Auditor Report of Primuss Pipes & Tubes Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of PREMIER PIPES LIMITED (The Company) which comprise the Balance Sheet as at March 31, 2014. the statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("The Act"). This responsibility includes the design, implementa- tion 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.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanation given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

b. in our opinion, proper Books of Accounts as required by law have been kept by the Company so far as appears from our examination of those books.

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

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

e. on the basis of the written representations received from the Directors, as on March 31, 2014, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March, 2014 from being appointed as a Director in terms of clause (g) of sub-section (1)of Section 274 of the Companies Act, 1956.

The Annexure referred to in our report to the members of Premier Pipes Limited (''the Company'') for the year ended 31st March, 2014, We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) There was no disposal of fixed assets during the year, and therefore, do not affect the going concern assumption.

2. (a) As explained to us, inventories have been physically verified during the year by the management at reasonable Intervals.

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

(c) In our opinion, and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancies were noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has granted loans to four bodies corporate covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 1266.55 lacs and the year end balance of such loan amounted to Rs. 706.77 lacs. Other than the above, the Company has not granted any loans, secured or unsecured to companies, firm or parties in the register maintained under section 301 of the Act.

(b) In our opinion, the rate of interest and other terms and conditions on which the loans have been granted to the bodies corporate listed in the register maintained under Section 301 of the Act are not, prima-facie prejudicial to the interest of the Company.

(c) In the case of loans granted to the bodies corporate listed in the register maintained under section 301 of the Act, the borrowers have been regular in the payment of the interest as stipulated. The terms of arrangement do not stipulate any repayment schedule and the loans are repayable on demand. Accordingly, paragraph 4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount.

(d) There are no overdue amounts of more than rupees one lakh in respect of the loans granted to the bodies corporate listed in the register maintained under section 301 of the Act.

(e) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the Company has taken loans from two bodies corporate and one other parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 19.47 lacs and the year end balance of such loan amounted to Rs. 4.38 lacs.

(f) In our opinion, the rate of interest and other terms and conditions on which the loans have been taken from the bodies corporate and other parties covered in the register maintained under Section 301 of the Act are not, prima-facie, prejudicial to the interest of the Company.

(g) In respect of loans taken from the bodies corporate and other parties covered in the register maintained under section 301 of the Act, the Company has been regular in the payment of the interest as stipulated. The terms of arrangement do not stipulate any repayment schedule and he loans are repayable on demand. Accordingly, paragraph 4(iii)(g) of the Order is not applicable to the Company in respect of repayment of the principal amount.

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 the nature of its business for the purchase of inventory and Fixed Assets and for the sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in internal controls has been noticed.

5. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered in to register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted deposits from the public.

7. As per information and explanation given by the management, the Company has an adequate internal audit system commensurate with its size and nature of its business.

8. As per information and explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause(d)of sub-section(1) of section 209 of the Act and we are of the opinion that prima facie the prescribed accounts and records has been made and maintained. We have not, however, made a detailed examination of the same.

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, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, cess to the extent applicable and other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st March, 2013for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues of Employees State Insurance, Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute and the forum where the dispute is pending are as under

Name of the Nature of dues Amount Forum where dispute Statute (Rupees) is pending

ESI Act, 1948 Damages and Interest 135617.00 Civil Judge (Senior) ESI, Court, Kanpur Nagar

10. The Company does not have any accumulated losses as at the year end,and has not incurred any cash losses during the financial year and the immediately preceding financial year.

11. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

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

14. In our opinion, the Company is not dealing in or trading in shares, securities, debentures, and other investments.

The investments have been held by the Company in its own name.

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.

16. The Company did not have any term loans outstanding 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 report that no funds raised on short-term basis have been used for long-term investment.

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

19. The Company did not have any debentures during the year.

20. The Company has not raised any money by Public issue during the year.

21. According to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

Place : Kanpur For C. L. Kanodia & Co. Date : 30.05.2014 Firm''s Registration No. :001002C Chartered Accountants

Sd/- (C. L. Kanodia) Prop. Membership No. 11427

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Mar 31, 2012

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

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

1. As required by the Companies (Auditor's Report) Order, 2003 (As amended) 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 to the extent applicable.

2. Further to our Comments in the Annexure referred to in paragraph 1 above, we report that :-

a. we have obtained all the information and explanations which to the best of our knowledge and belief where 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 the books.

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

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

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

f. in our opinion and to the best of our information and according to the explanation given to us, the said accounts, read with notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view :-

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31.03.2012 and ii) in the case of the Profit and Loss Account, of the Profit for the year ended on that date. iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT (Referred to in Paragraph (1) of our Report of even date)

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

of Fixed Assets.

(b) The Fixed Assets have been physically verified by the management according to the program of periodical verification which in our opinion is reasonable having regard to the size of the company and nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(c) In our opinion, and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

2. (a) As explained to us, management has carried out physical verification of the inventory at reasonable intervals.

