Auditor Report of Gangotri Iron & Steel Company Ltd.

Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of GANGOTRI IRON & STEEL COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss, Cash Flow Statement for the year then ended, 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 the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 "the Act"). 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 sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis of Qualified opinion

a) As mentioned in note no 23 of financial statements, the Company has not provided for the liability towards Gratuity as the necessary actuarial valuation has not been carried out as required under Accounting Standard (AS-15).

b) As mentioned in note no 30(d) of financial statements, the company has not provided for the liability for income-tax and interest thereon in respect of assessment years 2003- 2004 to 2009-2010 amounting to Rs 77,67,947 and Rs. 43,55,613 respectively. Had the liabilities been provided, the loss for the year would have been higher by Rs. 1,21,23,560 and the balance of Surplus would have been lower by that amount Consequently, the long term loans and advances would have been lower by that amount.

c) As mentioned in note no. 31 of financial statements, we are unable to form an opinion about the recoverability of a cumulative claims of Rs.10,49,12,524 as at 31st March, 2014 in respect of subsidy/incentive on VAT as per Industrial Incentive Scheme, 2006 by the Department of Industries. Bihar, which includes Rs.2.47,40.315 claimed during the year ended 31st March, 2014 of which only Rs 1,21,77,779 has been received by the company for the financial year 2013-14 and Rs. 81.87,907 has been received for the financial year 2012-13.

d) As mentioned in note no. 34 of the financial statements, the company has not paid the installments of electricity charges and interest thereon for the months of September 2013 to March 2014 amounting to Rs. 4,86,15,840 The company has also not provided for an estimated interest on electricity charges of Rs. 41,85,675 for the months of October 2013 to March 2014. Had the liabilities been provided, the loss for the year would have been higher by Rs. 41,85,675 and the balance of Surplus would have been lower by that amount. Consequently, the Other Current Liabilities would have been higher by that amount.

e) As mentioned in note no. 35 , some advance from customers and security deposit from customers are subject to confirmation / reconciliation and the consequential adjustment thereof has not been determined.

f) As mentioned in note no. 36, there may be incidence of bad debts for which no provision has been made by the Company. In absence of identification of such bad debts, the amount of provision is indeterminate.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matters described in the Basis of Qualified Opinion paragraph as mentioned above and read together with the other notes, 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

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, 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) except for the matter described in the paragraph (a), (b). (c) and (d) of Basis for Qualified Opinion paragraph, 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;

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 TO THE INDEPENDENT AUDITOR''REPORT

Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of GANGOTRI IRON AND STEEL COMPANY LIMITED on the financial statements of the company for the year ended March 31 2014.

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

1 a) The company is in the process of updating the fixed assets register.

b) The fixed assets have not been physically verified by the management during the year

c) Since there is no disposal of substantial part of fixed assets during the year, paragraph 4(i)(c) of the Companies (Auditor''s Report) Order, 2003 is not applicable.

2. a) The management has conducted the physical verification of inventory at reasonable intervals during the year. As informed, no material discrepancies were noticed on such physical verification,

b) In our opinion, the procedures of physical verification of inventory 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 record of its inventories and no discrepancies were noticed on physical verification.

3. a) According to the information and explanation given to us the company has not granted unsecured loans to a companies covered in the register maintained under section 301 of the Companies'' Act, 1956 and hence clause nos. 4(iii)(b), 4(iii)(c) and 4(iii)(d) are not applicable.

b) According to the information and explanation given to us & in our opinion the company has taken interest free loans from two companies covered in the register maintained under section 301 of the Companies'' Act, 1956. The maximum amount outstanding during the year was Rs 11.71 crores and the year end balance of loans taken by the company was Rs 10.38 crores

c) In our opinion and according to the information given to us, as the loans taken are interest free, the clause 4(iii) (f) of the Companies (Auditor''s Report) Order, 2003 is not applicable. However other terms and conditions on which loans have been taken are not, in our opinion, prima facie, prejudicial to the interest of the company.

d) Since the loans are in the nature of demand loan same are repayable as and when the lenders calls back the loans 4

4 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 Company and the nature of its business for the purchase 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 control system.

5. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance Section 301 of Act, have been so entered in the register maintained as per requirement of that Section.

b) In our opinion and according to the information and explanations given to us, each of these transactions have been made in pursuance of such contracts or arrangements at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under

7. The company did not have any formal internal audit system during the year under review

8 We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

9. a) According to the information and explanations given to us and the books and records examined by us, the company is generally regular in depositing with the appropriate authorities the undisputed statutory dues relating to custom duty, service tax. excise duty, cess and other material statutory dues as applicable to it except for delays in the case of Provident Fund, ESI and Income Tax(Tax Deducted at Source).

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in position to comment upon the regularity or otherwise of the Company in depositing the same

b) According to the information and explanations given to us and the books and records examined by us, there are no undisputed amount payable, in respect of income tax, sales tax, wealth tax, service tax. custom duty. excise duty, cess outstanding as at 31st March, 2014 for a period exceeding 6 months from the date they become payable except the followings.

Nature of Nature of Amount Period to Due Date of Statute Dues (Rs) which the Date Payment amount related

Employees Employees 17,925 2009-2010 N.A Unpaid State State 1,18,392 April ''13 N.A Unpaid Insurance Insurance to Act, 1948 September''13

53,529 2009-2010 N.A.

Employees Provident 3,35,654 2010-2011 N.A. Unpaid Provident Fund 2,28,732 2011-2012 N.A. Unpaid Fund Act, 1,45,740 2012-2013 N.A. Unpaid 1952 2,57,002 April''13 N.A. Unpaid to September ''13

Unpaid as the company''s Bihar Entry Bihar Entry 49,01,921 2011-2012 N.A. claim Tax Tax for VAT Subsidy is pending for approval 10,84,560 2010-2011 Unpaid as the Bihar Value 44,13,099 2011-2012 company''s Added value 64,20,140 April''13 N.A. claim for Tax Act, Added Tax to VAT 2005 September''13 N.A. Subsidy is pending for approval

Income Tax 5,17,541 2012-13 Unpaid Tax Deducted at 2,04,327 April''13 N.A. Act 1961 Source to September''13

c) As at 31st March 2013 according to the records of the Company, the following are the particulars of the disputed dues on account of Excise duty:

NNature of Nature of Amount Period to Forum Where Statute Dues (Rs) which the distipute amount is pending related

Central Excise Duty 14.43,471 1998-2001 High Court Excise Patna Act, 1944

10. The Company has incurred cash losses in the financial year ending 31st March, 2014 and also has accumulated losses as on that date In our opinion, the accumulated losses as at the end of the financial year are not less than 50% of the net worth of the company after taking into account quantified qualifications in the audit report

11. The company has defaulted in repayment of dues to banks from 31st December, 2013 and has been declared as non-performing assets by the bank The outstanding overdue payment in respect of term loans is Rs 6,93,00,000/- and interest accrued and due Rs. 57,188,161.80/-

12. 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. The provisions of special nature applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company

14 In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly provisions of clause (xiv) of the paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company

15 In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16 In our opinion and according to the information and explanation given to us, the Company has applied the term loans for the purpose for which the loans have been obtained

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investments

18 According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act

19. The Company has not issued any Debenture

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

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

For ARSK & ASSOCIATES Chartered Accountants firm Registration No. 315082E

CA. Ravindra Khandelwal partner Membership No 054615

Place: Kolkata Date: 0 3 SEP 2314

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of GANGOTRI IRON & STEEL COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss, Cash Flow Statement for the year then ended, 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 the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 "the Act"). 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 sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis of Qualified opinion

a) As mentioned in note no. 30(d) of financial statements, the company has not provided for the liability for income-tax and interest thereon in respect of assessment years 2003- 2004 to 2009-2010 amounting to Rs. 77,67,947 and Rs. 43,55,613 respectively. Had the I liabilities been provided, the loss for the year would have been higher by Rs. i 1,21,23,560 and the balance of Surplus would have been lower by that amount. Consequently, the long term loans and advances would have been lower by that amount.

