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Auditor Report of Jindal Stainless Ltd.

Mar 31, 2016

TO THE MEMBERS OF JINDAL STAINLESS LIMITED Report on the Standalone Financial Statements

We have audited the accompanying REVISED standalone financial statements of JINDAL STAINLESS LIMITED (“the Company”), which comprise the REVISED Balance Sheet as at 31st March, 2016, the REVISED Statement of Profit and Loss, the REVISED Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information in which impact of the Scheme (as stated in Note No. 27) have been incorporated.

Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these REVISED standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these REVISED 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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone 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 standalone 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone 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 REVISED standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid REVISED 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, 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters:

We draw attention to the following matters:

a) Net worth of the company has been eroded as stated in note no. 34 of the REVISED financial statements. The company continues to prepare its accounts on a going concern basis for the reasons as stated in the said note;

b) Pending necessary approvals for managerial remuneration as stated in Note no. 49(C)(i) of the REVISED financial statements;

c) Pending confirmations/reconciliation of balances of certain secured loans (read with Note No. 27), loans & advances, trade receivables, trade payables & other liabilities read with Note no. 32(A)(iii)(g) & 32(B) and 40(A) of the REVISED financial statements;

d) Investments and loan & advances to certain subsidiary/other companies and Mat Credit entitlement, considered as good and fully realizable/ recoverable and no provision for diminution in value is considered necessary in the opinion of the management as stated in note no. 40(B) of the REVISED financial statements;

e) Note no. 35 of the REVISED financial statements wherein the company has made investment of Rs, 8.56 crore (along with bank guarantee of Rs, 10.01 Crore) and Rs, 0.10 Crore in MJSJ Coal Limited and Jindal Synfuels Limited respectively. The company continues to treat the investment as good and recoverable in view of the pending decision challenging the Order and other circumstances mentioned therein;

f) Note no. 27 (5) of the REVISED financial statements regarding Mining Rights and effect of mining operations recorded in the financial statement of the Company for the reasons and as stated in said note no.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016(“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us during the course of audit, we give in the Annexure ‘A’ a statement on the matters specified in the 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 it appears from our examination of those books.

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

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

(f) As required by section 143(3)(i) of the Companies Act, 2013, and based on the checking of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, our separate report with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls is as per Annexure ‘B’.

(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 standalone financial statements - refer Note no. 28(A & D), 36 & 38 to the REVISED 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 derivatives contracts.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure “A” referred to in paragraph 1 under the heading “Report on other legal and regulatory requirements” of our report of even date on the

REVISED Standalone Financial Statements of JINDAL STAINLESS LIMITED for the year ended 31st March 2016

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

(b) The Company has a regular programme of Physical Verification of its Fixed assets by which fixed asset have been verified by the management according to the programe of periodical physical verification in a phased manner which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except as stated in footnote (@) of Note No. 11 of the standalone financial statements.

2. The inventories of the Company (except stock lying with the third parties and in transit), part of stores and spares, have been physically verified by the management at reasonable intervals. In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable in relation to the size of the Company and nature of its business. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

4. According to the information, explanations and representations provided by the management and based upon audit procedures performed, we are of the opinion that in respect of loans, investments, guarantees and security, the Company has complied with the provisions of the Section 185 and 186 of the Companies Act, 2013.

5. In our opinion and according to the information and explanations given to us, the Company has complied with the directive issued by the Reserve Bank of India and the provisions of Section 73 to 76 of the Act or any other relevant provisions of the Act and the rules framed there under (to the extent applicable) with regard to deposit accepted from the public. We have been informed that no order has been passed by the Company Law Board {however, on the application of the Company for extension of time (refer note no. 4(d)} or National Company Law Tribunal or Reserve Bank of India or any Court or other Tribunal in this regard.

6. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act in respect of the company’s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

7. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including provident fund, employees’

state insurance, income tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues with the appropriate authorities to the extent applicable and there are no undisputed statutory dues payable for a period of more than six months from the date they become payable as at 31 st March, 2016.

(b) According to the records and information & explanations given to us, there are no dues in respect of service tax that have not been deposited with the appropriate authorities to the extent applicable on account of any dispute and the dues in respect of income tax, duty of customs, duty of excise and value added tax that have not been deposited with the appropriate authorities on account of any dispute and the forum where the dispute is pending are given below: -

Name of The Statute

Nature of Dues

Amount (Rs, in Lacs)

Period

(Financial Year)

Forum where dispute is pending

Central Excise Act

Excise Duty

3,134.85

2005-11

CESTAT, East Zonal Bench Kolkata.

31.84

April 06 - March 12

Commissioner Appeal, Bhubaneswar

Customs Act

Custom Duty

797.05

2012-13

Commissioner of Central Excise,

Customs and Service Tax, Bhubaneswar -1

The Central Sales Tax, 1956

Sales Tax

2,479.44

2005-06 to 2007-08

High Court Orissa, Cuttack

Income tax Act

Income Tax

247.14

2005-06

2006-07 2010-11

Commissioner of Income Tax (Appeals), Delhi

517.52

2002-03

2003-04

High Court, New Delhi

2,828.17

2004-05

2005-06

2006-07 & 2007-08

ITAT, New Delhi

Entry Tax Act, 1999

Entry Tax

9,745.96

2006-07 to 2015-16

H’ble Supreme Court

8,210.54

2006-11

High Court Orissa, Cuttack

Above does not include show cause notices and are after incorporating effect of the Scheme (Refer Note no. 27)

8. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company has defaulted in repayment of dues (including interest, installment & letter of credits payments) to banks and financial institutions at various days during the year (read with note no. 33). The maximum amount of default on a particular date was Rs, 82,274.50 Lacs (including default ofRs, 508.51 Lacs w.r.t. outstanding debentures) and maximum delay (no. of days) noticed was 86 days (maximum delay of 59 days w.r.t. outstanding debentures). As on March 31, 2016, the overdue financial obligations to banks/ financial institutions/debenture holders was Rs, 55,359.54 Lacs with maximum delay of 61 days, the lender wise details of which is as follows:

Allahabad Bank Rs, 633.40 Lacs; Axis Bank Rs, 3,084.24 Lacs; Bank of Baroda Rs, 150.37 Lacs; Bank of Maharashtra Rs, 28.78 Lacs; Canara Bank Rs, 5,910.31 Lacs; Central Bank of India Rs, 646.10 Lacs; Corporation Bank Rs, 108.18 Lacs; Federal Bank Rs, 108.48 Lacs; General Insurance Corporation of India Rs, 28.65 Lacs; HDFC Bank Rs, 120.84 Lacs; ICICI Bank Rs, 5,599.94 Lacs; IDBI Bank Rs, 1,000.82 Lacs; Indian Bank Rs, 150.88 Lacs; Jammu & Kashmir Bank Rs, 255.85 Lacs; Karnataka Bank Rs, 68.84 Lacs; Life Insurance Corporation of India Rs, 577.75 Lacs; New India Assurance Company Rs, 28.57 Lacs; Oriental Bank Of Commerce Rs, 583.73 Lacs; Punjab National Bank Rs, 15,923.17 Lacs; State Bank of Bikaner & JaipurRs, 285.32 Lacs; State Bank of Hyderabad Rs, 695.50 Lacs; State Bank of India Rs,16,570.03 Lacs; State Bank of Mysore Rs, 241.49 Lacs; State Bank of Patiala Rs, 852.08 Lacs; State Bank of Travancore Rs, 340.14 Lacs; Syndicate Bank Rs, 224.68 Lacs; UCO Bank Rs, 295.38 Lacs; United India Insurance Company Rs, 28.54 Lacs; Union Bank of India Rs, 321.85 Lacs; United Bank of India Rs, 495.64 Lacs.

9. On the basis of information and explanations given to us, term loan were applied for the purpose for which the loans were obtained. No moneys have been raised during the year by way of initial public offer or further public offer.

10. Based on the audit procedure performed and on the basis of information and explanations provided by the management, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the course of the audit.

11. According to the information and explanations given to us and based on our examination of the records of the Company, managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, read with note no. 49(C)(i).

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

13. According to the information and explanations and records made available by the management of the Company and audit procedure performed, for transactions with the related parties during the year, the Company has complied with the provisions of Section 177 and 188 of the Act, where applicable [Read with note no. 27(6&7) and 47]. As explained and as per records, details of related party transactions have been disclosed in the standalone financial statements as per the applicable Accounting Standards.

14. According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year, read with note no. 2(b)(ii). Accordingly, we are not offering comment with respect to compliance of requirement of Section 42 of the Act and utilization of the money.

15. On the basis of records made available to us and according to information and explanations given to us, the Company has not entered into non-cash transactions with the directors or persons connected with him.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

ANNEXURE ‘B’ TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE REVISED STANDALONE FINANCIAL STATEMENTS OF JINDAL STAINLESS LIMITED

Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of JINDAL STAINLESS LIMITED (“the Company’) as of March 31, 2016 in conjunction with our audit of the REVISED standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s 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 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 Company’s 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 Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. 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 auditor’s judgment, 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 Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s 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 company’s 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 authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 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, 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 March 31, 2016, 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 issued by the Institute of Chartered Accountants of India.

For LODHA & CO. For S.S. KOTHARI MEHTA & CO.

Chartered Accountants Chartered Accountants

FRN: 301051E FRN: 000756N

N.K. LODHA SUNIL WAHAL

Partner Partner

Membership No. 85155 Membership No. 87294

Place : New Delhi

Dated : 23rd November, 2016


Mar 31, 2014

We have audited the accompanying financial statements of Jindal Stainless Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and Cash Flow statement for the year then ended, and a summary of the 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 the 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 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. 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 free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In case of the Balance Sheet, of the state of the affairs of the company as at 31st March, 2014,

b. In case of the statement of Profit and Loss, of the loss for the year ended on that date, and

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

Emphasis of Matter

Attention is drawn to the following:

(a) Note no. 53(C)(i) regarding pending necessary approvals for managerial remuneration as explained in the said note.

(b) Note no. 32(A)(iv)e read with Note no. 40(B) and 40(A) regarding pending confirmations of balances of certain secured loans, loans & advances, creditors & receivables as stated in the said note.

(c) Note no. 40(C) regarding certain investments and loan & advances as good and fully realizable/ recoverable related to certain subsidiary companies, for the reason stated in said note, and no provision for diminution in value is necessary in the opinion of the management.

Our opinion is not qualified in respect of above matters.

Report on other legal and regulatory requirements

(i) 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 matters specified in paragraphs 4 and 5 of the order.

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

a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

c. The report on the accounts of the branches audited under section 228 by other auditors have been forwarded to us as required by clause (c) of sub-section 228 and have been dealt with in preparing our report in the manner considered necessary by us;

d. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account and with the audited returns received from the branches;

e. In our opinion, the Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement referred to in this report 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;

f . On the basis of the written representations received from the Directors and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31st March 2014 from being appointed as a Director of the Company 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

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

(b) We have been informed that certain fixed assets of the company have been physically verified by the management according to a phased programme of periodic verification which, in our opinion, is reasonable having regard to the size of the company and nature of fixed assets. As informed, no material discrepancies between book records and physical inventory have been noticed in respect of the fixed assets physically verified during the year.

