Auditor Report of Orissa Sponge Iron & Steel Ltd.

Mar 31, 2015

1. We have audited the accompanying. financial statements of Orissa Sponge Iron & Steel Limited ("the Company") which comprise the Balance Sheet as at March 31, 201 5, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the sign financial year ending exploratory information

MANAGEMENTS Responsibility FOR THE FINANCIAL STATEMENTS

2. 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 on a going concern basis 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 include 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 and making judgment and estimates that are reasonable and prudent; and design, Implementation and maintenance of adequate Internal financial controls, that operate 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.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

5. 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from materials misstatements.

G. 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 controls 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 on adequate Internal financial control system over financial reporting and 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.

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

OPINION

8. 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, if the state of affairs aft the Company as at 31st March, 201 5 and its loss and its cash flows for the year ended on the date.

EMPHASIS OF MATTER

9. Without qualifying our opinion we draw attention on the following:

(a) The Company has suspended the production in June 2012; incurred a net loss of Rs, 8,013.13 lacs during the year ended 31st March, 201S and the accumulated losses as of that date amount to Rs, 3S.072.70 lacs, the Company's net worth has become negative: the current liabilities exceeded Its current assets by Rs 33,734.02 lacs; the company defaulted in repayment of term loan and cash credit facilities and SBF, B01 and PNB have taken possession of all the assets at the plant under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI); These conditions indicate the existence of material uncertainly that may cause significant doubt about the company to continue as a going concern.

(b) Referring to Note No. 12(1} of Notes on Accounts to the financial Statement wherein the company has considered deferred tax assets of Rs, 12730.82 lacs including Rs. 1676.54 lacs for the current year on the assumption that the Company will be able to earn sufficient profit in future In future years to recoup the carry forward of losses, when, Iron ore will be available from captive mines. We cannot comment on the certainty of the future profits.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

10. As required by the Companies (Auditor's Report) Order 201 S issued by the Central Government of India in terms of sub-section 143(11) of the Act (here in under referred to as the "order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraph 3 and 4 of the order.

11. As required by Section 143(3) of the Act, we report that;

a) We how 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 statement 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, 201S, taken on the 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 16M2) of the Act.

f) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 201 4, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us ;

(I) The Company has disclosed the impact, If any, of pending litigations as on 31st March 201S on Its financial positions in Its financial statements as referred to in Mote 30(A) of the Motes on Accounts to the Financial Statements.

(H) The Company did not have any long term contracts including derivative contract for which there were any material foreseeable losses.

(iil) There were no amounts, which were required to be transferred during the year to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 10 of the Independent Auditors' Report of even date to the members of Orissa Sponge Iron & Steel Limited ("the Company"') on the financial statements as of and for the year ended 31st March, 2015. We report that:

1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of its fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets, by which a II fixed assets are verified in a phased manner over a period of three years. In our opinion this periodicity of physical verification Is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the current year and no material discrepancies were noticed upon such verification.

2. (a) The inventory of the Company has been physically verified by the management during the year. In our opinion the frequency of such verification is reasonable.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noted on physical verification between the physical stocks and the book records were not material.

3. The Company has not granted any loans secured or unsecured to companies, firms or other parties covered In the register maintained under Section 189 of the Companies Act 2013. Therefore the provisions of Clause (3) (iii) (a) and (b) of the said Order are not applicable to the Company.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchases of inventory and fixed assets and with regard to sale of goods and services.

5. The Company has not accepted any deposits from the Public within the meaning of Section 73 to 76 of the Act or any other relevant provisions of the Act and Rules framed there under.

6. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 148 (1) of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been maintained. However we have not made a detailed examination of such records.

7. (a) According to the information and explanations given to us and except Central Sales Tax, Orissa Sales Tax and Entry Tax liability totaling Rs, 30.91 lakhs, and Provident Fund dues to the extent of Rs, 199.54 lacs no undisputed dues payable in respect of Provident Fund, Employees State Insurance, Income Tax, Wealth Tax. Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and other material statutory dues were outstanding at the year end. for a period of more than six months from the date they became payable.

