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Auditor Report of Jayaswal Neco Industries Ltd.

Mar 31, 2023

Jayaswal Neco Industries Limited

Report on the Audit of Financial Statements

Opinion

We have audited the accompanying financial statements of JAYASWAL NECO INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Financial Statements give the information required by the Companies Act, 2013 (" the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its Profit including Other Comprehensive Income, its Cash Flows and the Statement of Changes in Equity for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing ("SA") specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Financial Statements.

Emphasis of Matter

We draw your attention to the

a) Note no. 2.07 to the Financial Statements, regarding the attachment of the properties of the Company to the extent of Rs. 30,758.39 Lakhs by the Directorate of Enforcement in earlier years, which has been contested by the Company and presently stayed.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements for the year ended March 31, 2023. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matters below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors'' responsibilities for the audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Financial Statements.

Key Audit Matters	How our audit addressed the key audit matter
1) Inventories
As of March 31, 2023, inventories appear in the Financial Statements	Our audit procedure included, among others:
for an amount of Rs. 128359.54 Lakhs constitutes 21.20 % of the total assets of the Company. Inventories are valued at the lower of cost and net realizable value	Â¦ Reviewing the Company''s process and procedure for physical verification of the Inventories, identification of non-moving and obsolete items and accounting for the same.
The Company may recognize an inventory allowance if inventory items are damaged, if the selling price has declined, or if the estimated costs to completion or to be incurred to make the sale have increased.	Â¦ Obtaining the physical inventory count reports of the Management as per verification plan and discussing with the Management about the Control checks performed by them.
We considered this matter as key audit matter due to the:	Â¦ Assessing the methods used to value inventories and ensuring the
Â¦ Significance of the inventories balance.	consistency of accounting methods.
Â¦ Complexities involved in determining the cost of inventories in view	Â¦ Testing, by sampling, the effectiveness of the controls set up by the
of type of materials, multiple integrated manufacturing process,	Management to prevent or detect possible errors in valuation of
locations and obsolete inventories.	inventories.
Refer note no. 1(C)(VI) and 7 to the Financial Statements.

Key Audit Matters	How our audit addressed the key audit matter
	_Â¦	Analyzing the Company''s assessment of net realizable value and calculations for stock obsolescence.
	_Â¦	Verifying the completeness of disclosure in the Financial Statements as per Ind AS 2.
	_Â¦	Obtaining representation letter from the management as per SA 580 (revised) - Written representations.
2) Litigation and Regulatory Claims
The Company is subject to number of significant litigations. Major risks identified by the Company in that area related to Energy Development Cess, Attachment of the Company''s property by the Directorate of Enforcement, Arbitration with the vendors / customers, other litigation with Government authorities, etc. The amount of litigation may be significant and estimates of the amounts of provisions or contingent liabilities are subject to significant Management judgment. (Refer Note No. 2.07, 2.08, 3.03, 3.04, 28.01,37 and 50.01 to the Financial Statements) Due to complexity involved in these litigations and regulatory claims, management''s judgment regarding recognition and measurement of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined. Accordingly, it has been considered as a key matter.	Our audit procedure included the following: Â¦ Assessing the procedures implemented by the Company to identify and gather the risks it is exposed to. Â¦ Obtaining an understanding of the risk analysis performed by the Company, with related supporting documentation, and studying written statements from internal legal experts, where applicable. Â¦ Discussion with the management on the development in these litigations during the year. Â¦ Enquiring from the Company''s legal counsel and studying the responses as received from them. Â¦ Verification that the accounting and / or disclosure as the case may be in the Financial Statements made by the Company is in accordance with the assessment of Company''s legal counsel / management, based on the information currently available to the Company.
	_Â¦	Obtaining representation letter from the management on the assessment of these matters as per SA 580 (revised) - Written representations.

Information Other than the Financial Statements and Auditors'' Report Thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the management discussion and analysis and director''s report included in the annual report but does not include the Financial Statements and our auditors'' report thereon. The above information is expected to be made available to us after the date of this auditors'' report.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the above other information, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act, with respect to the preparation of these Financial Statements that give a true and fair view of the Financial Position, Financial Performance including Other Comprehensive Income, Cash Flows and the Statement Of

Changes in Equity of the Company in accordance with the Ind AS and other accounting principles generally accepted in India.

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 the appropriate accounting policies; making judgements 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 fair presentation of the Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditors'' Responsibilities for the Audit of the Financial Statements

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current year and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we 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 appears from our examination of those books;

c) The Balance Sheet, Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this report are in agreement with the books of account;

d) In our opinion, the aforesaid Financial Statements comply with the accounting standards specified under section 133 of the Act;

e) On the basis of written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023, from being appointed as a director in terms of section 164(2) of the Act;

f) With respect to the adequacy of the internal financial controls with reference to Financial Statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

g) With respect to the other matters to be included in the Auditors'' Report in accordance with the requirements of section 197(16) of the Act, as amended,

I n our opinion and to the best of our information and according to the explanations given to us, the remuneration paid or provided by the Company to its directors during the year is in accordance with the provisions of section 197 read with Schedule V of the Act.

h) With respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information

writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(c) Based on our audit procedure conducted that have been considered reasonable and appropriate in the circumstances, nothing has come to our attention that causes us to believe that the representation given by the management under paragraph (2) (h) (iv) (a) & (b) contains any material misstatement.

v. The Company has not declared or paid any dividend during the year and has also not proposed dividend for the year.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For Chaturvedi & Shah LLP

Chartered Accountants

(Registration No. : 101720W/W100355)

Anuj Bhatia

Partner

Membership No. 122179

UDIN: 23122179BGQWTT8423

Mumbai

Date: May 23, 2023

an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Â¦ Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Â¦ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

Â¦ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Â¦ Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Â¦ Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

and according to the explanations given to us and as

represented by the management:

i. The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements as referred to in Note No. 2.07, 2.08, 3.03, 3.04, 28.01, 37 and 50.01 to the Financial Statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. (a) Management has represented to us that, to the

best of its knowledge and belief, as disclosed in the notes to the Financial Statements, during the year no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) Management has represented to us that, to the best of its knowledge and belief, as disclosed in the notes to the Financial Statements, during the year no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in

Mar 31, 2021

Report on the Audit of the Financial Statements Qualified Opinion

We have audited the accompanying Financial Statements of JAYASWAL NECO INDUSTRIES LIMITED (âthe Companyâ), which comprise the Balance Sheet as at March 31,2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and statement of Cash Flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as âthe Financial Statementsâ).

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the âBasis for Qualified Opinionâ para below, the aforesaid Financial Statements give the information required by the Companies Act, 2013 (âthe Actâ) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2021 and its loss including other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

As mentioned in Note no. 18.10 to the Financial Statements, Non Current Borrowings include an amount of Rs. 183111.16 Lakhs due to an Asset Reconstruction Company. Banks holding 97.91% (by value) of the total principal debt, equivalent to Rs. 356,324.74 Lakhs, assigned all their rights, title and interests in financial assistances granted by them to the Company in favour of Assets Care & Reconstruction Enterprise Limited, acting in its capacity as Trustee of ten different Trust (ACRE). Until the revised terms and condition will be agreed between the Company and ACRE, the arrangement with those banks are valid and as per the arrangements with those banks, the Company is required to comply with certain covenants as referred in the said note and non-compliance with these covenants may give rights to the banks/ACRE to demand repayment of the loans. As at March 31,2021, the Company has not complied with certain covenants and they have not been provided with any confirmation from those lenders for extension of time to comply with these covenants. The Company has not classified these liabilities as current liabilities as required by Indian Accounting Standards (Ind AS) - 1 - âPresentation of Financial Statementsâ.