(c) As per records and information and explanation given to us, no substantial part of fixed assets has been disposed off during the year.

2. (a) As informed, the inventory of the company (except stocks lying with third parties, in transit), part of the stores and spares, have been physically verified by the management either at the end of the year or after the year end, and in respect of stores and spares, there is perpetual inventory system and a substantial portion of the stocks have been verified during the year (Read with Note no. 49). In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of inventory; in respect of process stock, the records are updated as and when physical verification has been carried out. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. (a) As informed to us, the company has not given any loan, secured or unsecured to companies, firms, or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii) (b) to (d) of The Order are not applicable.

(e) As informed to us, the company has not taken any loan, secured or unsecured, from companies, firms, or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (f) & (g) of The Order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that certain items purchased/sold are of special nature for which, as explained, suitable alternatives sources, do not exist for obtaining comparative quotations, taking into consideration the quality, usage and such other factors, there are adequate internal control systems commensurate with the size of the company and nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given, we have neither come across nor have we been informed of any instance of major weaknesses in aforesaid internal control systems.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Act have been so entered.

(b) In our opinion and having regard to our comments in paragraphs 4 above, and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Act and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Act and the Rules framed there under with regard to deposits accepted from public. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Act in respect of the Company''s products and are of the opinion that, prima facie, the prescribed records have been made and maintained. We are, however, not required to make a detailed examination of such books and records.

9. (a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues have generally been regularly deposited during the year with appropriate authorities. No undisputed amount payable inrespect of the aforesaid statutory dues were outstanding as at 31.03.2014 for a period of more than six months from the date they became payable.

(b) In our opinion and according to the information and explanations given to us, there are no dues in respect of Wealth Tax and Cess that have not been deposited with appropriate authorities on account of disputes and the dues in respect of Income Tax, Excise duty, Service Tax, Sales Tax and Custom Duty that have not been deposited with appropriate authorities on account of dispute and the forum where the dispute is pending are as given below:

Name of the statue Nature of the Dues Amount (Rs. In lacs)

Central Excise Act,1944 Excise Duty 1.69

658.08

27.19

7.57

2,960.81

46.99

57.14

7.63

0.02 6.12

290.84

0.12

3,256.20

31.84

437.86

5.21

1.02

4.74

11.90

0.39

18.52 145.81

Custom Act, 1962 Custom Duty 60.00

10.00

Finance Act,1994 Service Tax 522.83

53.83

9.79

15.29



Name of the statue Period to which Forum where dispute is pending the amount relates

Central Excise Act, 1944 April 1995-June 95 High Court, New Delhi

Jan 1999- Dec 2004 High Court of Punjab & Haryana.

Jan 05-June 05 CESTAT, Delhi.

2000-01 CESTAT, Delhi.

July 05- Dec 07 CESTAT, Delhi.

July 05- Dec 07 CESTAT, Delhi.

Sep 94- March 96 Commissioner of Central Excise, Rohtak.

1994-95 Addl. Commissioner of Central Excise, Rohtak.

Jan 10- June 10 CESTAT, Delhi

July 95- Sep 95 Joint Commissioner of Central Excise, Rohtak

2006-07 CESTAT, Delhi

July 12 to Feb 13 Dy., Commissioner, Hisar

May 08 - March 11 Commissioner Appeal, Bhubaneswar

May 08 - March 11 Commissioner Appeal, Bhubaneswar

Aug-08 to Dec-10 CESTAT, Delhi

Jul-09 Revision Authority (Jt Secy)

April-07 to Oct-2007 High Court, Punjab & Haryana

May-07 to Oct-2007 High Court, Punjab & Haryana

Jan- 95 to June- 96 Joint Commissioner, Rohtak

June, 96 to July 96 Commissioner (Appeal), Delhi-III, Gurgaon

Jul-09, Aug-09 Dy Comm, Hisar

July 2011 - Sept 2011 Commissioner (Appeal), Delhi-III, Gurgaon

Custom Act, 1962 2008-09 CESTAT, Delhi

2013-14 CESTAT, Delhi

Finance Act,1994 Dec 03- March-06 CESTAT, Delhi

2005-06 to 2008-09 CESTAT, Delhi

2005-06 to 2010-11 CESTAT, Delhi

Oct.08 to Dec.08 CESTAT, Delhi



Name of the statue Nature of the Dues Amount (Rs. In lacs)

Central Sales Tax Sales Tax 3.00 Act,1956

2,479.44

Income Tax Act, 1961 Income Tax 254.05

517.52

3,429.34

Entry Tax Act, 1999 Entry Tax 4,600.91

8,210.13



Name of the statue Period to which Forum where dispute is pending the amount relates

Central Sales Tax Act,1956 1993-94 High Court of Punjab & Haryana

2005-06 to 2007-08 H''ble High Court Orissa, Cuttack

Income Tax Act, 1961 2004-05, 2009-10 CIT (A) -VIII, New Delhi

2002-03 & 2003-04 High Court, New Delhi

2004-05, 2005-06, ITAT, Delhi 2007-08

Entry Tax Act, 1999 2006-07 To 2012-13 H''ble Supreme Court

2006-11 H''ble High Court Orissa, Cuttack

Above does not include show cause notice.

10. The company has accumulated losses at the end of the financial year and also its net worth has been eroded more than 50%. Further company has incurred cash losses during the year and also incurred cash losses in the immediately preceding financial year.

11. In our opinion and according to information and explanations given to us, the company had defaulted in repayment of dues (including interest, installment & letter of credits payments) to banks at various days during the year. There is no default in repayment of dues to financial institutions/ debenture holders during the year. The maximum amount of default on a particular date was Rs. 30,677.75 lacs and maximum delay (no. of days) noticed for a particular bank was 85 days (refer foot note to Note no. 10 & Note no. 33 for continue default and read with Note no. 32).

