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Auditor Report of Marmagoa Steel Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of MARMAGOA STEEL LIMITED ("the Company"), which comprise the Balance Sheet asDat 31st March 2015, the Statement of Profit and Loss, and the Cash Flow Statement for the year ended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements:

2. The management and Board of Directors of the Company are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ('the Act') with respect to the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Principles generally accepted in India, including the Accounting Standards specified underSection 133 of the Act, read with rule 7 of the Companies (Accounts) Rules 2014. This responsibility 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; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility:

3. 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.

4. 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 financialcontrol relevant to the Company's preparation of the financial statements, that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Management and Board of Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion:

6. We have been informed by the company that the production activities have been suspended since June 2013 for want of Working Capital Support from the Banks, consequent upon the company's loans which have been classified as NPA by both the Bank of Maharashtra and the Union Bank of India. As a result, there is no generation of cash flows even to meet the day to day expenses. However,pending finalization of rehabilitation plan the accounts have been prepared on a going concern basis.

Subject to this, in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read together with the Notes thereon, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2015.

ii) In the case of the Statement of Profit & Loss, of the Losses for the year ended 31st March 2015 and

iii) In the case of the Cash Flow Statement, of the Cash Flows during the year ended that date in the functioning of the Company.

Report on other Legal and Regulatory requirements:

7. 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 below a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(b) As represented to us in writing, the company has made a policy of verifying physically, the fixed assets in a block of two years. During the period, there has been no physical verification of the fixed assets.

ii. (a) We have been informed thatin the absence of production, no physicalverification has been done of inventory. Under these circumstances, periodical physical verification was not considered necessary.

(b) The procedures of physical verification of inventory followed by the management are reasonable but not adequate in relation to the size of the Company and the nature of its business, since the inventory was not completely verified physically.

(c) In our opinion and according to the information and as per the explanations given to us, the Company is maintaining proper records of inventory. The actual stock of physical verification was done only after the shutdown of manufacturing operation in May 2013. In the absence of physical verification of items of inventory, the question of dealing with the discrepancy in the book stock does not arise.

iii. (a) The company had granted during the year 2012-13 an interest free loan to a company covered under Section 189 of the Companies Act. No such loans were granted to any firm or other party covered under Section 189 of the Companies Act. Balance at the end of the year was Rs. 52.52 Lakhs.

(b) No interest has been charged to the borrower. We have been informed that the said advance was made to the holding company of Marmagoa Steel Limited, out of the interest free loan received from another company with which there were no terms and conditions attached regarding repayment of the principal.

(c) Since no specific terms were attached regarding repayment of the principal, the question of overdue loans does not arise.

iv. In our opinion and according to the information and as per the explanations given to us, there is an adequate internal control system in the company commensurate with its size and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. There were no services rendered by the company. During the course of our audit, we did not come across any continuing failure to correct any major weaknesses in the internal control system prevailing in the Company.

v. In our opinion and according to the information and as per the explanations given to us, the Company has neither accepted deposits from the public during the year under consideration nor has the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal have passed any orders against the Company for any contravention under Sections 73 & 74 or any other provisions of the Companies Act.

vi. The Central Government has prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, for the products of the Company. We have broadly reviewed the books of account maintained by the Company pursuant to the order made under the said Section and are of the opinion that prima-facie; the Company has maintained the prescribed accounts and records.

vii(a) In our opinion and according to the information and as per the explanations given to us, during the year, the Company was not regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, VAT, Income Tax and Service Tax. However, in the payment of Customs duty, Excise duty, cess and Wealth tax the company was regular in depositing undisputed dues with the appropriate authorities. As on 31st March 2015, a sum of Rs. 840.57 lakhs of tax was outstanding for a period of more than six months from the date they became payable comprising of the following -

(b) Statutory Dues Rs. In Forum where Lakhs Dispute pending

EPF - Employers PF Contribution (MSL) 11.37 commissioner

ESI - Employers Contribution (MSL) 4.30

PF Contribution PF (Contractors) 1.57 commissioner

Service Tax 30.75

Income Tax - TDS 63.60 Entry Tax 5.97

Central Sales Tax 430.61

VAT of various states 292.40

Total 840.57

(c ) There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise.