We conducted our audit in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditorâs Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Financial Statements under the provisions of the Act and the rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIâs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note no. 36 to the Financial Statements regarding preparation of Financial Statements of the Company on going concern basis, notwithstanding the fact that the Company continue to incurred cash losses, itâs net worth has been fully eroded, loans had been called back by few of the secured lenders, application has been made to National Company Law Tribunal (NCLT), Mumbai, under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by State Bank of India, the erstwhile lead secured lender, which has been contested by the Company, for the reasons stated in the said note. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companyâs ability to continue as going concern. Banks holding 97.91% (by value) of the total principal debt, equivalent to Rs. 356,324.74 Lakhs, assigned all their rights, title and interests in financial assistances granted by them to the Company in favor of Assets Care & Reconstruction Enterprise Limited acting in its capacity as Trustee of ten different Trust (ACRE) and for the other reasons mentioned in Note no. 36 to the Financial Statements. The appropriateness of assumption of going concern is critically dependent upon the Companyâs ability to raise requisite finance and generate cash flows in future to meet its obligations and to restructure its borrowing with the lenders.

Our opinion is not modified in respect of this matter.

Emphasis of Matter

We draw your attention to the Note no. 2.06 to the Financial Statements, regarding the attachment of the properties of the Company to the extent of Rs. 30,758.39 Lakhs by the Directorate of Enforcement, which has been contested by the Company and presently stayed.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

How our audit addressed the key audit matter

1) Inventories

As of March 31, 2021, inventories appear in the Financial Statements for an amount of Rs. 89,878.95 Lakhs constitutes 15.23% of the total assets of the Company. Inventories are valued at the lower of cost and net realizable value.

The Company may recognize an inventory allowance if inventory items are damaged, if the selling price has declined, or if the estimated costs to completion or to be incurred to make the sale have increased.

We considered this matter as key audit matter due to the:

â¢ Significance of the inventories balance.

â¢ Complexities involve in determining quality of inventories and quantities on hand due to the number, weight, location, diversity of inventory storage locations Valuation procedure including of obsolete inventories.

Refer note no. 1(C)(VI) and 7 to the Financial Statements.

Our audit procedure included, among others:

â¢ Reviewing the Companyâs process and procedure for physical verification of the Inventories, identification of non-moving and obsolete items and accounting for the same.

â¢ Obtaining the physical inventory count reports of the Management as per verification plan, which were conducted in the presence of internal auditors of the Company and discussing with the internal auditors about the Control checks performed by the internal auditors.

â¢ Assessing the methods used to value inventories and ensuring the consistency of accounting methods.

â¢ Testing, by sampling, the effectiveness of the controls set up by Management to prevent or detect possible errors in valuation of inventories.

â¢ Analyzing the companyâs assessment of net realizable value, as well as reviewing the assumptions and calculations for stock obsolescence.

â¢ Verifying the completeness of disclosure in the Financial Statements as per Ind AS 2.

â¢ Obtaining representation letter from the management as per SA 580 (revised) - Written representations.

Key Audit Matter

How our audit addressed the key audit matter

2) Litigation and Regulatory Claims

The Company is subject to number of significant litigations. Major risks identified by the Company in that area related to Energy Development Cess, Attachment of the Companyâs property by the Directorate of Enforcement, Application filed by a lender to NCLT under IBC for the recovery of loan, Arbitration with the vendors / suppliers, other litigation with Government authorities, etc. The amount of litigation may be significant and estimates of the amounts of provisions or contingent liabilities are subject to significant Management judgment. (Refer Note No. 2.06, 2.07, 3.03, 3.04, 26.01, 35 and 36 to the Financial Statements).

Due to complexity involved in these litigation and regulatory claims, managementâs judgment regarding recognition and measurement of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined. Accordingly, it has been considered as a key matter.

Our audit procedure included the following :

â¢ Assessing the procedures implemented by the Company to identify and gather the risks it is exposed to.

â¢ Obtaining an understanding of the risk analyses performed by the Company, with relating supporting documentation, and studying written statements from internal and external legal experts, where applicable.

â¢ Discussion with the management on the development in these litigations during the year.

â¢ Enquiring from the companyâs legal counsel (internal/external) and study the responses as received from them.

â¢ Verification that the accounting and / or disclosure as the case may be in the financial statements made by the Company is in accordance with the assessment of legal counsel / management, based on the information currently available to the Company.

â¢ Obtaining representation letter from the management on the assessment of these matters as per SA 580 (revised) - Written representations.

Other Information

The Companyâs Board of Directors is responsible for the other information. The other information comprises the management discussion & analysis and directorâs report included in the annual report but does not include the Financial Statements and our auditorâs report thereon. The above information is expected to be made available to us after the date of this auditorâs report.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

When we read the above other information, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance.

Managementâs Responsibility for the Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Financial Statements that give a true and fair view of the state of affairs (financial position), loss (financial performance including other comprehensive income), cash flows and the statement of changes in equity of the Company in accordance with the accounting principles generally accepted in India, including Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection 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 Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Companyâs financial reporting process.

Auditorsâ Responsibility for the audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

â¢ Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

â¢ Conclude on the appropriateness of managementâs use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern.

â¢ Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

1. As required by Section 143 (3) of the Act, we 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 (Including other comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d. In our opinion, except the matter described in the âBasis for Qualified Opinionâ paragraph above, the aforesaid Financial Statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules thereunder;

e. The going concern matter described in âMaterial Uncertainty Related to Going Concernâ paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f. On the basis of the written representations received from the directors as on March 31,2021, except from one of the ex-director who expired and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2021 from being appointed as a director in terms of Section 164 (2) of the Act.

g. With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ.

h. With respect to the other matters to be included in the Auditorâs Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

i. With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements as referred to in Note No. 2.06, 2.07, 3.03, 3.04, 22.06, 26.01, 35 and 36 to the Financial Statements;

ii. The Company has made provisions, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long term contracts including derivative contracts;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditorâs Report) Order, 2016 (the Order) issued by the Central Government of India, in terms of Section 143(11) of the Act, we give in âAnnexure Bâ hereto, a statement on the matters specified in paragraphs 3 and 4 of the Order.

For Pathak H. D. & Associates LLP For Naresh Patadia & Co.

Chartered Accountants Chartered Accountants

Firm Reg. No. 107783W/W100593 Firm Reg. No. 106936W

Mukesh Mehta Naresh Patadia

Partner Proprietor

Membership No. 43495 Membership No. 35620

UDIN: 21043495AAAACU5051 UDIN: 21035620AAAAAK3782

Mumbai Nagpur

Date: June 30, 2021 Date: June 30, 2021

Mar 31, 2018

Report on the Financial Statements

We have audited the accompanying Financial Statements of JAYASWAL NECO INDUSTRIES LIMITED (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as âthe Financial Statementsâ).