12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company on the basis of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of Clause 4 (xiii) of The Order are not applicable to the Company.

14. In our opinion, and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4 (xiv) of The Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. (Read with Note no. 27(C))

16. In our opinion and on the basis of information and explanations given to us, the term loans raised during the year by the Company were applied at the close of the financial year for the purposes for which the loans were obtained where such end use has been stipulated by the lender.

17. On the basis of information and explanations given to us, to the extent ofRs. 61,991.13 lacs fund raised on short-term basis have been used for long-term investments (read with Note no. 32).

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. (This is to read with Note no. 34)

19. On the basis of the records made available to us, the Company has created necessary security and charge in respect of debentures outstanding at the year end.

20. The company has not raised any money through public issue during the year.

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

For LODHA & CO. For S.S. KOTHARI MEHTA & CO.

Chartered Accountants Chartered Accountants

FRN 301051E FRN 000756N

(N.K. LODHA) (ARUN K. TULSIAN)

Partner

Membership No. 85155

Place: New Delhi Partner

Date : 29th May, 2014 Membership No. 89907


Mar 31, 2013

Report on the financial statements

We have audited the accompanying financial statements of Jindal Stainless Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2013, the statement of Profit and Loss and Cash Flow statement for the year then ended, and a summary of the 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 the 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 free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

b. In the case of statement of Profit and Loss, of the loss for the year ended on that date; and

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

Emphasis of Matter

Attention is drawn to the following:

(a) Note no. 51(C)(i) regarding pending necessary approvals for managerial remuneration as explained in the said note;

(b) Note no. 33(A)(v)e read with note no. 39(B) regarding pending confirmations of balances of certain secured loans as stated in the said note; and

(c) Note no. 39(C) regarding certain investments and loans & advances considered as good and fully realizable/ recoverable related to certain subsidiary companies, for the reason stated in said note, and no provision for diminution in value is necessary in the opinion of the management.

Our opinion is not qualified in respect of these matters.

Report on other legal and the regulatory requirements:

(i) As required by the Companies (Auditors'' 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 the paragraphs 4 and 5 of the order.

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

a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

c. The reports on the accounts of the branches audited by other Auditors have been forwarded to us and have been appropriately dealt with by us in preparing our report;

d. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account and with the audited accounts from the branches;

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

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

Referred to in paragraph 1 under the heading "Report on other legal and the regulatory requirements" of our report of even date

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

(b) We have been informed that certain fixed assets of the company have been physically verified by the management according to a phased programme of periodic verification which, in our opinion, is reasonable having regard to the size of the company and nature of fixed assets. As informed, no material discrepancies between book records and physical inventory have been noticed in respect of the fixed assets physically verified during the year.

(c) As per records and information and explanations given to us, no substantial part of fixed assets has been disposed off during the year.

2. (a) As informed, the inventory of the company at all its locations, except stocks lying with third parties, in transit and part of the stores and spares, have been physically verified by the management either at the end of the year or after the year end, and in respect of stores and spares, there is perpetual inventory system and a substantial portion of the stocks have been verified during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of inventory; in respect of process stock, the records are updated as and when physical verification is carried out. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. (a) As informed to us, the company has not given any loan, secured or unsecured, to companies, firms, or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii) (b) to (d) of The Order are not applicable.

(b) As informed to us, the company has not taken any loan, secured or unsecured, from companies, firms, or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (f) & (g) of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that certain items purchased/sold are of special nature for which, as explained, suitable alternatives sources do not exist for obtaining comparative quotations, taking into consideration the quality, usage and such other factors, there are adequate internal control systems commensurate with the size of the company and nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given, we have neither come across nor have we been informed of any instance of major weaknesses in aforesaid internal control systems.

5. (a) To the best of our knowledge and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Act, have been so entered.

(b) In our opinion and having regard to our comments in paragraph 4 above, and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Act, and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Act, and the Rules framed there under with regard to deposits accepted from public. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Act, in respect of the Company''s products and are of the opinion that, prima facie, the prescribed records have been made and maintained. We are, however, not required to make a detailed examination of such books and records.

9. (a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues have generally been regularly deposited during the year with appropriate authorities. No undisputed amount payable in respect of the aforesaid statutory dues were outstanding as at last day of the financial year for a period of more than six months from the date they became payable.

(b) In our opinion and according to the information and explanations given to us, there are no dues in respect of Wealth Tax that have not been deposited with appropriate authorities on account of disputes and the dues in respect of Income Tax, Excise duty, Service Tax, Sales Tax and Custom Duty that have not been deposited with appropriate authorities on account of dispute and the forum where the dispute is pending are as given below:

10. The company has no accumulated losses at the end of the financial year and it has incurred cash loss during the year and did not incur cash loss in the immediately preceding financial year.

11. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution/banks/ debenture holders, except default in payment of principal & interest of Rs. 13,570 lacs (USD 25 Million) & Rs. 1,495 lacs for a maximum period of 163 days and 41 days respectively. However as on balance sheet date there was no default and this is to be read with note no. 33(B).

12. In our opinion and according to information and explanations given to us, no loans and advances have been granted by the company on the basis of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of Clause 4 (xiii) of the Order are not applicable to the Company.

14. In our opinion, and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4 (xiv) of the Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. (Read with Note no. 27(C))

16. In our opinion and on the basis of information and explanations given to us, the term loans raised during the year by the Company were applied at the close of the financial year for the purposes for which the loans were obtained where such end use has been stipulated by the lender.

