5 Lacs have been entered into during the financial year, are at the prices which are reasonable having regard to the prevailing market prices at the relevant time, except in case of transactions where we are unable to comment owing to the unique and specialized nature of the items and absence of any comparable prices, whether the transactions are made at the prevailing market prices at the relevant time or not.

(6) In our opinion and according to the information and explanation given to us, the company has not accepted deposits from the public as per the directives issued by the Reserve Bank of India and the provisions of section 58A, section 58AA and any other relevant provisions of the Act and the rules framed there under.

(7) The Company has an Internal Audit Department system; however, the same is required to be further strengthened with regard to the scope, reporting and its compliance so that it can be commensurate with size and nature of business of the company.

(8) The Central Government of India has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the Steel Products and Vehicles and on the basis of the explanation given and our broad review of the records maintained prima facie the company has maintained cost records for the said records for the said Products. The contents of these accounts and records have not been examined by us.

(9) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees; state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Customs Duty, Excise Duty and cess were in arrears as at 31st March, 2011 for a period of more than six months from the date they become payable.

(c) On the basis of information furnished to us, following are the details of outstanding dues in respect of Sales tax, Income tax, Custom duty, Wealth tax, Excise Duty and Cess, which have not been deposited/adjusted/reveresed on account of any dispute. :-

NAME OF THE STATUTORY DUES FORUM WHERE DISPUTE IS PENDING AMOUNT (Rs. In Millions)

Income tax Commissioner of Income-Tax (Appeals) 1.42

Excise Duty Central Excise and Custom Appellate Tribunal 5.40

Excise Duty Commissioner of Central Excise and Custom (Appeals) 910.60

Excise Duty Dy. Commissioner of Excise and Custom 122.30

Excise Duty Commissioner of Central Excise 1750.10

Vat Asst Commissioner of Commercial Tax ( Appeals) 0.61

(10) In our opinion and on the basis of accounts, read with notes to accounts, there are no losses of the Company at the end of financial year and the Company has not incurred cash loss in the current financial year and in 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 (other than last quarter interest) to financial institution or bank. The company does not have any borrowings by way issue of debentures.

(12) We are of the opinion, 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 and therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 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 and accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

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

(16) According to the Cash Flow Statement and other records examined by us as well as information and explanations given to us on an overall basis, term loan taken by the company has been utilized for the purpose for which they were raised.

(17) According to the Cash Flow Statement and other records examined by us as well as information and explanations given to us on an overall basis, we report that funds raised on short term basis have not prima-facie been used for long term investment.

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

(19) The company has not issued any debentures and accordingly, the provisions of clause 4(xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(20) During the year, the company has not raised any money through a public issue.

(21) During the course of our examination of the books and records of the company, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Mehta Lodha & Co.

(Registration No.106250W)

Chartered Accountants

Prakash D.Shah

Place:Ahmedabad Partner

Date :May 30, 2011 Membership No. 34363

 
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