Managementâs Responsibility for the Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Financial Statements that give a true and fair view of the state of affairs (financial position), loss (financial performance including other comprehensive income), cash flows and the statement of changes in equity of the Company in accordance with the accounting principles generally accepted in India, including Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

Auditorsâ Responsibility

Our responsibility is to express an opinion on these 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 thereunder.

We conducted our audit of the Financial Statements in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as 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 disclosures in the Financial Statements. The procedures selected depend on the auditorâs 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 Companyâs preparation of the Financial Statements that give a true and fair view 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 the Companyâs 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 qualified audit opinion on the Financial Statements.

Basis for Qualified Opinion

As mentioned in Note no. 19.09 to the Financial Statements, Non Current Borrowings include an amount of Rs. 254,530.94 Lakhs due to certain banks. As per the arrangements with these banks, the Company is required to comply with certain covenants as referred in the said note and non-compliance with these covenants may give rights to the banks to demand repayment of the loans. As at 31st March, 2018, the Company has not complied with certain covenants and they have not been provided with any confirmation from the banks for extension of time to comply with these covenants. Further the Company has also received loan recall notice from one of the secured lenders in respect of non-current borrowings. The Company has not classified these liabilities as current liabilities as required by Ind AS.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Para above âBasis for Qualified Opinionâ, the aforesaid Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2018 and its loss including other comprehensive income, its cash flows and the statement of changes in equity for the year ended on that date.

Emphasis of Matters

We draw your attention to the:

a) Note no. 2.09 to the Financial Statements regarding the attachment of plant and machinery under installation at Dagori Integrated Steel Plant situated at Bilha, Bilaspur (Chhattisgarh) to the extent of Rs. 20,616.40 lakhs by the Directorate of Enforcement, which has been contested by the Company.

b) Note no. 19.10 to the Financial Statements regarding preparation of Financial Statements of the Company on going concern basis, notwithstanding the fact that the Company has been incurring cash losses, itâs net worth has been eroded as on 31st March, 2018, loans have been called back by few of the secured lenders, application has been made to National Company Law Tribunal (NCLT), Mumbai, under section 7 of the Insolvency and Bankruptcy Code 2016 by State Bank of India, one of the secured lenders, which has been contested by the Company, for the reasons stated in the said note. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companyâs ability to continue as going concern. The appropriateness of assumption of going concern is critically dependent upon the Companyâs ability to raise requisite finance / generate cash flows in future to meet its obligations.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act, we 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 (Including other comprehensive income), the Statement of Cash Flow and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

e. The going concern matter described in subparagraph (b) under the âEmphasis of Mattersâ paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f. On the basis of the written representations received from the directors as on 31st March, 2018 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.

g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ.

h. With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements as referred to in Note No. 2.07, 2.08, 2.09, 19.10, 23.04, 27.01 and 36 to the Financial Statements;

ii. The Company has made provisions, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long term contracts including derivative contracts;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE âAâ TO THE INDEPENDENT AUDITORSâ REPORT

(Referred to in paragraph 1 (g) under âReport on Other Legal and Regulatory Requirementsâ of our report of even date to the members of Jayaswal Neco Industries Limited on the Financial Statements for the year ended 31st March, 2018)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)

We have audited the internal financial controls over financial reporting of JAYASWAL NECO INDUSTRIES LIMITED (âthe Companyâ) as of 31st March, 2018 in conjunction with our audit of the Financial Statements of the Company for the year ended on that date.

Managementâs Responsibility for Internal Financial Controls

The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (âthe Guidance Noteâ) issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditorâs Responsibility

Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards of Auditing prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external purposes in accordance with generally accepted accounting principles. A Companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companyâs assets that could have a material effect on the Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

ANNEXURE âBâ TO INDEPENDENT AUDITORSâ REPORT

(Referred to in paragraph 2 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date to the members of Jayaswal Neco Industries Limited on the Financial Statements for the year ended 31st March, 2018)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.

c. According to the information and explanations given to us, the title deeds of immovable properties are generally in the name of the Company except in respect of 5 immovable properties at Raipur having the aggregate value of Rs. 31 lakhs in respect of which the documents are not registered in the name of the company with the concerned Government Authority and also in case of properties acquired by the entities or unit that have since been amalgamated/merged with the Company in pursuance to the scheme of amalgamation / demerger / arrangement approved by Honâble High Court and details of which are as under.:

(Rs. in lakhs)

Sr.

No.

Particulars of the Land and Building

Leasehold/ Freehold Land / Building

Net Block as at 31st March, 2018

Remarks (give reasons for the exception)

4 immovable properties land at Raipur (1 agreement pledge with the lender)

Leasehold Land

1,841.85

2 title deeds are in the name of Corporate Ispat Alloys Limited, from where the unit demerged and acquired by the Company and 2 title deeds are in the name of Nagpur Alloy Castings Limited erstwhile Company that was amalgamated with the Company under the Companies Act, 1956.

7 immovable properties (land / building) at Raipur / Nagpur / Kolkata (4 agreements equitable mortgage with the lenders)

Free hold land / building

70.50

The title deeds are in the name of Jayaswals Neco Limited (earlier known as Jayaswal Chemical Private limited) erstwhile Company that was amalgamated with the Company under the Companies Act, 1956.

As informed to us, in respect of 59 immovable properties having the aggregate value of Rs. 721.91 lakhs the original title deeds have been deposited with the lenders as security, we have been produced photocopies of documents for those immovable properties and based on such documents, the title deeds are held in the name of the Company except 5 immovable properties as disclosed above.

ii. In respect of its inventories:

As explained to us, inventories have been physically verified during the year by the management, except for inventories in transit / job worker for which management confirmation has been received. In our opinion the frequency of verification is reasonable. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted by the Company to companies, firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Act:

a. In the earlier years the Company had granted unsecured loan to one such Company and the terms and conditions on which the loan had been granted were not, prima facie, prejudicial to the interest of the Company.

b. The terms of repayment of principal and payment of interest have been stipulated and during the year, the principal and interest were due for payment but due to the financial crisis the party has not paid the same.

c. The amount is overdue and the Company has considered the said loan and interest receivables as doubtful and has been fully provided for.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of grant of loans, making investments and providing securities.

v. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause (v) of paragraph 3 of the Order are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under Section 148(1) (d) of the Act, as applicable and are of the opinion that, prima facie, the prescribed accounts and records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employeesâ State Insurance, Income tax, Sales tax, Service tax, Customs Duty, Excise Duty, Value Added Tax, Cess, Goods and Service Tax and any other statutory dues with the appropriate authorities during the year except in certain cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2018 for a period of more than six months from the date they became payable.

b. Details of dues of Duty of Custom, Duty of Excise, Service Tax, Sales Tax and Value Added Tax aggregating to Rs. 1,809.89 lakhs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Statutes	Nature of the Dues	Period to which it relates	Amounts (Rs. in lakhs) (*)	Forum where the dispute is pending
The Customs Act, 1962	Custom Duty	2004-05 and 2014-15	178.56	CESTAT
The Central Excise Act, 1944	Excise Duty	2009-14	96.40	CESTAT
		2011-13 and 2016-17	57.13	Commissioner Appeals
		2014-15	28.40	Assistant Commissioner
Finance Act, 1994	Servies Tax	2005-09	211.21	CESTAT
		2012-13, 2015-17	108.54	Commissioner Appeals
		2009-10	60.60	Commissioner