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

(c) In our opinion, and according to the information and explanations given to us, the Company has maintained proper records of its inventory, and discrepancies noticed on physical verification of inventory as compared to the books records, were not material and have been properly dealt with in the books of accounts

3. (a) During the year, the Company has taken unsecured loans of Rs. 108.68 lacs from companies listed in the register

maintained under section 301 of the Companies Act, 1956. The year end balance of the loan from companies and other party is Rs. 38.02 lacs. The company has granted loans to companies listed in the register maintained under section 301 of the Companies Act, 1956, having year end balance of Rs. 623.04 lacs.

(b) The rate of Interest and other terms and conditions of the loan taken or granted by the Company covered under sub-para (a) above are not, phma-facie prejudicial to the interest of the Company.

(c) In our opinion and according to the information and explanations given to us, the company is regular in repayment of the Principal amount as per stipulations.

(d) In our opinion and according to the information given to us, there are no overdue amounts for payment of principal.

4. In our opinion, and according to the information and explanations given to us, the Company has adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory and Fixed Assets and for the sale of goods services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in internal controls system.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need

to be entered into the register maintained under Section 301 of the Companies Act, 1956, have been so entered. (b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of rupees five lacs entered into during the financial year, at price which are reasonable having regard to the prevailing market prices at the relevant time.

6. As explained to us, the Company has not accepted deposits from the public under Sections 58A and 58AA of the Companies Act, 1956.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records u/s 209(1)(d)of the Companies Act, 1956, in regard to its products. We are of the opinion that prima- facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of

account, the Company has been regular in depositing during the year undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, and other statutory dues with appropriate authorities. As inform to us, there are no undisputed dues in arrears as at 31st March, 2012 for a period of more that six months from the date they become payable.

(b) According to the information and explanations given to us, the dues of Employees Estate Insurance, Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute and the forum where the dispute is pending are as under :-

Name of the Nature of dues Amount Forum where dispute

Statute (Rupees) is pending

Civil Judge (Senior) ESI Act, 1948 Damages and

Interest 135617.00 ESI Court KanpurNagar

10. The Company does not have any accumulated losses as at the year end, and has not incurred any cash losses during the financial year and the immediately preceding financial year.

11. In our opinion and based on the information and explanations given to us, the Company has not defaulted in repayment of dues to the Bank and financial institutions, during the above year.

12. Based on our examination of documents and records, we are of the opinion that 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, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures, and other investments. The investments have been held by the Company in its own name.

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.

16. According to theinformationandexplanationsgiventous.no term loan has been taken by the Company during the year.

17. In our opinion, and and according to the information and explanations given to us, the Company has not prima-facie, used the funds borrowed on short term basis during the year for long term investments and vies versa.

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

20. The Company has not raised any money by Public issue during the year.

21. Based on the audit procedures performed and on the basis of information and explanations given to us by the management, no fraud on or by the Company has been noticed or reported during the course of our audit.

For C. L. Kanodia & Co

Chartered Accountant

(C. L. Kanodia) Place : Kanpur Prop.

Date : 30.05.2012 Membership No. 11427

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Mar 31, 2011

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

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

1. As required by the Companies (Auditor's Report) Order, 2003 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 to the extent applicable.

2. Further to our Comments in the Annexure referred to in paragraph 1 above, we report that:-

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 the books.

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

d. in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this

report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

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

f. in our opinion and to the best of our information and according to the explanation given to us, the said accounts, read with notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view :-

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31.03.2011 and

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

iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT

(Referred to in Paragraph (1) of our Report of even date)

1. (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) As explained to us, the Fixed Assets of the Company are physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

(c) In our opinion, and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year and accordingly going concern is not effected.

2. (a) As explained to us, management has carried out physical verification of the inventory at reasonable intervals.

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

(c) In our opinion, and according to the information and explanations given to us, the Company has maintained proper records of its inventory, and no discrepancies noticed on physical verification of inventory as compared to the book records.

3. (a) During the year, the Company has taken unsecured loans of Rs. 170.00 lacs from companies and Other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(b) The rate of Interest and other terms and conditions of the loan taken or granted by the Company covered under sub-para (a) above are not, prima-facie prejudicial to the interest of the Company.

(c) In our opinion and according to the information and explanations given to us, the company is regular in repayment of the Principal amount as per stipulations.

(d) In our opinion and according to the information given to us, there are no overdue amounts for payment of principal.

4. In our opinion, and according to the information and explanations given to us, the Company has adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory and Fixed Assets and for the sale of goods. During the course of audit, we have not observed any continuing failure to correct major weaknesses in internal controls with regard to purchase of inventory and fixed assets and for the sale of goods.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956, have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of rupees five lacs entered into during the financial year, because of absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

6. As explained to us, the Company has not accepted deposits from the public under Sections 58A and 58AA of the Companies Act, 1956.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records u/s 209(1)(d)of the Companies Act, 1956, in regard to its products. We are of the opinion that prima- facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has been regular in depositing during the year undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, and other statutory dues with appropriate authorities. As inform to us, there are no undisputed dues in arrears as at 31st March, 2011 for a period of more that six months from the date they become payable.