viii. The company has accumulated losses at the end of the year which are more than 50% of its net worth. The Company has incurred cash losses during the current financial year and during the immediately preceding financial year.

ix. In our opinion and according to the information and as per the explanations given to us, the Company has defaulted in the repayment of dues to their Bankers viz., Bank of Maharashtra, Margao Branch and Union Bank of India, Panjim Branch who have invoked the provisions of SARFAESI Act, 2002 and also assigned the respective debts in favour of Asset Reconstruction Companies; Pridhvi Asset Reconstruction and Securitisation Company Ltd., Hyderabad and Asset Reconstruction Company (India) Ltd. respectively. We have been informed that negotiations are in progress with both the ARCs for arriving at a negotiated settlement of dues.

x. In our opinion and to the best of our information and as per the explanations given to us and as per the records of the Company, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions.

xi. In our opinion and to the best of our information and as per the records of the Company, no Term Loans were borrowed during the period under consideration for any specific purpose.

xii. During the course of our audit, we have neither come across any frauds on or by the Company nor has the same been reported to us by the management.

8. As required by section 143(3) of the Act, we further report that:

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

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

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

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

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

f) In our opinion and to the best of our information and according to the explanations given to us, we report as under 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:

i. The pending litigations which would impact the financial position of the Company is given at Note 32 of the Notes to financial statements

ii. The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise

iii. There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise.

For N.D.HEGDE & ASSOCIATES, Chartered Accountants (ICAI Firm Reg.No.103616W)

NAGESH D. HEGDE Membership No.: 041345 Place: Curtorim Date:17.07.2015


Mar 31, 2014

1. We have audited the accompanying financial statements of "MARMAGOA STEEL LIMITED"'' ("the Company"), which comprise the Balance Sheet as at 31st March 2014, the Statement of Profit & Loss, and the 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:

2. The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in Section 133 of the Companies Act, 2013("the Act") and in accordance with the accounting principles generally accepted in India. 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:

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

4. 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 the 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 controls. An audit also includes evaluating the appropriateness of the 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.

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

Opinion:

6. We have been informed by the company that the production activities have been suspended since June 2013 for want of Working Capital Support from the Banks, consequent upon the company''s loans which have been classified as NPA by both the Bank of Maharashtra and the Union Bank of India. As a result, there is no generation of cash flows even to meet the day to day expenses. However, pending finalization of rehabilitation plan the accounts have been prepared on a going concern basis Subject to this, in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read together with the Notes thereon, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

ii) In the case of the Statement of Profit & Loss, of the Losses for the year ended 31st March 2014 and

iii) In the case of the Cash Flow Statement, of the Cash Flows during the year ended that date in the functioning of the Company.

Report on other Legal and Regulatory requirements:

7. As required by Section 143(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 of account.

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

d) In our opinion, the Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 133 of The Companies Act, 2013 to the extent applicable to the Company as stated in para (1) of the Notes on the Financial Statements.

e) On the basis of the written representations received from four of the Directors, the said Directors are not disqualified as on 31st March 2014 from being appointed as Directors in terms of Section 164 (2) of the Act.

8) As required by the Companies (Auditors'' Report) Order 2003, issued by the Ministry of Finance (Department of Company Affairs) in terms of Section 143 (11) of the Companies Act 2013, we report on the matters specified in paragraphs 4 & 5 of the said Order to the extent applicable:

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

(b) As represented to us in writing, the company has made a policy of verifying physically, the fixed assets in a block of two years. During the period, there has been no physical verification of the fixed assets.

(c) No substantial part of the fixed assets of the company was sold during the year.

ii. (a) We have been informed that Physical Verification of only Billets has been made during the year. Thereafter, in the absence of production, no verification has been done of inventory. Under these circumstances, periodical physical verification was not considered necessary.

(b) The procedures of physical verification of inventory followed by the management are reasonable but not adequate in relation to the size of the Company and the nature of its business, since the inventory was not completely verified physically other than Billets.

