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Auditor Report of Kanishk Steel Industries Ltd.

Mar 31, 2018

Report on the Ind AS financial statements

We have audited the accompanying Ind AS financial statements of Kanishk Steel Industries Limited (‘the Company’), which comprise the Balance sheet as at 31st March 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement, the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS financial statements

The Company’s Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation and presentation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with Indian Accounting Standards (INDAS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended and other accounting principles generally accepted in India

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS 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 Ind AS financial statements based on our audit.

In conducting our audit, we have taken into account the provisions of the Act, and the Rules made thereunder including 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 thereunderandthe order issued under section 143(11) of the Act.

We conducted our audit of theInd AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether theInd AS financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Ind AS 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 Ind AS 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 Ind AS Financial Statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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 Ind AS and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2018 and its profit, total comprehensive income, its cash flows and changes in equity for the year ended on that date.

Other Matter

The comparative financial information of the company for the year ended 31st march 2017 and the transition date opening balance sheet as at 1st april 2016 included in these Ind AS financial statements are based on the statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditor whose report for the years ended 31st March 2017 and 31st March 2016 dated 29th May 2017 and 30th May 2016, respectively, expressed a unmodified opinion on those standalone financial statements. Adjustments made to the previously issued said financial information prepared in accordance with the Companies (Accounting Standards) Rules, 2006 to comply with Ind AS have been audited by us.

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 ofthe books and records of the company as we considered appropriate and according to the information and explatations given to us, we give in the “Annexure A”, a statement on the matters specified in the paragraph 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 Balance sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement Of Changes In Equity dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the Ind AS financial statements ;

d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with relevant rule issued thereunder.

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

f) With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

g) With respect to other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules, 2014 as amended, in our opinion and to the best of our information and according to the explanations given to us;

i. The Company has disclosed the impact of pending litigations as at March 31, 2018 on its financial position in its Ind AS financial statements- Refer Note 37 of Additional information to the Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses under the applicable law or accounting standards;

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

Annexure A to the Independent Auditor’s Report

(Referred to in paragraph 1 under the heading ‘Report on Other Legal and Regulatory Requirements of our report of even date to the members of Kanishk Steel Industries Limited For the year ended 31st March 2018)

In respect of Fixed Assets

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

(b) As explained to us, all the Property Plant and Equipment have been physically verified by the management at reasonable intervals during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification. In our opinion, this Physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanation given to us and on the basis of our examination of records of the company the title deeds of the immovable properties are held in the name of the company .

(ii) As explained to us, the management has conducted physical verification of Inventories during the year at reasonable intervals. According to the information and explanation given to us no material discrepancy were noticed on physical verification.

(iii) As per the information and explanation given to us and as per the records produced to us the Company has not granted any secured or unsecured loans to companies,firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act’). Accordingly, the provisions of clause 3 (iii) (a) to (c)of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 with respect of loans and investments and providing guarantees and securities as applicable.

(v) According to the information and explanation given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the act and the Companies(Acceptance of Deposits) Rule,2014as amended would

(vi) apply. Accordingly, paragraph 3(v) is not applicable to the company.

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

(vii) (a) According to the information and explanation given to us,in respect of statutory dues:

The Company has generally beenregular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess, Goods and Service Tax and other material statutory dues with the appropriate authorities. There wereno undisputed statutory dues as at 31st March 2018 for a period exceeding six months from the date they become payable.

(b) According to the information and explanations given to us, there are no material undisputeddues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty, vat, cess, GST and other material statutory dues as applicable, which have not been deposited with the appropriate authorities on account of any dispute. However, according to the information and explanations given to us, the following dues have not been deposited by the Company on account of disputes as at 31 March 2018 (also refer Note No. 37 of Additional information to the Ind AS financial statements).

Statute Name

Nature of dues

Amount in Rs.

Forum where dispute is pending

Central Excise Law(SCN No.2268/95 dated 25.07.1995)

Dispute relating to deemed Credit

Rs.2,34,094/-

Commissioner of Central Excise (Appeals) Chennai.

Central Excise Law

Dispute relating to re-fixation of Annual capacity of erstwhile OP Steels Limited

Rs.35,66,000 Plus equal amount of penalty

CESTAT,

Chennai.

Central Excise Law (SCN No.2/06 dt 17.1.2006)

Dispute relating to differential duty on depot sales.