b) As mentioned in note no. 31 of financial statements, we are unable to form an opinion about the recoverability of a cumulative claims of Rs.10,05,37,895 as at 31st March, 2013 in respect of subsidy/incentive on VAT as per Industrial Incentive Scheme, 2006 by the Department of Industries, Bihar, which includes Rs. 1,01,37,895 claimed during the year ended 31st March, 2013.

c) As mentioned in note no. 33 of the financial statements, the company has not provided for the interest liability of Rs. 2,98,00,000 payable to State Bank of India. Had the liabilities been provided, the loss for the year would have been higher by Rs. 2,98,00,000 and the balance of Surplus would have been lower by that amount. Consequently, the balance in the Other current Assets would also have been lower by that amount.

d) As mentioned in note no. 34 of the financial statements, the company has treated speculative transactions as turnover which is not consistent with the Accounting Standard (AS-9) - Revenue Recognition prescribed by the Companies (Accounting Standard) Rules, 2006. Had this been accounted as prescribed in the Accounting Standard, the turnover would have been lower by Rs. 60,88,38,412 and Cost of Materials consumed would have been lower by Rs. 56,15,88,468. The other income would have been higher by Rs. 4,72,49,944.

e) As mentioned in note no. 35 of the financial statements, the company has not provided for liability of electricity charges amounting to Rs. 4,43,25,143 and an estimated interest of Rs. 19,94,631 thereon. Had the liabilities been provided, the loss for the year would have been higher by Rs. 4,63,19,774 and the balance of Surplus would have been lower by that amount. Consequently, the Other Current Liabilities would have been higher by that amount.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matters described in the Basis of Qualified Opinion paragraph as mentioned above and read together with the other notes, 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, 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

(a) We draw attention to Note no. 36 of the financial statements wherein certain liabilities have been written back without obtaining confirmation from the creditors;

(b) We draw attention to Note no. 37 of the financial statements which describes that the balances of some of the trade receivables, trade payables, lenders and loans and advances are subject to confirmation/reconciliation and subsequent adjustments, if any. The company is taking requisite steps to confirm/reconcile such balances.

Our audit report is not qualified in respect of these matters.

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, 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) except for the matter described in the paragraph (c), (d)and (e) of Basis for Qualified Opinion paragraph, 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;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of GANGOTRI IRON AND STEEL COMPANY LIMITED on the financial statements of the company for the year ended March 31, 2013.

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 is in the process of updating the fixed assets register.

b) The fixed assets have been physically verified by the management during the year, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) Since there is no disposal of substantial part of fixed assets during the year, paragraph 4(i)(c) of the Companies (Auditor''s Report) Order, 2003 is not applicable.

2. a) The management has conducted the physical verification of inventory at reasonable intervals during the year. As informed, no material discrepancies were noticed on such physical verification.

b) In our opinion, the procedures of physical verification of inventory 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 record of its inventories and no discrepancies were noticed on physical verification.

3. a) According to the information and explanation given to us the company has not granted unsecured loans to a companies covered in the register maintained under section 301 of the Companies'' Act, 1956 and hence clause nos. 4(iii)(b), 4(iii)(c) and 4(iii)(d) are not applicable.

b) According to the information and explanation given to us & in our opinion the company has taken interest free loans from two companies covered in the register maintained under section 301 of the Companies'' Act, 1956. The maximum amount outstanding during the year was Rs 9.59 crores and the year end balance of loans taken by the company was Rs 8.86 crores.

c) In our opinion and according to the information given to us, as the loans taken are interest free, the clause 4(iii) (f) of the Companies (Auditor''s Report) Order, 2003 is not applicable. However other terms and conditions on which loans have been taken are not, in our opinion, prima facie, prejudicial to the interest of the company.

d) Since the loans are in the nature of demand loan same are repayable as and when the lenders calls back the loans.