The Central Sales Tax Act, 1956 and Sales Tax Acts of various states	Sales Tax / VAT	2008-09	9.40	High Court
		2007-08, 2009-10 and 2011-12	31.91	Tribunal
		2009-10 and 2011-15	917.68	Additional Commissioner
		1993-94 and 2013-15	96.43	Joint Commissioner
		1996-97 and 2002-03	13.63	Deputy Commissioner
		Total	1809.89

(*) Net of amount deposited under protest

viii. Based on our audit procedures and according to the information and explanations given by the management, we are of the opinion that as on 31st March, 2018 the Company has defaulted in repayment of dues to banks aggregating to Rs. 134,202.80 lakhs. Lender wise details of such default is as under:

(Rs. in lakhs)

Banks	Total Default	Below 90 days	Above 90 days
State Bank of India (Including merged Banks)	40,663.12	6,576.52	34,086.60
Punjab National Bank	32,505.26	4,642.33	27,862.93
Union Bank of India	19,033.55	2,778.78	16,254.77
Oriental Bank of Commerce	5,762.06	808.66	4,953.40
Bank of India	4,009.39	553.21	3,456.18
Indian Overseas Bank	6,053.13	810.32	5,242.81
Central Bank of India	9,703.60	1,398.33	8,305.27
Bank of Maharashtra	4,321.13	832.56	3,488.57
IDBI Bank	9,885.00	1,297.25	8,587.75
Andhra Bank	1,622.23	240.27	1,381.96
UCO Bank	644.33	287.21	357.12
Total	134,202.80	20,225.44	113,977.36

According to the information and explanations given to us, the following all the banks have classified the credit facilities given to the Company as Non Performing Asset (NPA) as on 31st March, 2018 in their Books of Account.

(Rs. in lakhs)

Sr. No.	Bank	Term Loan Principal	Fund Based Working Capital	Total
1	State Bank of India (Including merged Banks)	96,799.00	39,577.33	136,376.33
2	Punjab National Bank	70,280.13	5,764.47	76,044.60
3	Union Bank of India	46,309.46	4,116.46	50,425.92
4	Oriental Bank of Commerce	14,149.00	2,055.49	16,204.49
5	Bank of India	9,335.58	-	9,335.58
6	Indian Overseas Bank	14,575.00	-	14,575.00
7	Central Bank of India	24,399.52	1,995.00	26,394.52

8	Bank of Maharashtra	9,266.89	-	9,266.89
9	IDBI Bank	13,876.38	2,204.44	16,080.82
10	Andhra Bank	4,815.61	-	4,815.61
11	UCO Bank	1,586.60	-	1,586.60
12	ICICI Bank	-	5,209.09	5,209.09
	Total	305,393.17	60,922.28	366,315.45

ix. According to the information and explanations given to us, during the year the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The term loans raised by the Company have, prima facie, been applied for the purpose for which they are raised.

x. Based on our audit procedures performed for the purpose of reporting the true and fair view of the Financial Statements and on the basis of information and explanations given by the management, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi. In our opinion, according to the information and explanations given to us, the Company has paid or provided managerial remuneration in accordance with the provisions of requisite approvals mandated by the provision of section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Therefore, the provisions of clause (xii) of paragraph 3 of the Order are not applicable to the Company.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Financial Statements as required by the applicable Indian Accounting Standards.

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or debentures during the year. Therefore, the provisions of clause (xiv) of paragraph 3 of the Order are not applicable to the Company.

xv. According to the information and explanations given to us, during the year the Company has not entered into non-cash transactions with directors or persons connected with him. Therefore, the provisions of clause (xv) of paragraph 3 of the Order are not applicable to the Company.

xvi. In our opinion and according to information and explanations provided to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Pathak H. D. & Associates For Naresh Patadia & Co.

Chartered Accountants Chartered Accountants

Firm Reg. No. 107783W Firm Reg. No. 106936W

Mukesh Mehta Naresh Patadia

Partner Proprietor

Membership No. 43495 Membership No. 35620

Mumbai Nagpur

Date: 30th April, 2018 Date: 30th April, 2018

Mar 31, 2016

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of JAYASWAL NECO INDUSTRIES LIMITED (âthe Companyâ), which comprise the Balance Sheet as at 31^st March, 2016, the Statement of Profit and Loss, 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 (âthe Actâ) with respect to the preparation 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, as applicable.

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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We conducted our audit of the standalone financial statements 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 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. An audit also includes evaluating the appropriateness of 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March, 2016 and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act, we 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 appears from our examination of those books;

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

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, as applicable;

e. On the basis of the written representations received from the directors as on 31^st March, 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ

g. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, 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 financial statements as referred to in Note 12.08, 12.09, 12.10, 31(A), 31(B), 31(C) and 44 to the standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in âAnnexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order.

(Referred to in paragraph 2 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date to the members of Jayaswal Neco Industries Limited on the standalone financial statements for the year ended 31^st March, 2016)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.

c. According to the information and explanations given to us, the title deeds of immovable properties are generally in the name of the Company except in respect of 5 immovable properties at Raipur having the aggregate value of Rs. 31 lacs in respect of which the documents are not registered in the name of the company with the concerned Government Authority and also in case of properties acquired by the entities or unit that have since been amalgamated/merged with the company in pursuance to the scheme of amalgamation / demerger / arrangement approved by Hon''ble High Court and details of which are as under.

Sr.

No.

Particulars of the land and building

Leasehold / Freehold/ Building

Gross Block as at 31st March, 2016

Net Block as at 31st March, 2016

Remarks (give reasons for the exception)

4 immovable properties land at Raipur (1 agreement equitable mortgage with the lenders)

Leasehold Land

1790.13

1601.25

2 title deeds are in the name of Corporate Ispat Alloys Limited, from where the unit demerge and acquired by the Company and 2 title deeds are in the name of Nagpur Alloy Castings Limited erstwhile Company that were amalgamated with the Company under the Companies Act, 1956

7 immovable properties (land / building) at Nagpur / Kolkata / Mumbai (4 agreements equitable mortgage with the lenders)

Free hold land /building

106.56

73.07

The title deeds are in the name of Jayaswal Neco Limited (earlier known as Jayaswal Chemical Private limited) erstwhile Company that were amalgamated with the Company under the Companies Act, 1956

As informed to us, in respect of 59 immovable properties having the aggregate value of Rs. 795.21 lacs the original title deeds have been equitable mortgage with the lenders as security, we have been produced photocopies of documents for those immovable properties and based on such documents, the title deeds are held in the name of the Company except 5 immovable properties as disclosed above.

ii. In respect of its inventories:

As explained to us, inventories have been physically verified during the year by the management except for inventories in transit for which management confirmation has been received. In our opinion the frequency of verification is reasonable. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted by the company to companies, firms, limited liability Partnerships or other parties covered in the register maintained under section 189 of the Act:

a) In the earlier years the Company had granted unsecured loan to the subsidiary company and the terms and conditions on which this loan had been granted were not, prima facie, prejudicial to the interest of the Company.

b) The terms of repayment of principal and payment of interest have been stipulated and the principal and interest were not due for payment during the year.

c) As the repayment of the loan and interest is not due, the question of overdue amount does not arise, however in view of the reasons as mentioned in note no. 43 (i) b to the standalone financial statements the above loan and interest receivables has been fully provided for in the financial statements as on 31^st March 2016.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees.