(b) There are no disputed dues which have remained unpaid as on 311 March. 2015 on account of Income Tax, value added tax, duty of exudes of customs, sales tax. wealth tax, service tax. cess except as follows:

Name Due Amount (Rs, in lacs) Period to which the amount relates Forum where Dispute is pending

Income Tax 3.27 2006-07 Petition u/s 154 before Assessing Authority

Income Tax 1.00 2009-10 Appeal u /s. 246 before Commissioner of Income Tax (Appeals), Bhubaneswar

Central Excise 96.08 2005-06 to 2010-11 Commissioner of Appeals Central Excis Control Excise 59.25 2004-05 to 2007-06 Additional Commissioner Central Excise

Qri5sa Sales Tax & VAT 817.44 1985-86 to 2006-07 Various Authorities

Central Excise Tax 2495,87 1985-86 to 2006-07 Various Authorities

(c) Based on the information and explanation obtained, the company has no liability or requirement to transfer any amount to the Investor Education and Protection Fund in accordance with the relevant provisions of the Act and the Rules framed there under.

3. The Company has accumulated loss at the end of the financial year which has eroded the entire net worth. It has incurred cash loss in the current financial year and the year immediately preceding the current financial year.

9. The Company has defaulted in repayment of dues to Its bankers and financial institutions as on 31st March, 2015 as detailed below: -

Term Loan from Banks Details Rs. in lakhs Default has Rs. in Lakhs Name of Bonk Amount of Amount of Default Started since Default as on 31.03.2015 as on 31.03.2014

State Bank of India (5BT) Principal 3635.00 January-11 3635.00

Interest 3380.31 April-11 2417.60

Punjab National Bank (PNB) Principal 1672.77 October-11 760.30

Interest 1138.51 Aggust-11 939.20

Bank of India (BOI)-WCTL Principal 94.45 April-13 12.00

Interest 47.73 November-12 23.46 Term Loan from Other Parties:

Indian Renewable Energy Principal 2989.67 June-11 1968.32 Development Agency Interest 3231.17 June-11 2036.03 Limited (IREDA)

Edelweiss Asset Recons truction Principal 1323.00 March-11 1323.00

Company Limited (EARC) Interes 1425.05 April-11 846.17

Cash Credit from Banks :

State Bank of India 6814.82 April 2011 6714.13

Bank of India 552.85 March 2013 552.85

Cash Credit from Other Parties

Edelweiss Asset Recons truction 855.91 July-2011

Term Loan from Banks Default Has Name of Bank Started since

State Bank January-11 of India (5BT)

Punjab April-11 National Bank (PNB)

Bank of October -11 India (BOI)-WCTL Term Loan from Other Parties:

Indian August-11 Renewable Energy Development Agency April-13 Limited (IREDA)

Edelweiss March-11 Asset Recons truction

Company April-11 Limited (EARC) Cash Credit from Banks :

State Bank April-2011 of India Bank of India March-2013 Cash Credit from Other Parties

Edelweiss July -2011 Asset Recons truction

Company Limited SBI, BOl, PUB and EARC have is sued notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for recall of their outstanding dues.

10. According to the information and explanations given to us, the Company has given guarantee for loans taken by an associate company from banks or financial institutions, terms and conditions whereof are not prejudicial to the interest of the Company.

11. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which it was raised.

12. During the course of our examination of the books of records of the Company, carried out in accordance with the generally accepted auditing practice In India, and according to the information and explanations given to us, we have neither come across any Instance of material fraud on or by the Company, noticed or reported during the year nor have we been informed of any such case by the management

For L N. More & Company

Chartered Accountants

FRN 307042E

L N. More

Place: Bhubaneswar Partner

Dated: 29th August, 2015 Membership No. 011485

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Mar 31, 2014

1. We have audited the accompanying financial statements of Orissa Sponge Iron & Steel Limited ("the Company") which comprise the Balance Sheet as at March 31, 201 4, the Statement of Profit and 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, financial performance and cash flows 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 controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

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 controls relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of 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. EMPHASIS OF MATTER

6. Without qualifying our opinion we draw attention on the following :

(a) The Company has suspended the production in June 2012; incurred a net loss of? 4,129.25 lacs during the year ended 31st March, 2014 and the accumulated losses as of that date ? 27,886.70 lacs, the Company''s current liabilities exceeded its current assets by ? 23,608.83 lacs, the Company defaulted in repayment of term loan and cash credit facilities. These conditions indicate the existence of material uncertainty that may cause significant doubt about the Company to continue as going concern.