4. 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 Company and the nature of its business for the purchase 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 control system.

5. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance Section 301 of Act, have been so entered in the register maintained as per requirement of that Section.

b) In our opinion and according to the information and explanations given to us, each of these transactions have been made in pursuance of such contracts or arrangements at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under.

7. The company did not have any formal internal audit system during the year under review, but, in our opinion, their internal control procedure involves reasonable internal check in respect of the operations.

8. We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

9. According to the information and explanations given to us and the books and records examined by us, the company is generally regular in depositing with the appropriate authorities the undisputed statutory dues relating to provident fund, employees state insurance, income tax, custom duty, service tax, excise duty, cess and other material statutory dues as applicable to it though there has been a slight delay in a few cases.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in position to comment upon the regularity or otherwise of the Company in depositing the same.

10. The Company has no accumulated losses as at 31st March, 2013 and it has not incurred any cash losses in the financial year ended on that date.

11. The dues to the financial institutions / banks have been restructured and the repayment terms have been revised during the year. In terms of the restructuring and the revised repayment schedule, the company has not defaulted in repayment of dues to financial institutions, banks or to debenture holders.

12. 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. The provisions of special nature applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly provisions of clause (xiv) of the paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

15. In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion and according to the information and explanation given to us, the Company has applied the term loans for the purpose for which the loans have been obtained.

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short- term basis, which have been used for long-term investments.

18. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. The Company has not issued any Debenture.

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

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

For ARSK & ASSOCIATES

Chartered Accountants

Firm Registration No. 315082E

CA. Ravindra Khandelwal

Partner

Membership No. 054615

Place: Kolkata

Date: 4th September, 2013

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Mar 31, 2012

1. We have audited the attached Balance Sheet of GANGOTRI IRON AND STEEL COMPANY LIMITED ("the Company"), as at 31st March, 2012, the Profit and Loss Statement and also the Cash Flow Statement of the Company 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 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 from material misstatements. 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)(Amendment) Order, 2004, (together the "Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act. 1956 of India (the Act) 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 explanations given to us, we enclose in the Annexure, a Statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we draw your attention to:

i. Note no. 28(d) regarding non provision of income- tax liability and interest thereon.

ii. Note no. 29 regarding amount claimed by the company as subsidy/incentive on VAT as per Industrial Incentive Scheme, 2006 by the Department of Industries, Bihar. The Company is yet to get the passbook from the Department and we were unable to form an opinion about recoverability thereof.

iii. Note no. 31 regarding Balances of some of the Trade payables, Loans and advances incorporated in the books as per balances appearing in the relevant subsidiary records, are subject to confirmation from the respective parties

iv. Note no. 32 of the notes to financial statement regarding treatment of Revenues from operations.

5. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations, subject to paragraphs 4(iii) above 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, Profit and Loss Statement and Cash Flow Statement dealt with by this report are in agreement with the books of account of the Company;

d) In our opinion, subject to paragraph 4(iv) above. the Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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

f) In our opinion, subject to Paragraph 4 above, 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 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 31 st March. 2012;

ii. in the case of the Profit and Loss Account, of the loss for the year ended on that date; and iii. 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 the Auditors' Report of even date to the members of GANGOTRI IRON AND STEEL COMPANY LIMITED on the financial statements for the year ended March 31, 2012.

1. a) The company is in the process of updating the fixed assets register.

b) The fixed assets have been physically verified by the management during the year, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) Since there is no disposal of substantial part of fixed assets during the year, paragraph 4(i) (c) of the Companies (Auditor's Report) Order, 2003 is not applicable.