Rs.52,38,000 (total demand plus interest and penalty Rs.87,25,000/- and Rs.34,87,000/-already paid)

Honb''le High Court of Madras.

Central Excise Law

Dispute relating to re-fixation of Annual capacity

Rs.9,00,000 Plus equal amount of penalty plus interest thereon.

Honb''le High Court of Madras.

Central Excise Law

Disputerelating to Central Excise duty

Rs.69,06,945 plus equal amount of penalty plus interest thereon Rs.500000 fine (total demand Rs.19,325,930/- and Rs.1,36,45,721/-paid there-against)

CESTAT, Chennai

TNVAT

Dispute relating to Input Tax Credit

Rs 2,56,35,950/plus penalty of Rs.17,68,920/- plus interest thereon of Rs. 17,91,031/-

Commercial Tax Officer, Chennai / Honb''le High Court of Madras.

Income tax Act ,1961

Income Tax

1,27,260

Assessing Officer

Income tax Act ,1961

TDS

2,88,962

Assessing Officer

(viii) In our opinion and according to the information and explanations given to us, as at the reporting date, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and dues to debenture holders. The Company has not taken any loans from the government.

(ix) The company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or Term Loan during the year. Hence reporting under clause (ix) of the CARO, 2016 are not applicable.

(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company by its officers oremployees has been noticed or reported during the year.

(xi) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

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

(xiii) In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 188 and 177 of the Companies Act, 2013,where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the Ind AS financial.

(xiv) Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company.

(xvi) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company.

“Annexure B” to the Independent Auditor’s Report

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

We have audited the internal financial controls over financial reporting of Kanishk Steel Industries Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Ind AS 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.

Auditors’ 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. 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 Ind AS 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 Ind AS 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 Ind AS 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 Ind AS 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, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Puja Rathi & Associates

Chartered Accountants

FRN 014457S

Place: Chennai Puja Rathi,FCA

Date: 30-05-2018 Propreitor

Membership No.064246


Mar 31, 2015

We have audited the accompanying financial statements of Kanishk Steel Industries Limited ('the Company'), which comprise the Balance sheet as at 31 March 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation of these 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 judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2015 and its Profit and its Cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

2. As required by Section 143 (3) of the Act, we report , to the extent applicable, that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

c) The Balance sheet, the statement of profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account.

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

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

f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us.

(i) The Company has, in accordance with the generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 27(ii) of Additional information to the financial statements;

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses under the applicable law or accounting standards.

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

Annexure to the Independent Auditors' Report

(Referred to under 'Report on Other Legal and Regulatory Requirements' section of our Independent Auditors' Report of even date on the financial statements of Kanishk Steel Industries Limited for the year ended 31 March 2015).

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

(b) As explained to us, all the Fixed Assets have been physically verified by the management at reasonable intervals during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(ii) (a) Inventories have been physically verified during the year by the management at the close of the year.

(b) In our opinion and according to the information and explanation give 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 nature of its business.

(c) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification between the physical stock and book records which were not material having regard to the size of the company and nature of its business have been properly dealt with in the books of account.

As per the information and explanation given to us and as per the records produced

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

(iv) In our opinion and according to the information and explanations given to us, there is generally an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of Inventory and fixed assets and for the sale of goods and services. During the course of the audit, we have not observed any continuing failure to correct major weaknesses in such internal control system.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the company in respect of the products pursuant to the rule made by the Central Government of India regarding the maintenance of cost records and we are of the opinion that, prima facie, the prescribed account and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other statutory dues with the appropriate authorities ,wherever applicable and no dues are pending for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, there are no material dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty, vat, cess and other material statutory dues as applicable, which have not been deposited with the appropriate authorities on account of any dispute. However, according to the information and explanations given to us, the following dues of Excise Duty have not been deposited by the Company on account of disputes (also refer point no. 27 (ii) of Additional information to the Financial statements).

Statute Name Nature of dues Amount.

Central Excise Dispute relating Rs.2,34,094/- Law(SCN to deemed Credit No.2268/95 dated 25.07.1995)

Central Excise Law Dispute relating Rs. 35,66,000/- Plus to refixation of equal amount of Annual capacity penalty of erstwhile OP Steels Limited

Central Excise Law Dispute relating Rs. 52,38,000/- (SCN No.2/06 dt to differential (total demand plus 17.1.2006) duty on depot interest and sales. penalty Rs.87,25,000/- and Rs.34,87,000/- already paid)

Central Excise Law Dispute relating Rs. 9,00,000/- Plus to refixation of equal amount of Annual capacity penalty plus Interest thereon.