17. On the basis of information and explanations given to us, and on the basis of an overall examination of the balance sheet of the Company, no funds raised on short-term basis have been used for long-term investment. (read with note no. 33)

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. (read with note no. 47)

19. On the basis of the records made available to us, the Company has created necessary security and charge in respect of debentures outstanding at the year end.

20. The company has not raised any money through public issue during the year.

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

For LODHA & CO. For S.S. KOTHARI MEHTA & CO.

Chartered Accountants Chartered Accountants

FRN: 301051E FRN: 000756N

(N.K. LODHA) (ARUN K. TULSIAN)

Place : New Delhi Partner Partner

Date : 27th May, 2013 M. No. 85155 M. No. 89907


Mar 31, 2012

We have audited the attached Balance Sheet of Jindal Stainless Limited (Formerly JSL Stainless Limited), as at 31st March, 2012 and the Statement of Profit & Loss and also the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1) As required by the Companies (Auditor's Report) Order, 2003 (as amended) (herein after called The Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks of the books and records of the company as we considered appropriate, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2) Further to our comments in the Annexure referred to in Paragraph 1 above, we report that:

a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

c) The reports on the accounts of the branch audited by other Auditors have been forwarded to us and have been appropriately dealt with by us in preparing our report;

d) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account and with the audited accounts from the branch;

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

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

g) Without qualifying attention is drawn to;

(i) Note no. 33(vi) read with note no. 40(B) regarding pending confirmations of balances of certain secured loans as stated in the said note.

(ii) Note no. 40(C) read with note no. 12 regarding investment and loan & advances to certain subsidiary companies, for the reason stated in said note, no provision for diminution in value is necessary in the opinion of management.

h) 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 other 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 Balance Sheet, of the state of affairs of the Company as at 31st March, 2012; (ii) In the case of Statement of Profit & Loss, of the loss of the Company for the year ended on that date; and (iii) In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure to the Auditors' Report (Referred to in Paragraph 1 of our report of even date to the Members of Jindal Stainless Ltd. (Formerly JSL Stainless Ltd.) on the Financial Statements for the year ended 31st March, 2012)

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

(b) We have been informed that certain fixed assets of the company have been physically verified by the management according to a phased programme of periodic verification which, in our opinion, is reasonable having regard to the size of the company and nature of fixed assets. As informed, no material discrepancies between book records and physical inventory have been noticed in respect of the fixed assets physically verified during the year.

(c) As per records and information and explanation given to us, no substantial part of fixed assets has been disposed off during the year.

2. (a) As informed, the inventory of the company at all its locations, except stocks lying with third parties, in transit and part of the stores and spares, have been physically verified by the management either at the end of the year or after the year end, and in respect of stores and spares, there is perpetual inventory system and a substantial portion of the stocks have been verified during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of inventory; in respect of process stock, the records are updated as and when physical verification has been carried out. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. (a) As informed to us, the company has not given any loan, secured or unsecured to companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (b) to (d) of The Order are not applicable.

(e) As informed to us, the company has not taken any loan, secured or unsecured, from companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (f) & (g) of The Order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that certain items purchased/sold are of special nature for which, as explained, suitable alternatives sources, do not exist for obtaining comparative quotations, taking into consideration the quality, usage and such other factors, there are adequate internal control systems commensurate with the size of the company and nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given, we have neither come across nor have we been informed of any instance of major weaknesses in aforesaid internal control systems.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and having regard to our comments in paragraphs 4 above, and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under with regard to deposits accepted from public. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of the company's products and are of the opinion that, prime facie, the prescribed records have been made and maintained. We are, however, not required to make a detailed examination of such books and records.

9. (a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues have generally been regularly deposited during the year with appropriate authorities. No undisputed amount payable in respect of the aforesaid statutory dues were outstanding as at last day of the financial year for a period of more than six months from the date they became payable.

(b) In our opinion and according to the information and explanations given to us, there are no dues in respect of Wealth Tax that have not been deposited with appropriate authorities on account of disputes and the dues in respect of Income Tax, Excise duty, Service Tax, Sales Tax, Custom Duty and Cess that have not been deposited with appropriate authorities on account of dispute and the forum where the dispute is pending are as given below:

Name of Nature of Amount Period to which the statue the Dues ( Rs. in Lacs) the amount relates

Central Excise 1.69 April 1995-June 95 Excise Act Duty

658.09 Jan 1999-Dec 04

27.19 Jan 05-June 05

7.57 2000-01

2.960.81 July 05-Dec 07 47.96 July 05-Dec 07

253.64 Aug 09-June 09

57.14 Sep 94-March 96

7.63 1994-95 0.39 1996-97

23.74 July & August-09

4.04 April 09-Nov 10

0.02 Jan10-Jun10

18.02 July 95-Sep 95

5.76 April 07-October 07

3.723.82 2005-11

The Custom Custom 10.00 2008-09 Act, 1962 Duty 60.00 2008-09

Finance Act Service Tax 522.83 Dec 03-March 06

7.64 2008-09 & 2009-10

53.83 2005-06 to 2008-09

The Central Sales Tax 3.00 1993-94 Sales Tax Act 1956

2,479.44 2005-06 to 2007-08



Name of the Statue Forum where dispute is pending

Central Excise Act High Court, New Delhi

High Court of Punjab & Haryana.

CESTAT, Delhi.

CESTAT, Delhi.

CESTAT, Delhi.

CESTAT, Delhi.

CESTAT, Delhi.

Commissioner of Central Excise, Rohtak.

Addl. Commissioner of Central Excise, Rohtak.

Commissioner (Appeals), Gurgaon

Revision Authority, Delhi

Commissioner (Appeals), Gurgaon

Commissioner (Appeals), Gurgaon

Joint Commissioner of Central Excise, Rohtak

Joint Secretary Excise, Rohtak

Commissioner, Central Excise, Bhubneswar-1, Odisha.