(b) The Company has considered deferred tax assets of ? 11,054.28 lacs, including? 2,785.19 lacs for the current year, on the assumption that the Company will be able to earn sufficient profit in future years to recoup the carry forward of losses, when the raw materials i.e. iron ore will be available from captive lease mines in future years. We cannot comment on the certainty.

OPINION

7. 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.

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

8. As required by the Companies (Auditor''s Report) Order 2003 as amended by the Companies (Auditors Report), (Amendment) 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act (here in under referred to as the "order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraph 4 and 5 of the order.

9. 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 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211 (3C) of the Act,

e) On the basis of the written representations received from the directors as on March 31, 201 4, taken on the record by the Board of Directors, none of the directors is disqualified as on March 31, 201 4 from being appointed as a director in terms of Section 274(1 )(g)of the Act.

ANNEXURE TO THE AUDITORS'' REPORT

Referred to in paragraph 8 of the Auditors'' Report of even date to the members of Orissa Sponge Iron & Steel Limited ("the Company") on the financial statements for the year ended 31 st March, 2014. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of three years. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the current year and no material discrepancies were noticed upon such verification.

(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2. (a) The inventory of the Company has been physically verified by the management during the year. In our opinion the frequency of such physical

verification is reasonable.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noted on physical verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from Companies, Firms or other parties covered in the register maintained pursuant to the Section 301 of the Companies Act, 1956.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchases of inventory and fixed assets and with regard to sale of goods and services.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in

Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under the section. (b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of X 5 lacs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits under the provisions of section 58(A) and 58(AA) of the Act, and the Rules framed there under.

7. In our opinion the Company has an Internal Audit System commensurate with the size and nature of the business.

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained. However we have not made a detailed examination of such records.

9. (a) According to the information and explanations given to us and except Central Sales Tax, Orissa Sales Tax and Entry Tax liability totaling Rs.30.91 lakhs, no undisputed dues payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, IncomeTax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues were outstanding at the year end, for a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us, details of dues of Income Tax, Sales Tax, Service tax, Customs duty, Excise Duty and Cess which have not been deposited as at 31 st March, 201 4 on account of any dispute are given below:

Name of the Nature of dues Amount Staute In Lacs Income Tax Tax Demand under appeal 3.27 Act 1961 for Assessment Year 2006-07 Tax Demand under appeal 1.00 for Assessment Year 2009-10

Central Sales Non-collection of declaration forms 2,495.87 Tax Act 1956 and enhanced assessment & penalty

Orissa Sales Enhanced Assessment & Penalty 634.79 TAX Act 1947

Central Excise Disputed Central Excise demand 155.33 Act 1944

Name of the Staute Forum Where Dispute is Pending

Income Tax Acy 1961 Petition u/s 154 Before Assessing Authority

Appeal u/s 246 before Appellate Authority

Central Sales Act 1956 Sales Tax Appelate Authorities

Orissa Sales Tax Act 1947 Sales Tax Appelate Authorities

Central Excise Act 1944 Commissiioner of Appeals, Central Excise



10. The Company has accumulated losses at the end of the financial year which are more than fifty percent of its net worth. It has incurred cash losses in the current financial year and the year immediately preceding financial year.

11. The Company has defaulted in repayment of dues to its bankers and financial institutions as on 31st March, 2014 as detailed below : -

Bank / Financia Amount of Default Default has Insituation Rs in lacs Started since Term Loan

a) State Bank of India 3,635.00 Principal January 2011 2,417.60 Interest April 2011

b) State Bank of Bikaner& Jaipur 1,323.00 Principal March 2011 846.17 Interest April 2011

c) Punjab National Bank 760.30 Principal October 2011 939.20 Interest August 2011

d) Bankof India - WCTL 12.00 Principal April 2013 23.46 Interest November 2012

e) Indian Renewable Energy DevelopmentAgencyLtd.(IREDA) 1,968.32 Principal June2011 2,086.03 Interest June 2011

Cash Credit (excluding interest not charged by Bank)

f) State Bank of India 6,714.14 Balance April 2011 outstanding on 31.03.2014

g) State Bank of Bikaner& Jaipur 855.91 Balance July 2011 Outstanding on 31.03.2014

h) Bank of India 552.85 Balance March 2013 Outstanding on 31.03.2014

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the Company is not a chit fund/nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given guarantee for loans taken by associated companies from banks or financial institutions, terms and conditions whereof are not prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanation given to us, the term loan taken by the Company during the year have been applied for the purpose for which it was raised.