Central Excise Law Dispute relating Rs. 69,06,945/- plus to Central Excise equal amount of duty penalty plus interest thereon Rs.500000/-fine (total demand Rs.19,325,930/-and Rs.1,36,45,721/- paid there-against)

Forum where Statute Name dispute is pending

Central Excise Commissioner Law(SCN of Central No.2268/95 dated Excise (Appeals) 25.07.1995) Chennai.

Central Excise Honb'le High Court of Madras.

Central Excise Honb'le High (SCN No.2/06 Court of Madras. 17.1.2006)

Central Excise Honb'le High

Central Excise Law CESTAT,Chennai

(c) The amounts required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made thereunder, have been transferred to such fund within time.

(viii) The Company has no accumulated losses at the end of the financial year and has not incurred cash losses during the financial year ended on 31.03.2015 and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company did not have any outstanding dues to financial institutions or debenture holders during the year.

(x) 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 the terms and conditions whereof are prejudicial to the interest of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

To the best of our knowledge and belief, and according to the information and

(xii) explanations given to us, and considering the size and nature of the Company's operations, no fraud of material significance on the Company or no fraud by the Company has been noticed or reported during the year.

For CHATURVEDI & COMPANY CHARTERED ACCOUNTANTS FRN 302137E

S Ganesan,FCA PLACE: Chennai PARTNER DATE: 30-05-2015. Membership No. 217119


Mar 31, 2014

We have audited the accompanying financial statements of Kanishk Steel Industries Limited, which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material 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 auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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 the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

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

We draw attention to

Note No. 29 to the financial statement relating to managerial charged to Statement of profit and loss of the current year. The excess of Rs. 6,00,000 is subject to approval of the Central Government and Shareholders of the company.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, issued by the

Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the

Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

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

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

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

d) in our opinion, the balance sheet, statement of profit and loss and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and

e) On the basis of the written representations received from the directors as on March 31, 2013, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of Section 274(1)(g) of the Act.

Annexure to Independent Auditors'' Report

The Annexure referred to in our report to the members of Kanishk Steel Industries Limited (the Company) for the year ended 31st March 2014, we report that:

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

b) The Fixed Assets have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

c) The Company has not disposed of substantial part of the Fixed Assets during the year which could affect the going concern status of the Company.

ii) a) Inventories have been physically verified during the year by the management at reasonable intervals.

b) In our opinion and according to the information and explanation 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 nature of its business.

c) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification between the physical stock and book records which were not material having regard to the size of the company and nature of its business have been properly dealt with in the books of account.

iii) a) As per the information and explanation given to us and as per the records produced to us, the company has not granted any secured / unsecured loans to company covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly paragraphs 4(iii) (b) to (g) not applicable.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in the internal controls system.

v) a) We are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register maintained under the said section; b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposit from the public.

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

viii) We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the rule made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956, and are of the opinion that, prima facie, the prescribed account and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

ix) a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities, wherever applicable and no dues are pending for a period of more than six months from the date they become payable.

b) According to the information and explanations given to us and the records of the Company, there were no dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute except as follows: (also refer Note:No: 28 (iii), Additional Information to the Financial Statements)

Statute Name Nature of dues Amount in Forum where dispute Rs. is pending

Central Excise Law Dispute relating to 2,34,094 Commissioner of (SCN No. 2268/95 deemed Credit Central Excise dated 25.07.1995 (Appeals) Chennai.

Central Excise Law Dispute relating to 35,66,000 Honb''le High Court refixation of Annual Plus equal of Madras capacity of amount erstwhile OP Steels penalty Limited of

Central Excise Law Dispute relating to 52,38,000 Honb''le High Court (SCN No. 2/06 dt differential duty on of Madras 17.1.2006) depot sales.

Central Excise Law Dispute relating to 9,00,000 Honb''le High Court refixation of Plus equal of Madras Annual capacity amount of penalty plus Interest thereon.