2. a) The management has conducted the physical verification of inventory at reasonable intervals during the year. As informed, no material discrepancies were noticed on such physical verification.

b) In our opinion, the procedures of physical verification of inventory 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 record of its inventories and no discrepancies were noticed on physical verification.

3. a) According to the information and explanation given to us the company has not granted unsecured loans to a companies covered in the register maintained under section 301 of the Companies' Act, 1956.

b) In our opinion, the rate of interest and other terms and conditions on which the loans have been granted are not prima facie, prejudicial to the interest of the company.

c) The parties are regular in repaying the principal amount and payment of interest as per stipulations.

d) In respect of the loans granted, the question of overdue amounts does not arise as the loans are repayable on demand.

e) According to the information and explanation given to us & in our opinion the company has taken interest free loans from one company covered in the register maintained under section 301 of the Companies' Act, 1956.The maximum amount outstanding during the year was Rs 4.36 crores and the year end balance of loans taken by the company was Rs 4.36 crores.

f) In our opinion and according to the information given to us, as the loans taken are interest free, the clause 4(iii) (f) of the Companies (Auditor's Report) Order, 2003 is not applicable. However other terms and conditions on which loans have been taken are not, in our opinion, prima facie, prejudicial to the interest of the company.

g) The company is regular in paying the principal amounts as stipulated.

4. 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 Company and the nature of its business for the purchase 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 control system.

5. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance Section 301 of Act, have been so entered in the register maintained as per requirement of that Section.

b) In our opinion and according to the information and explanations given to us, each of these transactions have been made in pursuance of such contracts or arrangements at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under.

7. In our opinion, the company has an internal audit system during the year under review, which needs to be strengthened for being commensurate with the size and nature of its business.

8. The provisions of the Companies Act for maintenance of cost records under Section 209(1) (d) are not applicable to the company.

9. a) According to the information and explanations given to us and the books and records examined by us, the company is generally regular in depositing with the appropriate authorities the undisputed statutory dues relating to provident fund, employees state insurance, investor education and protection fund, income tax, wealth tax, service tax, customs duty, excise duty, cess and statutory dues with the appropriate authorities though there has been delay in few cases.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441Aof the Companies Act, 1956, we are not in position to comment upon the regularity or otherwise of the Company in depositing the same.

b) According to the information and explanations given to us and the books and records examined by us, there are no undisputed amount payable, in respect of income tax, sales tax, wealth tax! service tax, custom duty, excise duty, cess outstanding as at 31st March, 2012 for a period exceeding 6 months from the date they become payable except the followings.

Nature of Statute Nature of Dues Amount Period to which (Rs.) the amount related

Central ExciseAct, 1944 Excise Duty 3,23,366 2006-2007

70,98,836 April 2011 to August 2011

Employees State Insurance Employees State 4,30,912 2009-2010 Act, 1948 Insurance 7,53,574 2010-2011

1,61,041 April 2011 to August 2011

Employees Provident Provident Fund 17,46,792 2009-2010 Fund Act,1952 19,31,053 2010-2011

4,10,001 April 2011 to August 2011

Bihar Entry Tax Bihar Entry Tax 1,19,45,205 April 2011 to August 2011

Central Sales Tax Central Sales Tax 41,302 April 2011 to Act, 1956 August 2011

Bihar Value Added Value Added Tax 10,84,560 2010-2011 Tax Act,2005 92,91,268 April 2011 to August 2011



Name of Statue Due Date Date of Payment

Central Excise Act, 1944 N.A. Unpaid

N.A Unpaid

Employees State Insurance Act, 1948 N.A Unpaid

N.A Unpaid

N.A Unpaid

Employees Provident Fund Act, 1952 N.A Unpaid N.A Unpaid

N.A Unpaid

Bihar Entry Tax N.A Unpaid as the N.A company's claim for VAT Subsidy is pending for approval

Central Sales Tax Act, 1956 N.A Unpaid as the company's claim for VAT Subsidy is pending for approval