The Custom Act, 1962 High Court, New Delhi

CESTAT, Delhi.

Finance Act CESTAT, Delhi. CESTAT, Delhi. CESTAT, Delhi.

The Central Sales Tax Act 1956 High Court of Punjab & Haryana.

High Court Odisha, Cuttack.



Name of Nature of Amount Period to which the statue the Dues ( Rs. in Lacs) the amount relates

Orissa Value Sales Tax 179.53 2005-06,2006-07 Added Tax &2007-08 Act 2004

Income Tax Income Tax 5,988.49 2004-05, 2005-06 Act 2006-07

517.52 2002-03 & 2003-04

549.65 2007-08

Entry Tax Entry Tax 5,440.45 2006-07 to 2011-12 Act, 1999

8,210.13 2010-11



Name of the Statue Forum where dispute is pending

Orissa Value Added Tax Act 2004 Add. Commissioner of Sales tax, Cuttack

Income Tax Act Commissioner of Income Tax(Appeals), Delhi

High Court, New Delhi Dispute Resolution Panel

Entry Tax Act, 1999 H'ble Supreme Court

High Court Odisha, Cuttack.

10. The company has no accumulated losses at the end of the financial year and it has not incurred cash loss during the year and also in the immediately preceding financial year.

11. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions/banks/ debenture holders, in view of the debt restructuring approved under CDR mechanism as stated in note no 33 and read together with note no. 4(f).

12. In our opinion and according to information and explanations given to us, no loans and advances have been granted by the company on the basis of pledge of shares, debentures and other securities.

13. The company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of Clause 4 (xiii) of The Order are not applicable to the company.

14. In our opinion and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4 (xiv) of The Order are not applicable to the company.

15. In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions. (Read with Note no. 27(c).

16. In our opinion and on the basis of information and explanations given to us, the term loans raised during the year by the company were applied at the close of the financial year for the purposes for which the loans were obtained where such end use has been stipulated by the lender.

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

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

19. On the basis of the records made available to us, the company has created necessary security and charge in respect of debentures outstanding at the year end.

20. The company has not raised any money through pubic issue during the year.

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

For Lodha & Co. For S.S. Kothari Mehta & Co.

Chartered Accountants Chartered Accountants FRN: 301051E FRN: 000756N

(N.K. Lodha) (Arun K. Tulsian)

Place: New Delhi Partner Partner

Date : 29th May, 2012 M. No. 85155 M. No. 89907


Mar 31, 2011

We have audited the attached Balance Sheet of JSL Stainless Limited, as at 31st March 2011 and the Profit & Loss Account and also the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1) As required by the Companies (Auditor's Report) Order, 2003 (as amended) (herein after called The Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, and on the basis of such checks of the books and records of the company as we considered appropriate, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2) Further to our comments in the Annexure referred to in Paragraph 1 above, we report that:

a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

c) The reports on the accounts of the branch audited by other Auditors have been forwarded to us and have been appropriately dealt with by us in preparing our report;

d) The Balance Sheet, Profit & Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account and with the audited accounts from the branch;

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

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

g) Without qualifying attention is drawn to;

(i) Note no. 28 (C) (i) (a) of schedule 20 regarding pending necessary approvals for managerial remuneration as explained in the said note.

(ii) Note no. 7 (b) of schedule 20 regarding pending confirmations of balances of certain secured loans as stated in the said note.

(iii) Note no. 13 (c ) of schedule 20 regarding investment and loan & advances to certain subsidiary companies, for the reason stated in said note, no provision for diminution in value is necessary in the opinion of management.

h) 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 Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

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

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

ANNEXURE TO AUDITORS' REPORT

(Referred to in Paragraph 1 of our report of even date to the Members of JSL Stainless Limited on the Financial Statements for the year ended 31st March, 2011)

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

(b) We have been informed that certain fixed assets of the company have been physically verified by the management according to a phased programme of periodic verification which, in our opinion, is reasonable having regard to the size of the company and nature of fixed assets. As informed, no material discrepancies between book records and physical inventory have been noticed in respect of the fixed assets physically verified during the year.

(c) As per records and information and explanations given to us, no substantial part of fixed assets has been disposed off during the year.

2. (a) As informed, the inventory of the company at all its locations, except stocks lying with third parties, in transit and part of the stores and spares, have been physically verified by the management either at the end of the year or after the year end, and in respect of stores and spares, there is perpetual inventory system and a substantial portion of the stocks have been verified during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of inventory; in respect of process stock, the records are updated as and when physical verification has been carried out. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. (a) As informed to us, the company has not given any loan, secured or unsecured to companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (b) to (d) of The Order are not applicable.

(e) As informed to us, the company has not taken any loan, secured or unsecured, from companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (f) & (g) of The Order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that certain items purchased/sold are of special nature for which, as explained, suitable alternatives sources, do not exist for obtaining comparative quotations, taking into consideration the quality, usage and such other factors, there are adequate internal control systems commensurate with the size of the company and nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given, we have neither come across nor have we been informed of any instance of major weaknesses in aforesaid internal control systems.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and having regard to our comments in paragraphs 4 above, and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under with regard to deposits accepted from public. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of the Company's products and are of the opinion that, prime facie, the prescribed records have been made and maintained. We are, however, not required to make a detailed examination of such books and records.

9. (a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues have generally been regularly deposited during the year with appropriate authorities. No undisputed amount payable in respect of the aforesaid statutory dues were outstanding as at last day of the financial year for a period of more than six months from the date they became payable.