Statute Name Nature of dues Amount in Forum where Rs. dispute is pending Central Excise Law Dispute relating 69,06,945 plus CESTAT, Chennai Central Excise equal amount duty of penalty plus interest thereon Rs.500000 fine (total demand Rs.19,325,930/- and Rs.1,36,45,721/- paid there-against)

x) The Company has no accumulated losses. The Company has also not incurred cash losses during this financial year and the immediately preceding financial year.

xi) The company has not defaulted in repayment of loans availed from Banks. The company has no borrowings from financial institution and has not issued debentures.

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

xiii) The Company is not a chitfund, nidhi, mutual benefit fund or society and therefore the requirements pertaining to such class of companies is not applicable.

xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. The Investments in shares has been held by the company in its own name.

xv) 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 Bank or Financial Institutions the terms and conditions whereof are prejudicial to the interest of the Company.

xvi) The company did not have any term loan outstanding during the year.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, we are of the opinion that there are no funds raised on short-term basis which have been used for long term investment by the Company.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) The Company has not issued any debentures during the year.

xx) The company has not raised any money by way of public issue during the year.

xxi) Based on the audit procedures performed and the information and given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For CHATURVEDI & COMPANY CHARTERED ACCOUNTANTS FRN 302137E

PLACE : Chennai S. GANESAN DATE: 28th May, 2014 Partner (Membership No. 217119)


Mar 31, 2010

We have audited the attached Balance Sheet of KANISHK STEEL INDUSTRIES LIMITED (the Company) as at 31st March 2010 and also the Proft & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These fnancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fnancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) order, 2003, (as amended) issued by the Govt. of India in terms of sub-section (4A) of Sec.227 of the Companies Act, 1956, we report on the matters specifed in paragraphs 4 and 5 of the said order to the extent applicable.

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

(b) The Fixed Assets have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verifcation.

(c ) The Company has not disposed off substantial part of the Fixed Assets during the year which could affect the going concern status of the Company.

(ii) (a) Inventories have been physically verifed during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanation give to us, the procedures of physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c ) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verifcation between the physical stock and book records which were not material having regard to the size of the company and nature of its business have been properly dealt with in the books of account.

(iii) During the year, the Company has given unsecured loan aggregating to Rs.10.00 crores a company. At the year end, the loans granted to company aggregates to Rs.10.01 crores. (Including Interest) The maximum balance outstanding during the year is Rs. 10.01 crores.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been as per stipulations.

(d) There are no overdue amounts and hence the provisions of sub-clause (d) of clause 4(iii) of CARo are not applicable to the Company.

(e) The Company has not taken any loans, secured or unsecured from companies, frms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of sub-clauses (e), (f) and (g) of clause 4(iii) of CARo are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in the internal controls system.

(v) (a) We are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register maintained under the said section;

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

(vi) The Company has not accepted any deposit from the public.

(vii) In our opinion, the company’s in-house internal audit system is commensurate with the size and nature of its business.

(viii) The Central Government under Section 209(1)(d) of the Companies Act, 1956 has not prescribed the maintenance of cost records in respect of the activities of the company.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities, wherever applicable and no dues are pending for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us and the records of the Company, there were no dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute except as follows: (also refer Note:No:4 of Schedule N, Notes to the Accounts).

Statute Name Nature of dues Amount Forum where dispute is

Rs.in lacs pending

Central Excise Law Dispute relating to deemed Commissioner of Central

(SCN no. 2268/95 Credit 2.34 Excise (Appeals) Chennai.

dated 25.07.1995

35.66 Dispute relating to refxation of

Central Excise Law Plus equal

Annual capacity of erstwhile oP Honb le High Court of Madras.

amount of Steels Limited

penalty

Central Excise Law Dispute relating to differential ’

(SCN No. 2/06 dt 52.38 Honb le High Court of Madras.

duty on depot sales. 17.1.2006)



(x) The Company has no accumulated losses. The Company has also not incurred cash losses during this financial year and the immediately preceding fnancial year.

(xi) The company has not defaulted in repayment of loans availed from Banks. The company has no borrowings from financial institution and has not issued debentures.

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

(xiii) The Company is not a chitfund, nidhi, mutual benefit fund or society and therefore the requirements pertaining to such class of companies is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. The Investments in shares has been held by the company in its own name

(xv) 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 Bank or Financial Institutions the terms and conditions whereof are prejudicial to the interest of the Company.