v. According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (v) of paragraph 3 of the Order are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under Section 148(1) (d) of the Companies Act, 2013, as applicable and are of the opinion that, prima facie, the prescribed accounts and records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. According to the information and explanations given to us, in respect of statutory dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Service tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues with the appropriate authorities during the year except in certain cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2016 for a period of more than six months from the date they became payable.

b. Details of dues of Duty of Custom, Duty of Excise, Service Tax, Sales Tax and Value Added Tax aggregating to Rs.3,080.65 Lacs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Statutes	Nature of the Dues	Period to which it relates	Amounts (Rs. in Lacs)(*)	Forum where the dispute is pending
The Custom Act, 1962	Custom Duty	2004-05	100	CESTAT
The Central Excise Act, 1944	Excise Duty	2001-11	1247.81	CESTAT
The Central Excise Act, 1944	Excise Duty	2009-10	37.91	Additional Commissioner
Finance Act, 1994	Service Tax	2005-09	171.68	CESTAT
Finance Act, 1994	Service Tax	2009-10	60.61	Commissioner
The Central Sales Tax Act, 1956 and Sales Tax Acts of various states	Sales Tax / VAT	2006-07	200.61	Commercial tax Tribunal
		1993-94, 1995-97, 2002-03 & 2004-05	1,128.62	Joint Commissioner
		2007-11	119.79	Additional Commissioner
		1996-97, 2002-03	13.62	Deputy Commissioner (A)
		Total	3,080.65

(*) Net of amount deposited under protest

viii. Based on our audit procedures and according to the information and explanations given by the management, we are of the opinion that as on 31st March, 2016 the Company has defaulted in repayment of dues to banks aggregating to Rs. 1,777.60 Lacs. Lender wise details of such default is as under:

(Rs. in Lacs)

Sr. No.	Bank	Principal amount of default as at the balance sheet date	Period of default
1	IDBI Bank	261.12	Below 90 days
2	ICICI Bank	91.67	Below 90 days
3	Union Bank of India	114.83	Below 90 days
	Union Bank of India (Working Capital)	1,036.67	Below 90 days
4	UCO Bank	224.62	Below 90 days
5	State Bank of India	48.69	Below 90 days
	Total	1,777.60

According to the information and explanations given to us, the following banks have classified the credit facilities given to the Company as Non Performing Asset (NPA) as on 31st March 2016 in their Books of Account due to non-achievement of Date of Commencement of Commercial Operations (DCCO) for its projects by the Company.

Sr. No.	Bank	Term Loan Principal	Fund Based Working Capital (Incl. SLOC & CC)	Total
1	Andhra Bank	4,852.00	-	4,852.00
2	Bank of India	9,433.00	-	9,433.00
3	Bank of Maharashtra	9,432.31	-	9,432.31
4	Indian Overseas Bank	14,575.00	-	14,575.00
5	Punjab National Bank	71,359.00	8,735.76	80,094.76
6	State Bank of Patiala	3,900.00	-	3,900.00
7	State Bank of Bikaner & Jaipur	18,866.00	1,751.37	20,617.37
8	State Bank of Hyderabad	16,036.00	-	16,036.00
9	State Bank of India	39,235.93	35,355.27	74,591.20
10	State Bank of Travancore	19,482.22	3,133.34	22,615.56
11	UCO Bank	3,144.75	-	3,144.75
12	Union Bank of India	47,951.12	5,904.16	53,855.28
13	Oriental Bank of Commerce	14,149.00	2,432.88	16,581.88
	Total	272416.33	57,312.78	329729.11

ix. According to the information and explanations given to us, during the year the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The term loans raised during the year have, prima facie, been applied for the purpose for which they are raised..

x. Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and on the basis of information and explanations given by the management, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xii. In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of Clause (xii) of paragraph 3 of the Order are not applicable to the Company.

xiii. According to the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

xiv. According to the information and explanations give to us and based on our examination of the records of the Company, during the year, the company has not raised any money by preferential allotment or private placement of share or debentures. Therefore, the provisions of Clause (xiv) of paragraph 3 of the Order are not applicable to the Company.

xv. According to the information and explanations given to us, during the year the company has not entered into any non-cash transactions with directors or persons connected with him, Therefore, the provisions of Clause (xv) of paragraph 3 of the Order are not applicable to the Company.

xvi. In our opinion and according to information and explanations provided to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Firm Registration No. - 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

Partner Partner

Membership No. - 35629 Membership No. - 30154

Place: Mumbai Place: Nagpur

Date : 27^th May, 2016 Date : 27^th May, 2016

Mar 31, 2015

We have audited the accompanying standalone financial statements of Jayaswal Neco Industries Limited (Rs.the CompanyRs.), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 (Rs.the ActRs.) with respect to the preparation 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these 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 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 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 qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

As mentioned in Note No. 12.11 to the standalone financial statements, during the year the Hon'ble Supreme Court of India cancelled 3 coal blocks of the Company and subsequently these blocks have been allotted to different bidders in the E- auction by the Ministry of Coal, Government of India. The Company has filed a writ petition before the Hon'ble Delhi High Court challenging the provision of ordinance and tendering process and no adjustments have been made in the value of these 3 coal mining assets for the reasons mentioned therein. We were unable to determine whether any adjustments to these amounts were necessary.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Rs.Basis for Qualified OpinionRs. paragraph above, the aforesaid 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, of the state of affairs of the Company as at 31st March, 2015 and its profit and its 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 (Rs.the OrderRs.) 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 paragraphs 3 and 4 of the Order, to the extent applicable.

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

b. In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books;

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

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the company.

f. On the basis of the written representations received from the directors as on 31st March, 2015 and 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.

g. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, 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 financial statements as referred to in Note 12.09, 12.10 and 30 (A) to the standalone financial statements except for the possible effect of the matters described in the basis for Qualified Opinion.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts except for the possible effect of the matters described in the basis for Qualified Opinion.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under the heading Rs.Report on Other Legal and Regulatory RequirementsRs. of our report of even date to the members of Jayaswal Neco Industries Limited on the accounts for the year ended 31st March, 2015)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company's inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted by the company to companies, firms or other parties covered in the register maintained under section 189 of the Act:

a. The company has given advances in the nature of loan to its subsidiary, and as per the information and explanations given to us; the above advances along with the interest are not due for repayment.

b. As the loan is not due for repayment, the question of overdue amount does not arise.

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 for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. According to the information and explanations given to us, the Company has not accepted any deposit from the public.