(b) In our opinion and according to the information and explanations given to us, there are no dues in respect of Wealth Tax that have not been deposited with appropriate authorities on account of disputes and the dues in respect of Income Tax, Excise duty, Service Tax, Sales Tax, Custom Duty and Cess that have not been deposited with appropriate authorities on account of dispute and the forum where the dispute is pending are as given below:

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

Central Excise 1.69 1995-96 Hon'ble High Court, New Delhi Excise Act Duty

658.08 1999-04 Hon'ble High Court of Punjab & Haryana.

27.19 2004-06 CESTAT, Delhi.

7.57 2000-01 CESTAT, Delhi.

113.07 2005-08 CESTAT, Delhi.

180.10 2008-10 CESTAT, Delhi.

57.14 1994-96 Commissioner of Central Excise,Rohtak

7.63 1994-95 Add. Commissioner of Central Excise,Rohtak

0.39 1996-97 Commissioner (Appeals), Gurgaon

0.98 2008-09 Commissioner (Appeals), Gurgaon

23.73 2009-10 Commissioner (Appeals), Gurgaon

18.02 1995-97 Joint Commissioner of Central Excise, Rohtak

6.53 2005-07 CESTAT, Bangalore

3,309.88 2005-10 Commissioner of Central Excise, Bhubaneshwar

70.50 2009-11 Commissioner of Central Excise, Bhubaneshwar

The Custom Custom 10.00 2008-09 Hon'ble High Court, Delhi Act, 1962 Duty

60.00 2008-09 CESTAT, Delhi

Finance Act Service Tax 745.67 2003-06 CESTAT, Delhi

7.64 2008-10 CESTAT, Delhi

Sales Tax Act Sales Tax 3.00 1993-94 Hon'ble High Court of Punjab & Haryana

65.06 2002-05 Commissioner of Sales Tax Odisha, Cuttack

O VAT 179.57 2005-06, Stay petition before Additional Commissioner 2006-07 & of Sales Tax and Writ Petition before High 2007-08 Court, Cuttack

Entry Tax Entry Tax 22.71 2004-05 Commissioner of Sales Tax Odisha, Cuttack Act, 1999

351.65 2007-08 Hon'ble Supreme Court

79.56 2008-09 Hon'ble Supreme Court

15.76 2009-10 Hon'ble Supreme Court

4,129.01 2010-11 Hon'ble Supreme Court

Income Tax Income Tax 6,103.86 2004-05, Commissioner of Income Tax (Appeals), Delhi Act 2005-06,

2006-07 & 2008-09

517.52 2002-03 & Hon'ble High Court, Delhi 2003-04

10. The company has no accumulated losses at the end of the financial year and it has not incurred cash loss during the year and also in the immediately preceding financial year.

11. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution/banks/ debenture holders, in view of the debt restructuring approved under CDR mechanism as stated in note no.7 of schedule 20 and read together with notes no. 1 and 2 of schedule 4.

12. In our opinion and according to information and explanations given to us, no loans and advances have been granted by the company on the basis of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of Clause 4 (xiii) of The Order are not applicable to the Company.

14. In our opinion, and according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4 (xiv) of The Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. (Read with Note no. 20 of schedule 20)

16. In our opinion and on the basis of information and explanations given to us, the term loans raised during the year by the Company were applied for the purposes for which the loans were obtained where such end use has been stipulated by the lender, however pending utilization during the course of the year the loan fund has been temporarily deployed in mutual funds/bonds/deposited with banks.

17. On the basis of information and explanations given to us, and on the basis of an overall examination of the balance sheet of the Company, no funds raised on short-term basis have been used for long-term investments.

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

19. On the basis of the records made available to us, the Company has created necessary security and charge in respect of debentures outstanding at the year end.

20. The company has not raised any money through pubic issue during the year.

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

For Lodha & Co. For S.S. Kothari Mehta & Co.

Chartered Accountants Chartered Accountants

FRN: 301051E FRN: 000756N

(N.K. Lodha) (Arun K. Tulsian)

Place:New Delhi Partner Partner

Date :27th May, 2011 M. No. 85155 M. No. 89907


Mar 31, 2010

We have audited the attached Balance Sheet of JSL Limited, as at 31st March, 2010 and the Profit & Loss Account and also the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit

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

1) As required by the Companies (Auditors Report) Order, 2003 (as amended) ^erein after called The Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks of the books and records of the company as we considered appropriate, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2) Further to our comments in the Annexure referred to in Paragraph 1 above, we report that:

a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

c) The reports on the accounts of the branch audited by other Auditors have been forwarded to us and have been appropriately dealt with by us in preparing our report;

d) The Balance Sheet, Profit & Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account and with the audited accounts from the branch;

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

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

g) Without qualifying attention is drawn to;

(,) Note no. 24 (C) ® of schedule 20 regarding pending necessary approvals for managerial remuneration as explained in

thesaidnote. (u) Note no. 10 of schedule 20 regarding impact of interest on FCCB and EPS as stated in the said note.

(ill) Note no. 7 (11) of schedule 20 regarding pending confirmations of balances of certain secured loans as stated in the saidnote.

(iv) Note no. 2 (B) of schedule 20 regarding pending export obligation against raw material consumed imported under advance license as stated in the said note

h) 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:

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

(u) In the case of Profit & Loss Account, of the profit of the Company for the year ended on that date; and

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

ANNEXURE TO AUDITORS REPORT

Referred to in Paragraph 1 of our report of even date to the Members of JSL LIMITED on the Financial Statements for the year ended 31st March, 2010.

1. (a) The company has maintained proper records in respect of its fixed assets showing full particulars, including quantitative

details and situation of fixed assets

(b) We have been informed that certain fixed assets of the company have been physically verified by the management according to a phased programme of periodic verification which, in oJ opinion, is reasonable having regard to the size of the company and nature of ffxed assets. As informed, no material discrepancies between book record! and physical inventory have been noticed in respect of the fixed assets physically verified during the year.