(c) In our opinion and according to the information and as per the explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records as far as Billets were concerned, have been properly dealt with in the books of account of the company. We have been informed that the stock of Billets as on 30th September 2013 as per the Books was 599.141 MT whereas on physical verification the actual stock of Billets was 80 MT bringing the difference to 519.141 MT. It has been represented to us that from the beginning of production of Billets, the same was accounted on the basis of theoretical calculation and the dispatches of Billets for Rolling/Sale was accounted on actual weighment basis at the weighbridge. The actual stock of physical verification was done only after the shutdown of manufacturing operation in May 2013. In the absence of physical verification of other items of inventory, the question of dealing with the discrepancy in the book stock does not arise.

iii. (a) The company had granted during the immediately preceding year an interest free loan to a company covered under Section 189 of the Companies Act. No such loans were granted to any firm or other party covered under Section 189 of the Companies Act. Balance at the end of the year was Rs. 52.52 Lakhs.

(b) No interest has been charged to the borrower. We have been informed that the said advance was made to the holding company of Marmagoa Steel Limited, out of the interest free loan received from another company with which there were no terms and conditions attached regarding repayment of the principal. Under these circumstances, in our opinion, the transaction is prima facie not prejudicial to the interest of the company.

(c) The company has not taken during the year any loans from companies, firms or other parties covered in the register maintained under section 189 of the Companies Act.

(d) We have been informed that there were no specific terms and conditions attached to the loans taken in earlier years including repayment. The rate of interest charged on such loans is not prima-facie prejudicial to the interest of the company.

(e) In the absence of specific terms and conditions for repayment of the loan, we are informed; the principal has not been paid/partially paid. Interest has not been charged during the year under consideration.

iv. In our opinion and according to the information and as per the explanations given to us, there is an adequate internal control system in the company commensurate with its size and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. There were no services rendered by the company. During the course of our audit, we did not come across any continuing failure to correct any major weaknesses in the internal control system prevailing in the Company.

v. To the best of our knowledge and belief and according to our information and as per the explanations given to us, there were no contracts or arrangements entered into by the Company that needed to be entered in the register maintained under Section 189 of the Companies Act.

vi. In our opinion and according to the information and as per the explanations given to us, the Company has neither accepted deposits from the public during the year under consideration nor has the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal have passed any orders against the Company for any contravention under Sections 73 & 74 or any other provisions of the Companies Act.

vii. During the year under consideration, the company did not have an Internal Audit System.

viii. The Central Government has prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, for the products of the Company. We have broadly reviewed the books of account maintained by the Company pursuant to the order made under the said Section and are of the opinion that prima-facie; the Company has maintained the prescribed accounts and records.

ix In our opinion and according to the information and as per the explanations given to us, during the year, the Company was not regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, VAT, Income Tax and Service Tax. However, in the payment of Customs duty, Excise duty, cess and Wealth tax the company was regular in depositing undisputed dues with the appropriate authorities. As on 31st March 2014, a sum of Rs. 1,558.98 lakhs of tax was outstanding for a period of more than six months from the date they became payable comprising of the following -

x. The company has accumulated losses at the end of the year which are more than 50% of its net worth. The Company has incurred cash losses during the current financial year and during the immediately preceding financial year.

xi. In our opinion and according to the information and as per the explanations given to us, the Company has defaulted in the repayment of dues in the case of 69 Letters of Credit and Bank Guarantees which had devolved on the Company / invoked. The date of default, the name of the Bank, the amount of the Letter of Credit / Bank Guarantee and the number of days of delay up to 31st March 2014 are given here below.

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

xiii. In our opinion and according to the information and as per the explanations given to us, the provisions of any special statutes applicable to chit funds are not applicable to the Company.

xiv. In our opinion and according to the information and as per the explanations given to us, the Company is not dealing or trading in Shares, Securities, Debentures and other Investments.

xv. In our opinion and to the best of our information and as per the explanations given to us and as per the records of the Company, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions.

xvi. In our opinion and to the best of our information and as per the records of the Company, no Term Loans were borrowed during the period under consideration for any specific purpose.

xvii In our opinion and to the best of our information and as per the records of the Company, no funds have been raised on short-term basis during the period under consideration.

xviii. During the period under consideration, the Company did not allot shares to any parties or companies covered in the register maintained under Section 189 of the companies Act.

xvix. During the period, the Company did not issue any debentures.

xx. The Company had not made any Public issue of Shares during the period under consideration.

xxi. During the course of our audit, we have neither come across any frauds on or by the Company nor has the same been reported to us by the management.