Therefore, the provisions of Clause (v) of paragraph 3 of the Companies (Auditor's Report) Order, 2015 are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under Section 148(1) (d) of the Act and are of the opinion that, prima facie, the prescribed accounts and cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. According to the information and explanations given to us, in respect of statutory dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues with the appropriate authorities during the year except in certain cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

b. The disputed statutory dues of Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise Duty ,Value added tax and Cess aggregating to Rs. 8353.87 Lacs, that have not been deposited on account of Disputed matters pending before appropriate authorities are as under:

Nature of Dues Name of the Statute Period Amount Forum where Involved (Rs. in lacs) (*) dispute is pending Custom Duty Custom Act, 1962 1998-99 765.10 Supreme Court 2004-05 100.00 CESTAT

Excise Duty/ Central Excise Act, 1944 2000-01 5.52 Supreme Court

Service Tax 2008-10 5.03 Appellate Tribunal 2001-12 2088.28 CESTAT

2005-08 1.98 Additional

Commissioner

2005-10 82.32 Commissioner (Appeal) Sales Tax / Central Sales Tax Act, 1956 and 1993-94, 1995-97, 1128.62 Joint Commissioner

VAT and Entry Sales Tax Acts of various 2002-03 & 2004-05

Tax states 1996-97, 2002-03 1281.77 Deputy & 2006-09 Commissioner

Electricity Cess / Electricity Act, 2003 and 2004-05 to 2010-11 2680.49 Supreme Court

Duty Chhattisgarh State Electricity 2011-12 200.00 High Court Regulatory Commission 2006-08 14.76 Chief Engineer (Electrical) department

Total 8353.87

(*) Net of amount deposited under protest

c. There was no such amount which was required to be transferred to Investor Education and protection fund in accordance with the relevant provision of the Companies Act, 1956 and rule made there under. viii. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year. ix. Based on our audit procedures and according to the information and explanations given by the management, we are of the opinion that as on 31st March, 2015 the Company has not defaulted in repayment of dues to banks, except the repayment of principal amount of Rs. 1618.89 lacs and interest of Rs. 6,557.07 lacs for a period less than sixty days. x. The Company has given corporate guarantees aggregating to Rs. 1,181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not, prima facie, prejudicial to the interest of the Company. xi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been applied for the purpose for which they were raised. xii. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the standalone financial statements and as per the information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Firm Registration No. - 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

Partner Partner

Membership No. - 35629 Membership No. - 30154

Place: Mumbai Place: Nagpur

Date : 29th May, 2015

Mar 31, 2014

We have audited the accompanying financial statements of Jayaswal Neco Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2014 and the Statement of Profit & 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 the Accounting principles generally accepted in India, including, Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

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

Opinion

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

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2014;

ii. In the case of the Statement of Profit & Loss , of the profit of the Company 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.

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. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Act read with the general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Jayaswal Neco Industries Limited on the accounts for the year ended 31st March, 2014)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

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

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company''s inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Act:

a. The company has given advances in the nature of loan to two parties in respect of which maximum amount involved during the year was Rs. 690.92 lacs and the year-end balance was Rs. 671.31 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances along with the interest are not due for repayment.

d. As the loans are not due for repayment, the question of overdue amounts does not arise.

e. The company has taken loans from eighteen such parties in respect of which maximum amount involved during the year was Rs. 35,229.79 lacs and the year-end balance was Rs. 13,569.72 lacs.

f. In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable, and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans along with interest payable are repayable on demand and are not due for repayment.

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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Act:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 of the Act, have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per the information available with the Company, except for certain transactions for purchase of services and projects of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs to be further strengthened to make it commensurate with its size and nature of its business.

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

ix. According to the information and explanations given to us in respect of statutory dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable except for environment cess on coal aggregating to Rs. 9.85 lacs.

b. The disputed statutory dues of Income tax, Sales tax, Service tax, Custom duty, Wealth tax, Excise Duty and Cess aggregating to Rs. 10422.42 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

(Rs.in Lacs)

Nature of Dues Statute Period Involved

Custom Duty Custom Act, 1962 1998-99

2004-05

Excise Duty/ Central Excise Act, 1944 2000-01 Service Tax 2006-07

1998-99 and 2001-02 to 2010-11 2005-06 to 2009-10

Sales Tax / Central Sales Tax Act, 1956 1996-97 VAT and Entry Tax and Sales Tax Acts of various 1993-94, 1995-97, states 2002-03 and 2004-05

1996-97,2002-03 and 2006-09

2002-03

Electricity Cess / Electricity Act, 2003 and 2004-05 to 2010-11 Duty Chhattisgarh State Electricity 2009-10 Regulatory Commission 2011-12

TOTAL

Nature of Dues Amount Forum where dispute (*) is pending

Custom Duty 733.11 Supreme Court

100.00 CESTAT

Excise Duty/ Service Tax 5.52 Supreme Court

603.47 High Court

1,387.70 CESTAT

91.82 Commissioner (Appeals)

Sales Tax / VAT and Entry Tax 6.98 Appellate Tribunal

1,924.27 Joint Commissioner (A)

2,050.84 Deputy Commisioner(A)

7.70 Additional Commissioner (A)

Electricity Cess / Duty 3,062.01 Supreme Court

249.00 Supreme Court

200.00 High Court

TOTAL 10422.42

(*) Net of amount deposited under protest.

x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2014 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities and other investments. The Company has maintained proper records of transactions and contracts in respect of shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name.

xv. The Company has given corporate guarantees aggregating to Rs. 1181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not, prima facie, prejudicial to the interest of the Company.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purpose for which they were raised or pending utilization have been temporary kept with the banks.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2014, related information as made available to us and as represented to us, by the management, we are of the opinion, that no funds raised on short term basis have been utilized for long term purposes.

xviii. During the year, the Company has made preferential allotment of 46,672,000 equity shares to nine companies covered in the Register maintained under Section 301 of the Act. According to the information and explanations given to us these shares are issued in terms of Securities and Exchange Board of India (Issue Of Capital and Disclosure Requirements) Regulations, 2009 and accordingly, the prices at which these shares are issued are not prima facie prejudicial to the interest of the company.

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

xx. During the year covered by our report the company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R. Koria S. R. Chhallani

Partner Partner

Membership No. - 35629 Membership No. - 30154

Mumbai Nagpur Date : 30th April, 2014

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Jayaswal Neco Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2013 and the Statement of Profit & 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 the Accounting principles generally accepted in India, including, 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.

Auditors'' Responsibility

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

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion

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

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2013;

ii. In the case of the Statement of Profit & Loss , of the profit of the Company 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.

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. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Act;

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 Act.

(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Jayaswal Neco Industries Limited on the accounts for the year ended 31st March, 2013)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

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

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company''s inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Act:

a. The company has given advances in the nature of loan to two parties in respect of which maximum amount involved during the year was Rs. 623.40 Lacs and the year-end balance was Rs. 623.40 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances are repayable on demand.

d. As the loans are repayable on demand, the question of overdue amounts does not arise. In respect of interest there are no overdue amounts.

e. The company has taken loans from eight such parties in respect of which maximum amount involved during the year was Rs. 7778.13 lacs and the year-end balance was Rs. 6272.42 Lacs .

f. In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable, and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans are not due for repayment and there is no overdue amount of principal and interest.

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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Act:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 of the Act, have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per the information available with the Company, except for certain transactions for purchase of services, projects and sale of goods of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs to be further strengthened to make it commensurate with its size and nature of its business.