Bihar Value Added Tax Act, 2005 N.A Unpaid as the company's claim N.A. for VAT Subsidy is pending for approval

c) As at 31st March 2012 according to the records of the Company, the following are the particulars of the disputed dues on account of Excise duty:

Nature of Statute Nature of Dues Amount Period to which Forum where (Rs.) the amount related dispute is pending

Central Excise Act, 1944 Excise Duty 14,43,471 1998-2001 High Court, Patna

10. The Company has no accumulated losses as at 31 st March, 2012 but it has incurred cash loss in the financial year ended on that date.

11. The Company has not paid the dues of loans including working capital borrowings taken from State bank of India as per repayment Schedule. An amount of outstanding installments of loans including working capital borrowings is not determinable. An estimated amount of Rs. 3,02,00,000 stands overdue on account of interest as on 31st March, 2012 since third quarter of the financial year 2010-11. The company does not have any debentures outstanding as on 31st March 2012.

12. 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. The provisions of special nature applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

15. In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion and according to the information and explanation given to us, the term loans were applied for the purpose for which loan were obtained.

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investments.

18. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. The Company has not issued any Debenture during the year.

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

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

For ARSK& ASSOCIATES

Chartered Accountants

Firm's Registration No. 315082E CA. Ravindra Khandelwal

Place : Kolkata Partner

Date : 3rd September, 2012 Membership No. 054615

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of GANGOTRI IRON AND STEEL COMPANY LIMITED ("the Company"). as at 31st March, 2011, the Profit and Loss Account and also the Cash Flow Statement of the Company 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 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 from material misstatements. 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)(Amendment) Order, 2004, (together the "Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of India (the Act) 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 explanations given to us, we enclose in the Annexure, a Statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account of the Company;

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

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

f) Subject to note no 2 of Schedule 19 forming part of the accounts, 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 gives 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:

ii. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii. 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 the Auditors' Report of even date to the members of GANGOTRI IRON AND STEEL COMPANY LIMITED on the financial statements for the year ended March 31, 2011.

1. a) The company is in the process of updating the fixed assets register.

b) The fixed assets have been physically verified by the management during the year, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) Since there is no disposal of substantial part of fixed assets during the year, paragraph 4(i) (c) of the Companies (Auditor's Report) Order, 2003 is not applicable.

2. a) The management has conducted the physical verification of inventory at reasonable intervals during the year. As informed, no material discrepancies were noticed on such physical verification.

b) In our opinion, the procedures of physical verification of inventory 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 record of its inventories and no discrepancies were noticed on physical verification.

3. a) According to the information and explanation given to us the company has granted unsecured loans to a company and a party covered in the register maintained under section 301 of the Companies' Act, 1956.The maximum amount involved during the year was Rs.84.94 lacs.and the year end balance of loan granted to such party was Rs.84.94 lacs.

b) In our opinion, the rate of interest and other terms and conditions on which the loans have been granted are not prima facie, prejudicial to the interest of the company.

c) The parties are regular in repaying the principal amount and payment of interest as per stipulations.

d) In respect of the loans granted, the question of overdue amounts does not arise as the loans are repayable on demand.

e) According to the information and explanation given to us & in our opinion the company has taken interest free loans from two companies and one other party covered in the register maintained under section 301 of the Companies'Act, 1956.The maximum amount outstanding during the year was Rs 3.46 crores and the year end balance of loans taken by the company was Rs 3.42 crores.

f) In our opinion and according to the information given to us, as the loans taken are interest free, the clause 4(iii) (f) of the Companies (Auditor's Report) Order, 2003 is not applicable. However other terms and conditions on which loans have been taken are not, in our opinion, prima facie, prejudicial to the interest of the company.

g) The company is regular in paying the principal amounts as stipulated.

4. 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 Company and the nature of its business for the purchase 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 control system.

5. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance Section 301 of Act, have been so entered in the register maintained as per requirement of that Section. b) In our opinion and according to the information and explanations given to us, each of these transactions have been made in pursuance of such contracts or arrangements at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under.

7. In our opinion, the company has an internal audit system during the year under review, which needs to be strengthened for being commensurate with the size and nature of its business.

8. The provisions of the Companies Act for maintenance of cost records under Section 209(1) (d) are not applicable to the company.

9. a) According to the information and explanations given to us and the books and records examined by us. the company is generally regular in depositing with the appropriate authorities the undisputed statutory dues relating to provident fund, employees state insurance, investor education and protection fund, income tax, wealth tax, service tax, customs duty excise duty, cess and statutory dues with the appropriate authorities though there has been delay in few cases.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in position to comment upon the regularity or otherwise of the Company in depositing the same.

b) According to the information and explanations given to us and the books and records examined by us, there are no undisputed amount payable, in respect of income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess outstanding as at 31st March, 2011 for a period exceeding 6 months from the date they become payable except the fallowings.

Nature of Statute Nature of Dues Amount Period to which Due Date Date of (Rs.) the amount related Payment

Central Excise Act, 1944 Excise Duty 3,23,366/- 2006- 2007 N.A. Unpaid

Employees State Employees State 4,30,912/- 2009- 2010 N.A. Unpaid

Insurance Act, 1948 Insurance 3,90,242/- April 2010 to August 2010

Employees Provident 17,46,792/- 2009-2010 N.A. Unpaid

Provident Fund Fund 9,97,027/- April 2010 to Unpaid Act, 1952 August 2010

c) As at 31st March 2011 according to the records of the Company, the following are the particulars of the disputed dues on account of Excise duty:

Nature of Statute Nature of Dues Amount Period to which the Forum where dispute (Rs) amount related is pending

Central Excise Act, 1944 Excise Duty 14,43,471/- 1998-2001 High Court, Patna

10. The Company has no accumulated losses as at 31st March, 2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. The Company has defaulted in repayment of dues of term loan taken from State Bank of India. An amount of Rs 1,15,00,000 stands overdue as on 31st March, 2011 pertaining to third quarter of the financial year 2010-11. The installments for the 4th quarter have not been considered as default in view of the grace period allowed by the bank. The company does not have any debentures outstanding as on 31st March 2011.

12. 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. The provisions of special nature applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

15. In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. According to the information and explanation given to us, and an overall examination of the balance sheet of the company, in our opinion, funds raised on short term basis have not been used for long term investment.

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investments.

18. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. In our opinion. the price at which shares have been issued is not prejudicial to the interest of the company.

19. The Company has not issued any Debenture during the year.

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

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

For ARSK& ASSOCIATES

Chartered Accountants

Firm's Registration No. 315082E

CA. Ravindra Khandelwal

Kolkata Partner

Date : 3rd September 2011 Membership No. 054615

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of GANGOTRI IRON AND STEEL COMPANY LIMITED ("the Company"). as at 31st March, 2010, the Profit and Loss Account and also the Cash Flow Statement of the Company 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.

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 from material misstatements. 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 (Auditors Report) Order,2003, as amended by the Companies (Auditors Report)(Amendment) Order, 2004, (together the "Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of India (the Act) 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 explanations given to us, we enclose in the Annexure, a Statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account of the Company;

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

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

f) 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 gives 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, 2010:

ii. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii. 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 the Auditors Report of even date to the members of GANGOTRI IRON AND STEEL COMPANY LIMITED on the financial statements for the year ended March 31, 2010.

1. a) The company is in the process of updating the fixed assets register.

b) The fixed assets have been physically verified by the management during the year, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) Since there is no disposal of substantial part of fixed assets during the year, paragraph 4(i) (c) of the Companies (Auditors Report) Order, 2003 is not applicable.