(xvi) on the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the company during the year were applied for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, we are of the opinion that there are no funds raised on short-term basis which have been used for long term investment by the Company.

(xviii) The Company has not made any preferential allotment of shares during the year.

(xix) The Company has not issued any debentures during the year.

(xx) The company has not raised any money by way of public issue during the year.

(xxi) Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit. Further to our comments 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.

c) The Balance Sheet, Proft and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Proft and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

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

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with and subject to notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009 and

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

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

For chaturvedi & comPany

CHARTERED ACCOUNTANTS

PLACE : Chennai

DATE: 29th May 2010 (S.Ganesan)

PARTNER.

Membership No.217119

FIRM REG. No. 302137E


Mar 31, 2009

We have audited the attached Balance Sheet of KANISHK STEEL INDUSTRIES LIMITED (the Company) as at 31st March 2009 and also the Profit & Loss Account and the Cash Flow Statement 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.

As required by the Companies (Auditors Report) Order, 2003, (as amended) issued by the Govt, of India in terms of sub-section (4A) of Sec.227 of the Companies Act, 1956, we report on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable.

(i) (a) The Company has maintained proper records showing full particulars, including

quantitative details and situation of Fixed Assets.

(b) The Fixed Assets have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

(c ) The Company has not disposed off substantial part of the Fixed Assets during the year which could affect the going concern status of the Company.

(ii) (a) Inventories have been physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanation give 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 nature of its business.

(c ) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification between the physical stock and book records which were not material having regard to the size of the company and nature of its business have been properly dealt with in the books of account.

(iii) (a) The Company has not granted or taken any loan secured or unsecured to/from to companies, firms or other parties covered in the register maintained under section 301

(g) of the Companies Act, 1956. Accordingly clauses 4 (iii) (b) to (g) of the Order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there are

adequate internal control systems commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in the internal controls system.

(v) (a) We are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register maintained under the said section;

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

(vi) The Company has not accepted any deposit from the public.

(vii) In our opinion, the companys in-house internal audit system is commensurate with the size and nature of its business.

(viii) The Central Government under Section 209(1 )(d) of the Companies Act, 1956 has not prescribed the maintenance of cost records in respect of the activities of the company.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities, wherever applicable and no dues are pending for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us and the records of the Company, there were no dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute except as follows: (also refer Note:No:4 of Schedule N, Notes to the Accounts).

Forum where dispute is Statute Name Nature of dues Amount pending Rs.in lacs Central Excise Law Commissioner of Central Dispute relating to deemed (SCN no. 2268/95 Credit 2.34 Excise (Appeals) Chennai. dated 25.07.1995

Dispute relating to 35.66 Central Excise refixation of Plus equal Law Annual capacity of amount of Honb le High Court Penality of Madras. erstwhile OP Steels Limited Commissioner of Central Central Excise Dispute relating to Law valuation of 0.11 Excise (Appeals) Chennai. Sponge Iron Central Excise Law Dispute re ating to differential SCN No. 2/06 dt 52.38 Honble High Court of Madras. duty on depot sales. 17.1.2006) 17.99 Central Excise Plus equal commissioner of Income Tax Law Dispute relating to Cenvat Credit amount of (Appeals), Chennai penalty

(x) The Company has no accumulated losses. The Company has also not incurred cash losses during this financial year and the immediately preceding financial year.

(xi) The company has not defaulted in repayment of loans availed from Banks. The company has no borrowings from financial institution and has not issued debentures.

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

(xiii) The Company is not a chitfund, nidhi, mutual benefit fund or society and therefore the requirements pertaining to such class of companies is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. The Investments in shares has been held by the company in its own name.

(xv) 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 Bank or Financial Institutions the terms and conditions whereof are prejudicial to the interest of the Company.

(xvi) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the company during the year were applied for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, we are of the opinion that there are no funds raised on short-term basis which have been used for long term investment by the Company.

(xviii) The Company has not made any preferential allotment of shares during the year.

(xix) The Company has not issued any debentures during the year.

(xx) The company has not raised any money by way of public issue during the year.

(xxi) Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

Further to our comments 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.