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

ix. According to the information and explanations given to us in respect of statutory dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable.

b. The disputed statutory dues aggregating to Rs. 9919.76 Lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

(Rs.in Lacs)

Nature of Dues Statute Period Involved

Custom Duty Custom Act, 1962 1998-99

2004-05

Excise Duty Central Excise Act, 1944 2000-01

Excise Duty Central Excise Act, 1944 2006-07

Excise Duty Central Excise Act, 1944 1998-99 to 2010-11

Excise Duty Central Excise Act, 1944 1995-96 and 2006-07 & 2007-08 to 2009-10

Service Tax Service Tax 2005-06 to 2009-10,

Sales Tax Central Sales Tax Act, 1956 1996-97

Sales Tax Central Sales Tax Act, 1956 1995-96 to 96-97, 2002-03 and 2004-05

Sales Tax Central Sales Tax Act, 1956 1996-97,2002-03 and 2005-06 to 2009-10

Sales Tax Central Sales Tax Act, 1956 2002-03

Entry Tax Chattisgarh Entry Tax Act, 1976 1990-91 and 2004-05

Electricity Electricity Act, 2003 2004-05 to 2010-11 Cess/duty Chhattisgarh State Electricity 2009-10 Regulatory Commission

Electricity Act, 2003 2011-12

Nature of Dues Amount Forum where dispute (*) is pending

Custom Duty 712.95 Supreme Court

100.00 CESTAT

Excise Duty 5.52 Supreme Court

Excise Duty 1,203.47 High Court

Excise Duty 1,415.50 CESTAT

Excise Duty 42.38 Commissioner (Appeals)

Service Tax 143.93 CESTAT

Sales Tax 6.98 Appellate Tribunal

Sales Tax 2,072.57 Joint Commissioner (A)

Sales Tax 2,047.23 Deputy Commisioner (A)

Sales Tax 7.70 Additional Commissioner (A)

Entry Tax 0.55 High Court

Electricity Cess/duty 1,711.98 Supreme Court

249.00 Supreme Court

200.00 High Court

TOTAL 9,919.76

(*) Net of amount deposited under protest.

x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2013 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities & other investments. The Company has maintained proper records of transactions and contracts in respect of shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name.

xv. The Company has given corporate guarantees aggregating to Rs. 1181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purpose for which they were raised or pending utilization have been temporary kept with the banks.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2013, related information as made available to us and as represented to us, by the management, we are of the opinion, that no funds raised on short term basis have been utilized for long term purposes.

xviii. During the year, the Company has made preferential allotment of 94,875,000 equity shares to nine companies covered in the Register maintained under Section 301 of the Act. According to the information & explanation given to us these shares are issued in terms of Securities and Exchange Board of India (Issue Of Capital and Disclosure Requirements) Regulations, 2009 and accordingly, the prices at which these shares are issued are not prima facie prejudicial to the interest of the company.

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

xx. During the year covered by our report the company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R. Koria S. R. Chhallani

Partner Partner

Membership No. - 35629 Membership No. - 30154

Mumbai Nagpur

Date: 25th May, 2013

Mar 31, 2012

1. We have audited the attached Balance Sheet of JAYASWAL NECO INDUSTRIES LIMITED, as at 31st March, 2012 and also the Statement of Profit and Loss and 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 of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure hereto, a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the company.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our examination of such books;

iii) 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;

iv) In our opinion the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors as on 31st March, 2012 and taken on records by the Board of Directors, 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. As regards to Directors nominated by Financial Institutions / Banks, they are exempted from the provisions of Section 274 (1) (g) in view of general circular issued by the Department of Company Affairs.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with significant accounting policies and notes 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:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

(ii) In the case of Statement of Profit and Loss, of the profits of the Company for the year ended on that date; and

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

ANNEXURE TO AUDITOR'S REPORT Referred to in paragraph 3 of our report of even date

As required by the Companies (Auditor's Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:- i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

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

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company's inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the companies Act 1956:

a. The company has given advances in the nature of loan to three parties in respect of which maximum amount involved during the year was Rs. 1143.18 lacs and the year-end balance was Rs. 254.12 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances are repayable on demand.

d. As the loans are repayable on demand, the question of overdue amounts does not arise. In respect of interest there are no overdue amounts.

e. The company has taken loans from two such parties in respect of which maximum amount involved during the year was Rs 6,500.03 lacs and the year-end balance was Rs. 582.68 lacs.

f. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans are not due for repayment, where repayment schedule exist and there is no overdue amount of principle and interest.

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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per the information available with the Company, except for certain transactions for purchase of services, projects and sale of goods of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs further improvement to make it commensurate with the size and nature of the business of the company.

viii. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have been told that the cost records are under preparation and hence could not be verified by us.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable except for the Electricity Duty and VAT of Rs 79.58 Lacs and Rs. 283.13 Lacs out of which electricity duty has since been paid.

c. The disputed statutory dues aggregating to Rs. 7,994.95 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

(Rs.in Lacs)

Nature of Dues Statute Period Involved Amount (*) Forum where dispute is pending

Custom Duty Custom Act, 1962 2004-05 100.00 CESTAT 1998-99 687.30 Supreme Court Entry Tax Chattisgarh Entry Tax Act, 1976 0.55 High Court

Excise Duty Central Excise Act, 1944 1998-2010 2,626.55 CESTAT

Excise Duty Central Excise Act, 1944 1995-96 to 2006-10 30.83 Commissioner (Appeals)

Excise Duty Central Excise Act, 1944 2000-01 5.52 Supreme Court

Sales Tax Central Sales Tax Act, 1956 2002-03 7.70 Additional Commissioner

Sales Tax Central Sales Tax Act, 1956 1996-97, 2002-03, 2004-05 and 2006-08 97.56 Deputy Commissioner

Sales Tax Central Sales Tax Act, 1956 1995-97, 2002-03 and 2004-05 2,072.57 Joint Commissioner

Service Tax Service Tax 2005-06 61.59 CESTAT

VAT Chhattisgarh State

Vat Act, 2005 2007-08 721.83 Deputy Commissioner

Electricity Cess 2004-05 to 2010-11 1,333.95 Supreme Court

Chhattisgarh State

Electricity Regulatory

Commission 249.00 Supreme Court

Total 7,994.95

(*) Net of amount deposited under protest.

x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2012 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities & other investments. The Company has maintained proper records of transactions and contracts in respect of shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name.

xv. The Company has given corporate guarantees aggregating to Rs. 1,181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purpose for which they were raised or pending utilization have been temporary kept with the banks.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2012, related information's as made available to us and as represented to us, by the management, we are of the opinion, that no funds raised on short term basis have been utilized for long term purposes.

xviii. During the year, the Company has made preferential allotment of 7,44,35,500 equity shares to ten companies covered in the Register maintained under Section 301 of the Companies Act, 1956. According to the information & explanation given to us these shares are issued in terms of Securities and Exchange Board of India (Issue Of Capital and Disclosure Requirements) Regulations, 2009 and accordingly, the prices at which these shares are issued are not prima facie prejudicial to the interest of the company.

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

xx. During the year covered by our report the company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

(Partner) (Partner)

Membership No. - 35629 Membership No. - 30154

Mumbai Nagpur

Date: 12th May, 2012

Mar 31, 2011

1. We have audited the attached Balance Sheet of JAYASWAL NECO INDUSTRIES LIMITED, as at 31st March, 2011 and also the Profit and Loss Account and 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 of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure hereto, a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company.

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

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

ii) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our examination of such books;

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

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

v) On the basis of the written representations received from the directors as on 31st March, 2011 and taken on records by the Board of Directors, 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. As regards to Directors nominated by Financial Institutions / Banks, they are exempted from the provisions of Section 274 (1) (g) in view of general circular issued by the Department of Company Affairs.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with significant accounting policies and notes 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:

(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 Profit and Loss Account, of the profits of the Company for the year ended on that date; and

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

ANNEXURE TO AUDITOR'S REPORT Referred to in paragraph 3 of our report of even date

As required by the Companies (Auditor's Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:- i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company.