(c) As per records and information and explanations given to us, no substantial part of fixed assets has been disposed off during the year.

2. (a) As informed, the inventory of the company at all its locations, except stocks lying with third parties, in transit and part of

the stores and spares, have been physically verified by the management either at the end of the year or after the year end, and in respect of stores and spares, there is perpetual inventory system and a substantial portion of the stocks have been verified during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper record of inventory; in respect of process stock, the records are updated as and when physical verification has been carried out. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. (a) As informed to us, the company has not given any loan, secured or unsecured to companies, firms, or other parties covered

in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (b) to (d) of The Order are not applicable.

(b) As informed to us, the company has not taken any loan, secured or unsecured, from companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (ill) (f) & (g) of The Order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that certain items purchased/sold are of special nature for which, as explained, suitable alternatives sources, do not exist for obtaining comparative quotations, taking into consideration the quality, usage and such other factors, there are adequate internal control systems commensurate with the size of the company and nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given, we have neither come across nor have we been informed of any instance of major weaknesses in aforesaid internal control systems.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the

opinion that the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and having regard to our comments in paragraphs 4 above, and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under with regard to deposits accepted from public. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of the Companys products and are of the opinion that, prime facie, the prescribed records have been made and maintained We are, however, not required to make a detailed examination of such books and records.

9. (a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including Provident

Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues have generally been regularly deposited during the year with appropriate authorities. No undisputed amount payable in respect of the aforesaid statutory dues were outstanding as at last day of the financial year for a period of more than six months from the date they became payable.

(b) In our opinion and according to the information and explanations given to us, there are no dues in respect of Wealth Tax and Custom Duty that have not been deposited with appropriate authorities on account of disputes and the dues in respect of Income Tax, Excise duty, Service Tax, Sales Tax and Cess that have not been deposited with appropriate authorities on account of dispute and the forum where the dispute is pending are as given below:

Name of the statute Nature Amount Period to which Forum where dispute of the (Rs. inthe amount is pending. Dues LAcs) relates Central Excise Act Excise Duty 1.69 1995.96 High Court, New Delhi. 21.69 1994-95 Reference application allowed by CESTAT, Delhi for further appeal in High Court, Delhi. 658.08 1999-2004 High Court of Punjab & Haryana 27.19 2004-06 CESTAT, Delhi. 113.07 2005-08 CESTAT, Delhi. 7.57 2000-01 CESTAT, Delhi. 57.14 1994-96 Commissioner of Central Excise, Rohtak. 7.63 1994-95 Addl. Commissioner of Central Excise, Rohtak 5.99 2007-08 & 2008-09 Commissioner (Appeals), Gurgaon 0.39 1996-97 Commissioner (Appeals), Gurgaon 18.02 1995-97 Joint Commissioner of Central Excise, Rohtak 6,48 2005-07 CESTAT, Banglore 14.38 2004-08 Assistant Commissioner, Vtzag 3,309.88 2005-10 Commissioner of Central Excise, Bhuvanshver Finance Act Service Tax 745.67 2003-06 CESTAT, Delhi 1.99 2007-08 & 2008-09 Commissioner (Appeals), Delhi 9.89 2008-09 Commissioner (Appeals), Gurgaon Sales Tax Act Sales Tax 3.00 1993-94 High Court of Punjab & Haryana 65.06 2002-03, 2003-04 Commissioner of Sales Tax Onssa, Cuttack. & 2004-05 OVAT 179.57 2005-06, 2006-07 Stay petition before Additional Commissioner & 2007-08 of Sales Tax and Writ Petition before High Court, Cuttack ORISED Act, 2004 Cess 320.49 2005-07 Hble Supreme Court Entry Tax Act, 1999 Entry Tax 22.71 2004-05 Commissioner of Sales Tax Onssa, Cuttack. 10.37 2005-06 Commissioner of Commercial Tax Central Zone Cuttack 351.65 2007-08 Hble Supreme Court Income Tax Act Income Tax 2,851.73 2004-05 & 2005-06 Commissioner of Income Tax (Appeals), Delhi. 534.99 2002-03 & 2003-04 High Court, New Delhi

10. The company has no accumulated losses at the end of the financial year and it has not incurred cash loss during the year. However cash loss was incurred m the immediately preceding financial year.

11. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution/banks/ debenture holders, in view of the debt restructuring approved under CDR mechanism as stated in note no. 7 of schedule 20 except redemption/conversion of Foreign Currency Convertible Bonds.

12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the companion the basis of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a mdhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiu) of The Order are not applicable to the Company.

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

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. (Read with Note no. 18 of schedule 20).

16. In our opinion and on the basis of information and explanations given to us, the term loans raised during the year by the Company were applied for the purposes for which the loans were obtained where such end use has been stipulated by the lender, however pending utilization during the course of the year the loan fund has been temporarily deployed in mutual funds/bonds/deposited with banks.

17. On the basis of information and explanations given to us, and on the basis of an overall examination of the balance sheet of the Company, no funds raised on short-term basis have been used for long-term investments.

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

19. On the basis of the records made available to us, the Company has created necessary security and charge in respect of debentures outstanding at the year end.

20. The company has not raised any money through pubic issue during the year.

21. During the course of our examination of the books and records of the company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of material fraud on or by the company! noticed or reported during the year nor we have been informed of such case by the management.



For LODHA & CO. For S.S. KOTHARI MEHTA & CO. Chartered Accountants Chartered Accountants FRN:301051E FRN : 000756N (N.K. LODHA) (ARUN K. TULSIAN) Place: New Delhi Partner Partner Date : 31st May, 2010MNo. 85155 M. No. 89907

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