For N.D.HEGDE & ASSOCIATES, CHARTERED ACCOUNTANTS ICAI Firm Reg.No.103616W

Sd/- NAGESH D. HEGDE PROPRIETOR MEMBERSHIP NO.41345 Place : Curtorim Date : 06.09.2014


Mar 31, 2013

1. We have audited the accompanying financial statements of "MARMAGOA STEEL LIMITED"'' ("the Company"), which comprise the Balance Sheet as at 31st March 2013, the Statement of Profit & Loss, the 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:

2. The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956("the Act") and in accordance with the accounting principles generally accepted in India. 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:

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

4. 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 judgement, 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 the 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 controls. An audit also includes evaluating the appropriateness of the 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.

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

Opinion:

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read together with the Notes thereon, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

ii) In the case of the Statement of Profit & Loss, of the Losses for the year ended 31st March 2013 and

iii) In the case of the Cash Flow Statement, of the Cash Flows during the year ended that date in the functioning of the Company.

Report on other Legal and Regulatory requirements:

7. 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 of account.

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

(d) In our opinion, the Balance Sheet, the Statement of Profit & Loss and the 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 to the extent applicable to the Company as stated in para (1) of the Notes on the Financial Statements.

(e) On the basis of the written representations received from three Directors, including the Managing Director, the said Directors are not disqualified as on 31st March 2013 from being appointed as Directors in terms of Section 274(1)(g) of the Act. No such representations from the rest of the Directors have been produced for our perusal. Under these circumstances, we are unable to state as to whether they were or were not disqualified as on 31st March 2013 from being appointed as Directors in terms of Section 274(1)(g) of the Act.

8) As required by the Companies (Auditors'' Report) Order 2003, issued by the Ministry of Finance (Department of Company Affairs) in terms of Section 227 (4A) of the Companies Act 1956, we report on the matters specified in paragraphs 4 & 5 of the said Order to the extent applicable:

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

(b) As represented to us in writing, the company has made a policy of verifying physically, the fixed assets in a block of two years. Accordingly, a part of the fixed assets have been physically verified during the year by the Internal Auditors jointly with the management and no material discrepancies have been noticed on such verification.

(c) No substantial part of the fixed assets of the company was sold during the year.

ii. (a) We have been informed that Physical Verification of inventory has been made by the management only once during the year jointly with the Internal Auditors. Relevant records have been produced for our perusal in support of such claim. To comment as to whether such physical verification has been made at reasonable intervals, there should be at least two such physical verifications. In the absence of the same, we are of the opinion that the number of such physical verifications are inadequate.

(b) The procedures of physical verification of inventory followed by the management are reasonable but not 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 as per the explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size and operations of the Company and the nature of its business and the same have been properly dealt with in the books of account of the Company.

iii. (a) The company has granted during the year an interest free loan to a company, covered in the register maintained under Section 301 of the Companies Act. No such loans were given to any firms or other parties covered under Section 301 of the Companies Act. The amount advanced was Rs.300.02 Lakhs. Balance at the end of the year was Rs.52.52 Lakhs.

(b) No interest has been charged to the borrower. We have been informed that the said advance was made to the holding company of Marmagoa Steel Limited, out of the interest free loan received from another company and that there were no terms and conditions attached regarding repayment of the principal. Under these circumstances, in our opinion, the transaction is prima facie not prejudicial to the interest of the company. of the following -

Statutory Dues Rs.In Lakhs

EPF - Employers Contribution (MSL) 18.08

EPF - Employers Contribution (Contractors) 0.49

Service Tax 13.98

Income Tax - TDS 3.78

Entry Tax 5.97

Central Sales Tax 1,064.36

VAT of various states 275.69

Total 1,382.35

(c) The company has not taken during the year any loans from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act.

(d) We have been informed that there were no specific terms and conditions attached to the loans taken in earlier years including repayment. The rate of interest charged on such loans is not prima-facie prejudicial to the interest of the company.