17. According to the information and explanations given to us and on an overall examination of the balance Sheet of the Company, we are of the opinion that the funds raised during the year on short term basis have not been used for long term investment.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to Parties and Companies covered in the Register maintained under Section 301 of the Companies Act, 1956 during the year.

19. The Company has received X 2,000 lakhs during the year as advance towards issuance of Redeemable Preference Share.

20. According to the information and explanations given to us, the Company has not issued debentures during the year.

21. During the course of our examination of the books & records of the Company, carried out in accordance with the generally accepted auditing practice in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year; nor have we been informed of any such case by the management.

For L. N. More & Company Chartered Accountants FRN 307042E

L. N. More Partner Membership No. 011485

Place: Bhubaneswar Dated: 30th May, 2014

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Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

1. We have audited the accompanying financial statements of Orissa Sponge Iron & Steel Limited ("the Company") which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year 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, financial performance and cash flows 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 controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

k. 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 controls relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of 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 give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

7. As required by the Companies (Auditor''s Report) Order 2003 as amended by the Companies (Auditors Report), (Amendment) 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act (here in under referred to as the "order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraph k and 5 of the order.

8. 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 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211 (3c) of the Act,

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

ANNEXURE TO THE AUDITORS'' REPORT

Referred to in paragraph 7 of the Auditors'' Report of even date to the members of Orissa Sponge Iron & Steel Limited ("the Company") on the financial statements for the year ended 31 st March, 2013. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of three years. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the current year and no material discrepancies were noticed upon such verification.

(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2. (a) The inventory of the Company has been physically verified by the management during the year. In our opinion the frequency of such physical verification is reasonable.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noted on physical verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from Companies, Firms or other parties in the register pursuant to the Section 301 of the Companies Act, 1956.

k. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchases of inventory and fixed assets and with regard to sale of goods and services.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in

Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under the section. (b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs.5 lacs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits under the provisions of section 58(A) and 58(AA) of the Act, and the Rules framed there under.

7. In our opinion the Company has an Internal Audit System commensurate with the size and nature of the business.

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained. However we have not made a detailed examination of such records.

9. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues are generally deposited during the year by the Company with the appropriate authorities. As explained to us, the Company does not have any dues on account of investor education and protection fund.

10. The Company has accumulated losses at the end of the financial year which are more than fifty percent of its net worth. It has incurred cash losses in the current financial year and the year immediately preceding financial year.

11. The Company has defaulted in repayment of dues to its bankers and financial institutions as on 31st March, 2013 as detailed below : -

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the Company is not a chit fund/nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given guarantee for loans taken by associated companies from banks or financial institutions, terms and conditions whereof are not prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanation given to us, the term loan taken by the Company during the year have been applied for the purpose for which it was raised.

17. According to the information and explanations given to us and on an overall examination of the balance Sheet of the Company, we are of the opinion that the funds raised during the year on short term basis have not been used for long term investment.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to Parties and Companies covered in the Register maintained under Section 301 of the Companies Act, 1956 during the year.

19. The Company has not raised any money by issue of shares during the year.

20. According to the information and explanations given to us, the Company has not issued debentures during the year.

21. During the course of our examination of the books & records of the Company, carried out in accordance with the generally accepted auditing practice in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year; nor have we been informed of any such case by the management.

For L N. More & Company

Chartered Accountants FRN 307042E

L. N. More

Place: Bhubaneswar Partner

Dated: 13th August, 2013 Membership No. 011485

---

Mar 31, 2012

We have audited the attached Balance Sheet of Orissa Sponge Iron & Steel Limited as at March 31, 2012, and 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 have 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 that our audit provides a reasonable basis for our opinion.

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

2. Further to our comments in the Annexure referred to 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 and Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) On the basis of written representations received from the directors of the Company, as on March 31, 2012, and taken on the records by the Board of Directors, we report that none of the director of the Company is disqualified as on March 31, 2012 from being appointed as a Director in terms of Section 274(1 )(g) of the Companies Act, 1956.

Orissa Sponge Iron & Steel Limited

3. In our opinion and to the best of our information and according to the explanations given to us.

a) The Balance Sheet and Statement of Profit and Loss 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 Act to the extent applicable.

b) The said accounts together with the 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 March 31, 2012.