2. a) The management has conducted the physical verification of inventory at reasonable intervals during the year. As informed, no material discrepancies were noticed on such physical verification.

b) In our opinion, the procedures of physical verification of inventory 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 record of its inventories and no discrepancies were noticed on physical verification.

3. a) According to the information and explanation given to us & in our opinion the company has not granted any loans. secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly clauses 4(iii) (b) to 4(iii) (d) of the Companies (Auditors Report) Order. 2003 are not applicable.

b) According to the information and explanation given to us & in our opinion the company has taken interest free loans from two companies and one other party covered in the register maintained under section 301 of the Companies Act, 1956.The maximum amount outstanding during the year was Rs 7.04 crores and the year end balance of loans taken by the company was Rs 5.97 crores.

c) In our opinion and according to the information given to us, as the loans taken are interest free, the clause 4(iii) (f) of the Companies (Auditors Report) Order, 2003 is not applicable. However other terms and conditions on which loans have been taken are not, in our opinion, prima facie, prejudicial to the interest of the company.

d) The company is regular in paying the principal amounts as stipulated.

4. 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 Company and the nature of its business for the purchase 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 control system.

5. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance Section 301 of Act, have been so entered in the register maintained as per requirement of that Section.

b) In our opinion and according to the information and explanations given to us, each of these transactions have been made in pursuance of such contracts or arrangements at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under.

7. In our opinion, the company has an internal audit system during the year under review, which needs to be strengthened for being commensurate with the size and nature of its business.

8. The provisions of the Companies Act for maintenance of cost records under Section 209(1) (d) are not applicable to the company.

9. a) According to the information and explanations given to us and the books and records examined by us, the company is generally regular in depositing with the appropriate authorities the undisputed statutory dues relating to provident fund, employees state insurance, investor education and protection fund, income tax, wealth tax, service tax, customs duty, excise duty, cess and statutory dues with the appropriate authorities though there has been delay in few cases.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in position to comment upon the regularity or otherwise of the Company in depositing the same.

b) According to the information and explanations given to us and the books and records examined by us, there are no undisputed amount payable, in respect of income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess outstanding as at 31st March, 2010 for a period exceeding 6 months from the date they become payable except the followings.

Nature of Statute Nature of Dues Amount Period to which (Rs.) the amount related

Central Excise Act, 1944 Excise Duty 3,23,366/- 2006-2007

Employees Provident Provident Fund 1,62,502/- July 2009

Fund Act, 1952 1,34,012/- August 2009

Central Sales Tax, 1956 Sales Tax 53,399/- May to September 2009

Bihar Entry Tax Act 1993 Entry Tax 34,01,689/- April to September 2009



Due Date Date of Payment

Central Excise Act, 1944 N.A. Unpaid

Employees Provident 20/08/2009 Unpaid

Fund Act, 1952 20/09/2009 Unpaid

Central Sales Tax, 1956 21st of Unpaid subsequent month Bihar Entry Tax Act 1993 21st of subsequent Paid month 27.08.2010

c) As at 31st March 2010 according to the records of the Company, the following are the particulars of the disputed dues on account of Excise duty: Nature of Statute Nature of Dues Amount Period to which the Forum where dispute (Rs) amount related is pending

Central Excise Act, 1944 Excise Duty 14,43,471/- 1998-2001 High Court, Patna

10. The Company has no accumulated losses as at 31st March, 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. The Company has not defaulted in repayment of dues to financial institution or bank. The company does not have any debentures outstanding as on 31 st March 2010.

12. 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. The provisions of special nature applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

15. In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. According to the information and explanation given to us, and an overall examination of the balance sheet of the company in our opinion, funds raised on short term basis have not been used for long term investment.

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investments.

18. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

19. The Company has not issued any Debenture during the year.

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

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



For ARSK & ASSOCIATES

Chartered Accountants

Firms Registration No. 315082E

CA. Ravindra Khandelwal

Kolkata Partner

Date : 1st September 2010 Membership No. 054615