(e) In the absence of specific terms and conditions for repayment of the loan, we are informed, the principal has not been paid/ partially paid. Interest has been credited to the current amounts.

iv. In our opinion and according to the information and as per the explanations given to us, there is an adequate internal control system in the company commensurate with its size and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. There were no services rendered by the company. During the course of our audit, we did not come across any continuing failure to correct any major weaknesses in the internal control system prevailing in the Company.

v. To the best of our knowledge and belief and according to our information and as per the explanations given to us, there were no contracts or arrangements entered into by the Company that needed to be entered in the register maintained under Section 301 of the Companies Act.

vi. In our opinion and according to the information and as per the explanations given to us, the Company has neither accepted deposits from the public during the year under consideration nor has the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal have passed any orders against the Company for any contravention under Sections 58A & 58AA or any other provisions of the Companies Act.

vii. During the year under consideration, the company had an Internal Audit System, which was fairly commensurate with the size of the Company and the nature of its business.

viii. The Central Government has prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, for the products of the Company. We have broadly reviewed the books of account maintained by the Company pursuant to the order made under the said Section and are of the opinion that prima-facie, the Company has maintained the prescribed accounts and records. i x In our opinion and according to the information and as per the explanations given to us, during the year, the Company was generally not regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, VAT, Income Tax and Service Tax. However, in the payment of Customs duty, Excise duty, cess and Wealth tax the company was regular in depositing undisputed dues with the appropriate authorities. As on 31st March 2013, a sum of Rs.1,382.35 lakhs of tax was outstanding for a period of more than six months from the date they became payable comprising

x. The company has accumulated losses at the end of the year which are more than 50% of its net worth. The Company has incurred cash losses during the current financial year and during the immediately preceding financial year.

xi. In our opinion and according to the information and as per the explanations given to us, the Company had not defaulted in the repayment of dues excepting in the case of 41 Letters of Credit which had devolved on the Company. The date of default, the name of the Bank, the amount of the Letter of Credit and the number of days of delay upto 31st March 2013 are given here below.

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

xiii. In our opinion and according to the information and as per the explanations given to us, the provisions of any special statutes applicable to chit funds are not applicable to the Company.

xiv. In our opinion and according to the information and as per the explanations given to us, the Company is not dealing or trading in Shares, Securities, Debentures and other Investments.

xv. In our opinion and to the best of our information and as per the explanations given to us and as per the records of the Company, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions.

xvi. In our opinion and to the best of our information and as per the records of the Company, no Term Loans were borrowed during the year under consideration for any specific purpose. However, a sum of Rs.2,340 lakhs being Letters of Credit, which had devolved on the banks has been converted into term loans (previous year nil).

xvii. During the year under consideration, a sum of Rs.1.95 Lakhs (previous year Rs.15.04 Lakhs) was used for purchase of assets net of sales from funds raised on short term basis.

xviii. During the year under consideration, the Company did not allot shares to any parties or companies covered in the register maintained under Section 301 of the companies Act.

xix. During the year, the Company did not issue any debentures.

xx. The Company had not made any Public issue of Shares during the year under consideration.

xxi. During the course of our audit, we have neither come across any frauds on or by the Company nor has the same been reported to us by the management.

For KAMATH & RAU CHARTERED ACCOUNTANTS ICAI FIRM REG. NO.001689S

Sd/- (S. S.KAMATH - PARTNER) Membership No.007560.

Place: Camp, Curtorim

Date : 14-05-2013


Mar 31, 2012

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

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

1. 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.

2. 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.

3. The Balance Sheet, and the Statement of Profit and Loss, dealt with by this report are in agreement with the books of account maintained by the Company.

4. In our opinion, the Balance Sheet and the Statement of Profit and Loss dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of The Companies Act, 1956 to the extent applicable to the Company as stated in para (1) of the Notes on Financial Statements.