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

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management need to be strengthened considering the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956:

a. The Company has given advances in the nature of loan to a party in respect of which maximum amount involved during the year was Rs 9,089.24 Lacs and the year-end balance was Rs Nil.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions were not prima facie prejudicial to the interest of the Company.

c. Since there is no outstanding amount at the year end, the provisions of clause (iii) (c) and (d) are not applicable.

d. The Company has taken loans from two such parties in respect of which maximum amount involved during the year was Rs 6,113.45 Lacs and the year-end balance was Rs. 6,036.73 Lacs.

e. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

f. As per the information and explanations given to us, the above loans are not due for repayment, where repayment schedule exist and there is no overdue amount of principle and interest.

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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company, except for certain transactions for purchase of services and sale of goods of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs further improvement to make it commensurate with the size and nature of the business of the Company.

viii. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection 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.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except 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 a 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, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2011 for a period of more than six months from the date they became payable except for the Electricity Duty of Rs 78.99 Lacs.

c. The disputed statutory dues aggregating to Rs. 6,086.77 Lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

(Rs. in Lacs)

Name of the Statute Nature of dues Year Amounts Forum where dispute is pending

Central Excise Act, 1944 Excise Duty 1995-96, 2404.07 CESTAT 1998-99 to 2009-10

1998-99 & 2002-03 to 2003-04 22.98 Commissioner (A)

2007-08 22.24 High Court

2000-01 5.52 Supreme Court

Finance Act Service Tax 2005-06 & 2006-07 62.68 CESTAT

Customs Act, 1962 Cess 1998-99 661.65 CESTAT

Custom Duty 2004-05 100.00 CESTAT

Central Sales Tax Act, 1956 Sales Tax 1996-97, 2002-03, 2004-05 & 2006-07 55.82 Deputy Commissioner (A)

Sales Tax 2002-03 7.70 Additional Commissioner

Sales Tax 1995-96,

2002-03 &

2004-05 1,256.17 Joint Commissioner

Chhattisgarh Entry Tax Act, Entry Tax 1990-91 & 1976 2004-05 0.55 High Court

Electricity Act, 2003 Electricity Cess 2004-05 to 2010-11 1,333.95 Supreme Court

Mines & Minerals (Regulations Environme -ntal & 2006-07 to 153.43 High Court & Infrastructure Development) 2010-11 Act,1957 Development Cess

Total 6,086.77 x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2011 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

xiv. The Company has maintained proper records of transactions and contracts in respect of trading in shares and other securities and timely entries have been made therein. The investments are held by the Company in its own name except for certain shares, which are lodged for transfer.

xv. The Company has given corporate guarantees aggregating to Rs. 1,181 Lacs for loan taken by an associate Company from a bank. The management is of the opinion that the terms and conditions are not prejudicial to the interests of the Company. We are, however, unable to comment on the same.

xvi. To the best of our knowledge and belief and according to information and explanations given to us, in our opinion, the term loans raised have prima facie been applied for the purpose for which they were raised.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at 31st March, 2011, related information as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis aggregating to Rs.4,768.47 Lacs have been utilized for long term purposes.

xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained underSection 301 of the Companies Act, 1956.

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

xx. During the year covered by our report the Company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

Membership No. 35629 Membership No. 30154

Mumbai Nagpur

Date: 28th May, 2011

Mar 31, 2010

1. We have audited the attached Balance Sheet of JAYASWAL NECO INDUSTRIES LIMITED, as at 31st March, 2010 and also the Profit and Loss Account and 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 of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure hereto, a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company.

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

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

purposes of our audit;

ii) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our

examination of such books;

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

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

v) On the basis of the written representations received from the directors as on 31st March, 2010 and taken on records by the Board of Directors, we report that none of the directors is disqualified as on 31st 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. As regards to Directors nominated by Financial Institutions / Banks, they are exempted from the provisions of Section 274 (1) (g) in view of general circular issued by the Department of Company Affairs.

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with significant accounting policies and notes 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:

(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 Profit and Loss Account, of the profits of the Company for the year ended on that date; and

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

ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of our report of even date

As required by the Companies (Auditors Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:- i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company.

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

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management needs to be strengthened considering the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the companies Act 1956:

a. The Company has given advances in the nature of loan to a party in respect of which maximum amount involved during the year was Rs 8,435.75 lacs and the year-end balance was Rs 6,319.16 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances are repayable on demand. The interest is payable on demand.

d. In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest there are no overdue amounts.

e. The Company has taken loans from two such parties in respect of which maximum amount involved during the year was Rs 2532.64 lacs and the year-end balance was Rs. 39.02 lacs.

f. In our opinion and according to the information and explanations given to us, the rate of interest, wherever paid and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans are repayable on demand and there is no repayment schedule.

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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. According to the information and explanations given to us, these contracts or arrangements have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, except for certain transactions for purchase of goods and services and sale of goods and services of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs further improvement to make it commensurate with the size and nature of the business of the Company.

viii. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection 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.

ix. According to the information and explanations given to us in respect of statutory dues:

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable except for the Environmental Cess of Rs 85.16 Lacs.

c. The disputed statutory dues aggregating to Rs. 2433.74 lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Sr No Name of the Statute Nature of dues Year

1. Central Excise Act, 1944 2001-07

1997-99 &

2002-07

Excise Duty 2000-01

Customs Act, 1962 Cess 1998-99

Custom Duty 2004-05

Central Sales Tax Sales Tax 1995-96 &

2001-06

Sales Tax 1995-Dec,

97 &

2001-03

Chattisgarh Entry Entry Tax 1990-91 Tax Act, 1976

Exit Tax Nagar Nigam Cess 2004-05 &

2005-06

Total

(Rs. in Lacs)

Sr. No Name of the Statute Amounts Forum where dispute

is pending

1. Central Excise Act, 1944 691.96 CESTAT

26.83 Commissioner (A)

5.52 Supreme Court

Customs Act, 1962 636.01 CESTAT

100.00 CESTAT

Central Sales Tax 165.28 Deputy Commissioner (A)

807.27 Joint Commissioner

Chattisgarh Entry 0.32 Deputy Commissioner Tax Act, 1976 (A)

0.55 Deputy Commissioner (A)

2433.74

x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2010 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 is not applicable to the Company.

xiv. The Company has maintained proper records of transactions and contracts in respect of trading in shares and other securities and timely entries have been made therein. The investments are held by the Company in its own name except for certain shares, which are lodged for transfer.

xv. The Company has given corporate guarantees aggregating to Rs. 1181 lacs for loans taken by others from a bank. The management is of the opinion that the terms and conditions are not prejudicial to the interests of the Company. We are, however, unable to comment on the same.

xvi. To the best of our knowledge and belief and according to information and explanations given to us, in our opinion, the term loans raised have prima facie been applied for the purpose for which they were raised.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at 31st March, 2010, related information as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis have not prima facie been utilized for long term purposes.

xviii The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. The Company has not issued any debentures and hence provisions of clause 4 (xix) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report the Company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

Membership No. 35629 Membership No. 30154

Mumbai Nagpur

Date: 28th May, 2010

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