(b) According to the information and explanations given to us, the dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute and the forum where the dispute is pending are as under:- Name of the Nature of dues Amount Forum where dispute Statute (Rupees) is pending

Civil Judge (Senior) ESI Act, 1948 Damages and 135617.00 ESI, Court, Kanpur Nagar Interest

10. The Company does not have any accumulated losses as at the year end, and has not incurred any cash losses during the financial year and the immediately preceding financial year.

11. In our opinion and based on the information and explanations given to us, the Company has not defaulted in repayment of dues to the Bank and financial institutions, during the above year.

12. Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. As explained to us, the provisions of any special statutes applicable to Chit Fund, Nidhi, Mutual Benefit fund or society are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures, and other investments. The investments have been held by the Company in its own name.

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.

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

17. In our opinion, and on the basis of our explanation and according to the information and explanations given to us, the Company has not prima-facie, used the funds borrowed on short term basis during the year for long term investments and vice versa.

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

20. In our opinion and according to the information and explanations given to us, the Company has not raised any money by Public issue during the year.

21. To the best of our knowledge and belief and according to the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the year.



For C. L. Kanodia & Co. Chartered Accountants

(C. L. Kanodia) Prop. Membership No. 11427

Place : Kanpur Date : 27.05.2011

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Mar 31, 2009

We have audited the attached Balance Sheet of QST LIMITED, as at 31st March 2009 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

2. Further to our Comments in the Annexure referred to in paragraph 1 above, we report that :-

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

b. In our opinion, proper books of Accounts as required by law have been kept by the

Company, so far as appears from our examinations of the Books.

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

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

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

f. In our opinion and to the best of our information and according to the explanations give to us, the said accounts, read with notes thereon, Subject to the note No. 3 regarding non - provision of interest on Bank Loans, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view :-

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31.03.2009 and

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

iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

1. (a) The Company is maintaining proper records

showing full particulars including quantitative details and situation of Fixed Assets.

(b) As explained to us, the Fixed Assets of the Company are physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification.

(c) In our opinion, and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year and accordingly going concern is not effected.

2. (a) As explained to us, management has carried our physical verification of the inventory at reasonable intervals.

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

(c) In our opinion, and according to the information and explanations given to us, the Company has maintained proper records of its inventory, and no discrepancies noticed on physical verification of inventory as compared to the book records.

3. (a) During the year, the Company has taken

unsecured loans Rs 494.00 lacs from Companies and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. The Company has not granted any loans to firms, Companies and other parties listed in the register maintained u/s 301 of the Companies Act, 1956. (b) The rate of Interest and other terms and conditions of the loan granted by the Company covered under sub-para (a) above are not prima- facie prejudicial to the interest of the Company.

4. In our opinion, and according to the information and explanations given to us, the Company has adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory and Fixed Assets and for the sale of goods. During the course of audit, we have not observed any continuing failure to correct major weakness in internal controls with regard to purchase of inventory and fixed assets and for the sale of goods.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956, have been so entered.

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

6. As explained to us, the Company has not accepted deposits from the public under Sections 58A and 58AA of the Companies Act, 1956.

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

8. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records u/s 209(1)(d) of the Companies Act, 1956, in regard to its products. We are of the opinion that prima- facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records.

9. (a) According to the information and explanations given

to us and on the basis of our examination of the books of accounts, the Company has been regular in depositing during the year undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax and other statutory dues with appropriate authorities. As informed to us, there are no undisputed dues in arrears as at 31st March 2009 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, the dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute and the forum where the dispute is pending are as under:-

Name of the Nature of dues Amount Forum where dispute Statute (Rupees) is pending Income Tax 2000-2001 on account of 2781962.00 CIT (A)-ll, Kanpur Act, 1961 Additions on Assessment Income Tax 2001-2002 on account of 2632641.00 CIT (A)-ll, Kanpur Act, 1961 Additions on Assessment ESI Act,1948 Damages and Interest 135617.00 Civil Judge (Senior) ESI Court, Kanpur Nagar

10. The Company does not have any accumulated losses at the year end, and has not incurred any cash losses during the financial year and the preceding financial year.

11. In our opinion and based on the information and explanations given to us, the Company has defaulted in repayment of dues to the Bank of Baroda. The Banks have categorized the accounts as NPA on 31. 05. 2002. The Company has compromised with Bank of Baroda under one time settlement. The Amount payable to Bank of Baroda is Rs. 337.00 Lacs under one time settlement excluding interest payable from 01.10.2008.

12. Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of security by was of pledge of shares, debentures and other securities.

13. As explained to us the provisions of any special statutes applicable to Chit Fund, Nidhi, Mutual Benefit fund or society are not applicable to the Company,

14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures, and other investments. The invest- ments have been held by the Company in its own name.

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.

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

17. In our opinion, and on the basis of our explanation and according to the information and explanations given to us, the Company has not prima facie, used the funds borrowed on short term basis during the year for long term investments and vice versa.

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

20. In our opinion and according to the information and explanations given to us, the Company has not raised any money by Public issue during the year.

21. To the best of our knowledge and belief and

according to the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the year.



For C. L. Kanodia & Co. Chartered Accountants (C. L. Kanodia) Prop. Membership No. 11427 Place: Kanpur Date : 20.06.2009