5. On the basis of the written representations of the directors as on 31-03-2012 and taken on record by the Board of Directors, we report that none of the said Directors is disqualified as on 31-03-2012 from being appointed as a Director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

6. In our opinion and to the best of our information and as per the explanations given to us, the said accounts read together with the Notes thereon give the information required by the Companies Act, 1956, in the manner required and give ,a true and fair view in conformity with the Accounting Principles generally accepted in India:

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

ii) In the case of the Statement of Profit and Loss, of the Losses for the year ended 31st March 2012, and Further, as required by the Companies (Auditors' Report) Order 2003, issued by the Ministry of Finance (Department of Company Affairs) in terms of Section 227 (4A) of the Companies Act 1956, we report on the matters specified in paragraphs 4 & 5 of the said Order to the extent applicable:

i. (a) The Company has maintained proper

records in electronic medium showing

full particulars including quantitative details and situation of fixed assets.

(b) As represented to us in writing, the company has made a policy of verifying physically, the fixed assets in a block of two years. Accordingly, a part of the fixed assets have been physically verified during the year by the Internal Auditors jointly with the management and no material discrepancies have been noticed on such verification.

(c) No substantial part of the fixed assets of the company were sold during the year.

ii. (a) We have been informed that Physical Verification of inventory has been made by the management during the year jointly with the Internal Auditors. Relevant records have been produced for our perusal in support of such claims. In our opinion such verification has been made at reasonable intervals.

(b) The procedures of physical verification of inventory followed by the management are inadequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and as per the explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size and operations of the Company and the nature of its business and the same have been properly dealt with in the books of account of the Company.

iii. (a) The company has not granted during the _ year loans to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act.

(b) The company has not taken any loans from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act.

(c) We have been informed that there were no specific terms and conditions attached to the loans taken in earlier years including repayment. The rate of interest charged on such loans is not prima-facie prejudicial to the interest of the company.

(d) In the absence of specific terms and conditions for repayment of the loan, we are informed, the principal has not been paid/ partially paid. Interest has been credited to the current amounts.

iv. In our opinion and according to the information and as per the explanations given to us, there is an adequate internal control system in the company commensurate with its size and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. There were no services rendered by the company. During the course of our audit, we did not come across any continuing failure to correct any major weaknesses in the internal control system prevailing in the Company.

v. To the best of our knowledge and belief and according to our information and as per the explanations given to us, there were no contracts or arrangements entered into by the Company that needed to be entered in the register maintained under Section 301 of the Companies Act.

vi. (n our opinion and according to the information and as per the explanations given to us, the Company has neither accepted from the public during the year under consideration nor has the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal have passed any orders against the Company for any contravention under Sections 58A & 58AA or any other provisions of the Companies Act.

vii. During the year under consideration, the company had an Internal Audit System, which was fairly commensurate with the size of the Company and the nature of its business.

viii. The Central Government has prescribed maintenance of cost records under Section 209 (1) (d) of The Companies Act, 1956, for the products of the Company. We have broadly reviewed the books of account maintained by the Company pursuant to the order made under the said Section and are of the opinion that prima-facie, the Company has maintained the prescribed accounts and records.

ix. In our opinion and according to the information and as per the explanations given to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Customs duty, Excise duty, cess, Income tax and Wealth tax with the appropriate authorities. However, a sum of Rs. 208 lakhs of tax comprising of VAT collected in various branches amounting to Rs. 202 lakhs and entry tax in a branch amounting to Rs. 6 lakhs was outstanding as at the last day of the financial year for a period of more than six months from the date it became payable.

x. The company has accumulated losses at the end of the year which are more than 50% of its net worth. The Company has incurred cash losses during the current financial year and during the immediately preceding financial year.

xi. In our opinion and according to the information and as per the explanations given to us, the Company had not defaulted in the repayment of dues excepting in the case of 21 Letters of Credit which had devolved on the Company. The date of default, the name of the Bank, the amount of the Letter of Credit and the number of days of delay upto 31" March 2012 are given here below.