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

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

With reference to the Annexure referred to in paragraph 1 of the Auditors' Report to the members of Orissa Sponge Iron & Steel Limited ("the Company") on the financial statements for the year ended 31 st March, 2012 we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of three years. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the current year and no material discrepancies were noticed upon such verification.

(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2. (a) The inventory of the Company has been ' physically verified by the management during the year. In our opinion the frequency of such physical verification is reasonable.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noted on physical verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from Companies, Firms or other parties in the register pursuant to the Section 301 of the Companies Act, 1956.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchases of inventory and fixed assets and with regard to sale of goods and services.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under the section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lacs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits under the provisions of Section 58(A) and 58(AA) of the Act, and the Rules framed there under.

7. In our opinion the Company has an Internal Audit System commensurate with the size and nature of the business.

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained. However we have not made a detailed examination of such records.

9. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues are generally deposited during the year by the Company with the appropriate authorities. As explained to us, the Company does not have any dues on account of investor education and protection fund.

Orissa Sponge Iron & Steel Limited

(b) According to the information and explanations given to us, details of dues of Income Tax, Sales Tax, Service tax, Customs duty, Excise Duty and Cess which have not been deposited as at 31st March, 2012 on account of any dispute are given below:

Name of the statute Nature of dues Amount (Rs. in lacs) Forum where Dispute is pending

Income Tax Act, 1961 Tax Demand under appeal 3.27 Petition u/s 154 before for Assessment Year 2006-2007 Assessing Authority

Central Sales Tax Act, 1956 Non-collection of declaration forms 2,534.89 Sales Tax Appellate Authorities and enhanced assessment & penalty Orissa Sales Tax Act, 1947 Enhanced Assessment & Penalty 768.52 Sales Tax Appellate Authorities

Central Excise] Act, 1944 Disputed Central Excise demand 175.67 Commissioner of Appeals, Central Excise

10. The Company has accumulated losses at the end of the financial year which are more than fifty percent of its net worth. It has incurred cash losses in the current financial year and the year immediately preceding financial year.

11. The Company has defaulted in repayment of dues to its bankers and financial institutions as on 31st March, 2012 as detailed below : -

Bank / Financial Institution Amount of Default (Rs. in lacs) Default since

Term Loan

a) State Bank of India 2,015.00 Principal January 2011

606.85 Interest April 2011

b) State Bank of Bikaner & Jaipur 494.00 Principal March 2011

235.25 Interest April 2011

c) Punjab National Bank 152.06 Principal October 2011

199.94 Interest August 2011

d) Indian Renewable Energy Development Agency Ltd. (IREDA) 572.65 Principal June 2011

505.03 Interest June 2011

Cash Credit

(e) State Bank of India 3,818.81 Excess of balance outstanding April 2011 over Dra wing Power

(f) State Bank of Bikaner & Jaipur 656.26 Excess of balance out standing July 2011 over Dra wing Power

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us the Company is not a chit fund/nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments,. Accordingly, the provisions of paragraph 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given guarantee for loans taken by associated companies from banks or financial institutions, terms and conditions whereof are not prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loan taken by the Company during the year have been applied for the purpose for which it was raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised during the year on short term basis have not been used for long term investment.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to Parties and Companies covered in the Register maintained under Section 301 of the Companies Act, 1956 during the year.

19. The Company has not raised any money by issue of shares during the year.

20. According to the information and explanations given to us, the Company has not issued debentures during the year.

21. According to the information and explanations given to us and to the best of our knowledge, no fraud on or by the Company was noticed and reported during the year.

For L. N. More & Company

Chartered Accountants

FRN 307042E

L. N. More

Place: Kolkata Partner

Dated: 4th August, 2012 Membership No. 011485

---

Mar 31, 2010

We have audited the attached Balance Sheet of Orissa Sponge Iron & Steel Limited as at March 31, 2010, and the Profit and 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 have 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 that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003,("the Order") issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

3. We report that,

(i) No Provision has been made for diminution in value of long term investments in a listed Company {Bilati (Orissa) Ltd.} amounting to Rs. 142 lacs, (refer schedule 6 B [i])

(ii) According to us, advances recoverable from Nilachal Ispat Nigam Ltd. amounting to Rs. 274 lacs (Rs. 274 lacs) and from Bilati (Orissa) Ltd. amounting to Rs. 1,789 lacs (including advance of Rs. 89 lacs for the year) (Previous year Rs. 1700 lacs) are doubtful of recovery against which provision has not been made. (Refer Schedule No. 14B [5 & 6]).