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

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

e) On the basis of the written representations received from the directors as on 31st March 2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2009 from being appointed as a Director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with and subject to notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009 and

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

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

For CHATURVEDI & COMPANY CHARTERED ACCOUNTANTS

S GANESAN PARTNER (Membership No: 217119)

Place: Chennai

Date : 30th June 2009


Mar 31, 2000

We have audited the attached Balance Sheet of KANISHK STEEL INDUSTRIES LIMITED as at 31st March, 2000 and the Profit and Loss Account for the year ended on that date annexed thereto and report that:

1. As required by the Manufacturing and Other Companies (Auditors Report) Order 1988 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956, we report on the matters specified in paragraphs 4 and 5 of the said order.

i. The Company has maintained proper records showing full particulars,including quantitative details and situation of Fixed Assets. The Fixed Assets have been physically verified by the management during the year. No material discrepancies have been noticed on such verification.

ii. None of the Fixed Assets have been revalued during the year.

iii. The Stock of raw materials, stores and spares and finished goods have been physically verified during the year by the Management.

iv. In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

v. The discrepancies noticed on physical verification between the physical stocks and the book records were not material having regard to the size of the company and nature of its business and are properly dealt with in the books of account, after completion of review by the Management.

vi. On the basis of our examination of stock records, we are of the opinion that the valuation of stocks of finished goods, stores, spare parts and raw materials is fair and proper in accordance with the normally accepted accounting principles and on the same basis as in the preceding year.

vii. The Company has not taken any loans, secured or unsecured from firms, companies or other parties to be listed in the register maintained under section 301 and/or from the companies under the same management as defined under sub-section (1-B) of Section 370 of the Companies Act, 1956, where the rates of interest and other terms and conditions of such loans are prima facie prejudicial to the interest of the company.

viii. No loans and advances in the nature of loans have been given to firms, companies or other parties listed in the register maintained Under Section 301 of the Companies Act, during the year and or to the companies under the same management as defined under sub-section (1-B) of Section 370 of the Companies Act, 1956 where the rates of interest and other terms and conditions are prima facie prejudicial to the interest of the company.

ix. Loans & Advances in the nature of interest free loans to employees are repaid as stipulated wherever such stipulation exists.

x. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of raw materials, stores including components, plant and machinery, equipments and other assets and with regard to the sale of goods.

xi. In our opinion and according to the information and explanations given to us, the transactions of purchase of goods, materials and services and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained U/S.301 of the Companies Act, 1956 and aggregating during the year to Rs.50,000/- or more in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods, materials or services where such market prices are available or the prices at which transactions for similar goods or materials have been made with other parties.

xii. As explained to us, the company has a regular procedure for the determination of unserviceable or damaged stores and finished goods. Adequate provision has been made in the accounts for the loss arising on the items so determined.

xiii. The Company has not made any invitation for or accepted deposits from the public.

xiv. In our opinion, reasonable records have been maintained by the Company for the sale and disposal of scrap. The Company has no by-products.

xv. In our opinion, the Companys present Internal audit system is commensurate with the size and nature of its business.

xvi. The Central Government under Section 209(1)(d) of the Companies Act, 1956 has not prescribed the maintenance of cost records in respect of the activities of the company.

xvii. According to the records of the Company Provident Fund dues and Employees State Insurance dues have been regularly deposited during the year with the appropriate authorities.

xviii. According to the information and explanations given to us, there were no un-disputed amount payable in respect of Income-Tax, Wealth-Tax, Sales-Tax, Customs Duty and Excise Duty which have remained outstanding as at 31st March, 2000 for a period of more than six months from the date they became payable.

xix. No instance of personal expenses charged to revenue account has come to our notice, other than those payable under contractual obligations or in accordance with generally accepted business practices.

xx. The Company is not a Sick Industrial Company within the meaning of clause (o) of the Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

xxi. In respect of trading activities, according to the information and explanations given to us, there are no damaged stocks.

Further to our comments as above, we state 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 it appears from our examination of the books.

c) The Balance Sheet and the Profit and Loss Account referred to in this report are in agreement with the books of account produced before us.

d) In our opinion, the Profit and Loss Account and Balance Sheet complies with the mandatory accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and the Profit and Loss Account read together with and subject to notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2000 and

ii) in the case of the Profit and Loss Account, of the PROFIT of the Company for the period ended on that date.

for CHATURVEDI & COMPANY,

CHARTERED ACCOUNTANTS, PUCE : CHENNAI DATE : 20th June 2000. (K.R.RAJAGOPALAKRISHNAN)

PARTNER.

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