1) Bank of Maharashtra:



Date of Outstanding Delay upto default Amount 31.3.2012 (Rs. in (in days) lakhs)

06.02.2012 68.69 55

07.02.2012 121.63 54

17.02.2012 81.61 44

07.03.2012 21.41 25

09.03.2012 39.85 23

12.03.2012 96.93 20

19.03.2012 31.19 13

24.03.2012 36.79 8

26.03.2012 176.56 6

674.66



2) Union Bank of India

Date of Outstanding Delay upto default Amount 31.3.2012 (Rs. in (in days) lakhs)

13.01.2012 27.49 79

14.01.2012 122.82 78

23.01.2012 24.50 69

01.02.2012 48.56 60

09.02.2012 54.50 52

16.02.2012 61.74 45

23.02.2012 41.40 38

25.02.2012 76.28 36

06.03.2012 75.32 26

19.03.2012 119.88 13

30.03.2012 77.46 2

31.03.2012 22.22 1

752.17

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

xiii. In our opinion and according to the information and as per the explanations given to us, the provisions of any special statutes applicable to chit funds are not applicable to the Company.

xiv. In our opinion and according to the information and as per the explanations given to us, the Company is not dealing or trading in Shares, Securities, Debentures and other Investments.

xv. In our opinion and to the best of our information and as per the explanations given to us and as per the records of the Company, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions.

xvi. In our opinion and to the best of our information and as per the records of the Company, no Term Loans were borrowed during the year under consideration.

xvii. During the year under consideration, a sum of Rs.15.04 lakhs (previous year Rs.25.41 lakhs) was used for purchase of assets from funds raised on short term basis.

xviii. During the year under consideration, the Company did not allot shares to any parties or companies covered in the register maintained under Section 301 of the companies Act.

xix. During the year, the Company did not issue any debentures.

xx. The Company had not made any Public issue of Shares during the year under consideration.

xxi. During the course of our audit, we have neither come across any frauds on or by the Company nor has the same been reported to us by the management.



For KAMATH & RAU

CHARTERED ACCOUNTANTS

ICAI FIRM REG NO. 001689S

Sd/-

S. S. KAMATH

Place: Camp Bangalore, PARTNER

Date : 29.06.2012 Membership No.007560


Mar 31, 2010

We have audited the attached Balance Sheet of MARMAGOA STEEL LIMITED as at 31 st March 2010, as also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financiaf 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 the Auditing Standards generally accepted in India! Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the Accounting Principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe, our audit provides a reasonable basis for our opinion. We further report that:

1. 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.

2. 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.

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

4. In our opinion, the Profit and Loss Account, the Balance Sheet and the 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 to the extent applicable to the Company as stated in para (1) of the Notes on Accounts in Schedule 22.

5. On the basis of the written representations of the directors as on 31-03-2010 and taken on record by the Board of Directors, we report that none of the said Directors are disqualified as on 31-03-2010 from being appointed as a Director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

6. In our opinion and to the best of our information and as per the explanations given to us, the said accounts read together with the Notes thereon give the information required by the Companies Act, 1956, in the manner required and give a true and fair view in conformity with the Accounting Principles generally accepted in India:

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

ii) In the case of the Profit and Loss Account, of the Losses for the year Ended 31st March 2010, and

iii) In the case of the Cash Flow Statement, of the Cash Flows during the year ended that date in the functioning of the Company.

Further, as required by the Companies (Auditors Report) Order 2003, issued by the Ministry of Finance (Department of Company Affairs) in terms of Section 227 (4A) of the Companies Act 1956, we report on the matters specified in paragraphs 4 & 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) As represented to us in writing, the company has made a policy of verifying physically, the fixed assets in a block of two years. Accordingly, a part of the fixed assets have been physically verified during the year by the Internal Auditors jointly with the management and no material discrepancies have been noticed on such verification.

(c) No substantial part of the fixed assets of the company were sold during the year.

ii) (a) We have been informed that Physical Verification of inventory has been made by the management during the year. Relevant records have been produced for our perusal in support of such claims.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and as per the explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operations of the Company and the nature of its business and the same have been properly dealt with in the books of account of the Company.

iii) (a) The company has granted during the year unsecured loans to three companies covered in the register maintained under Section 301 of the Companies Act aggregating to Rs. 93.09 lakhs.

(b) We have been informed that there were no specific terms and conditions laid down for granting the loans including repayment. The rate of interest charged are not prima-facie prejudicial to the interest of the company.