Had the provision been made in respect of (i) and (ii) the net assets of the company would have decreased by Rs. 2205 lacs and the accumulated losses would have increased by the same amount and loss for the year would have increased by Rs. 89 lacs.

k. Subject to 3 above, in our opinion and to the best of our information and according to the explanations given to us:

a) The Balance Sheet and 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 Act to the extent applicable.

b) The said accounts together with the 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 March 31, 2010.

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

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

ANNEXURE TO THE AUDITORS REPORT

With reference to the Annexure referred to in paragraph 1 of the Auditors Report to the members of Orissa Sponge Iron & Steel Limited ("the Company") on the financial statements for the year ended 31 st March, 2010 we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of three years. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the current year and no material discrepancies were noticed upon such verification.

(c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2. (a) The inventory of the Company has been physically verified by the management during the year. In our opinion, the frequency of such physical verification is reasonable.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noted on physical verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from Companies, Firms or other parties listed in the register pursuant to the Section 301 of the Companies Act, 1956.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchases of inventory and fixed assets and with regard to sale of goods and services.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under the section. (b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs.5 lacs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits under the provisions of Section 58(A) and 58(AA) of the Act, and the Rules framed there under.

7. In our opinion the Company has an Internal Audit System commensurate with the size and nature of the business.

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Art, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However we have not made a detailed examination of such records.

9. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Customs duty, Excise duty, Cess and other material statutory dues are generally deposited during the year by the Company with the appropriate authorities. As explained to us, the Company does not have any dues on account of investor education and protection fund.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Customs duty, Excise duty, Cess and other material statutory dues were in arrears, as at 31 st March, 2010, for a period of more than six months from the date they became payable except the following:

Nature of Dues Amount (Rs. In Lacs)

Central Sales Tax 1.37

Orissa Sales Tax 0.58

Sales Tax Contractors 0.03

Provident Fund (Contractors) 53.58

(b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited with the appropriate authorities on account of dispute other than those mentioned as follows.

Name of the statute Nature of dues Amount (Rs. in lacs) Forum where Dispute is pending

Income Tax Act, 1961 Tax Demand under appeal 85.22 CIT (Appeal), Bhubaneswar For Assessment Year 2006-2007

Central Sales Tax Act, 1956 Non-collection 2,473.00 Sales Tax Appellate Authorities of declaration forms

Orissa Sales Tax Act, 1947 Enhanced Assessment & Penalty 500.63 -do-

Central Excise Act, 1944 Disputed Central Excise demand 44.76 Commissioner of Appeals, Central Excise

10. The Company has accumulated losses at the end of the financial year which are less than fifty percent of its net worth. It has incurred cash losses in the current financial year and the year immediately preceding financial year.

11. The Company has defaulted in repayment of dues to its bankers and financial institutions as on 31 st March, 2010 as detailed below: -

Bank / Financial Institution Amount of Default Default since Remakrs

a) State Bank of India A/c -1 Rs. 2,43,345 (Interest) 31.03.2010 Since paid

b) State Bank of India A/c - II Rs. 4,00, 00,000 (Principal) 28.02.2010 Since paid

Rs. 66,93,592(Interest) 31.03.2010 Since paid

c) Punjab National Bank Rs. 63,22,000 (Principal)01.01.2010 Since paid

Rs. 26,97,847 (Interest) 28.02.2010 Since paid

d)State Bank of Bikaner & Jaipur Rs. 76,00,000 (Principal)28.02.2010 Since paid

Rs. 47,74,674 (Interest) 28.02.2010 Since paid

Amount payable to IREDA has been rescheduled subsequent to close of the year.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us the Company is not a chit fund/nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4(xiv) of the Order are not applicable to the Company.

15. 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. Accordingly the provisions of caluse 4(xv) of the order are not applicable to the Company.

16. According to the information and explanations given to us, no term loans have been taken by the Company during the year.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised during the year on short term basis have not been used for long term investment.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to Parties and Companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not raised any money by issue of shares during the year.

20. According to the information and explanations given to us, the Company has not issued debentures during the year.

21. According to the information and explanations given to us and to the best of our knowledge, no fraud on or by the Company was noticed and reported during the year.

Place: Kolkata For L. N. More & Company

Date: 10th November, 2010 Chartered Accountants

FRN 307042E

L N. More

Partner

Membership No. 011485