(c) The loans are given in current account. Loans given to two companies have been squared off with interest. Only in the case of one company Rs. 105.41 lakhs inclusive of interest charged, is outstanding as at the end of the year.

(d) Since the loan was granted without any stipulations regarding repayment and the same is in current account, no recovery proceedings have been taken.

(e) The company has taken unsecured loans from two companies covered in the register maintained under section 301 of the Companies Act aggregating to Rs. 66.32 lakhs. These are in the current accounts of the companies mentioned in clause (c ) above.

(f) We have been informed that there were no specific terms and conditions attached to the loans taken including repayment. The rate of interest charged is not prima-facie prejudicial to the interest of the company.

(g) In the case of one company, the loan has been paid off. In the case of the other company, in the absence of specific terms and conditions for repayment of the loan, we are informed, the principal has not been paid. Interest has been credited to the loan amount.

iv) In our opinion and according to the information and as per the explanations given to us, there is an adequate internal control system in the company commensurate with its size and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. There were no services rendered by the company. During the course of our audit we did not come across any continuing failure to correct any major weaknesses in the internal control system prevailing in the Company.

v) To the best of our knowledge and belief and according to our information and as per the explanations given to us, there were no contracts or arrangements entered into by the Company that needed to be entered in the register maintained under Section 301 of the Companies Act.

vi) In our opinion and according to the information and as per the explanations given to us, the Company has neither accepted deposits from the public during the year under consideration nor the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal have passed any orders against the Company for any contravention under Sections 58A & 58AA or any other provisions of the Companies Act.

vii) During the year under consideration, the company had an Internal Audit System, which was commensurate with the size of the Company and the nature of its business.

viii) The Central Government has prescribed maintenance of cost records under Section 209 (1) (d) of The Companies Act, 1956, for the products of the Company. We have broadly reviewed the books of account maintained by the Company pursuant to the order made under the said Section and are of the opinion that prima-facie, the Company has maintained the prescribed accounts and records.

ix) In our opinion and according to the information and as per the explanations given to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Customs duty, Excise duty.cess.lncome tax and Wealth tax with the appropriate authorities. However, a sum of Rs.146 lakhs of tax comprising of VAT collected in various branches amounting to Rs. 117 lakhs, entry tax in a branch amounting to Rs. 6 lakhs and TDS of Rs. 23 lakhs was outstanding as at the last day of the financial year for a period of more than six months from the date it became payable. However, TDS of Rs. 23 lakhs was paid on 31st May 2010.

x) There was no accumulated loss in the books at the end of the Financial Year. The Company has incurred cash losses during the current financial year and during the immediately preceding financial year.

xi) In our opinion and according to the information and as per the explanations given to us, the Company had not defaulted in repayment of dues to Banks. The Company has neither taken any loans from financial institutions nor had it issued any Bonds or Debentures as on 31s1 March 2010. Regarding term loans taken from banks, repayment installments, wherever due, have been paid.

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

xiii) In our opinion and according to the information and as per the explanations given to us, the provisions of any special statutes applicable to chit funds are not applicable to the Company.

xiv) In our opinion and according to the information and as per the explanations given to us, the Company is not dealing or trading in Shares, Securities, Debentures and other Investments.

xv) In our opinion and to the best of our information and as per the explanations given to us and as per the records of the Company, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions.

xvi) In our opinion and to the best of our information and as per the records of the Company, no Term Loans were borrowed during the year under consideration.

xvii) During the year under consideration, a sum of Rs. 238 lakhs (previous year Rs. 187 iakhs) was used for repayment of long term investment borrowings from funds raised on short term basis.

xviii) During the year under consideration, the Company did not allot shares to any parties or companies covered in the register maintained under Section 301 of the companies Act.

xix) During the year, the Company did not issue any debentures.

xx) The Company had not made any Public issue of Shares during the year under consideration.

xxi) During the course of our audit, we have neither come across any frauds on or by the Company nor has the same been reported to us by the management.

For KAMATH & RAU

CHARTERED ACCOUNTANTS

FIRM REG NO. 001689 S

Sd/-

S. S. KAMATH

Place: Curtorim, Goa PARTNER

Date : 31.05.2010 Membership No.007560

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