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Auditor Report of Splendid Metal Products Ltd.

Mar 31, 2015

We have audited the accompanying Standalone financial statements of M/s.SUJANA METAL PRODUCTS LIMITED ( "the Company "), which comprise the Balance Sheet as at March 31,2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management 's Responsibility for the Standalone Financial Statements

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

Auditors ' Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

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

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

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

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

Opinion

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor 's Report) Order, 2015 ( "the Order ") issued by the Central Government in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

(c) The 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 standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

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

(i) The company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note 31 to the financial statements.

ii) The company had made provision, as required under the applicable law or accounting standards, for material forseeable losses, if any, and as required on long term contracts including derivative contracts.

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

Annexure to the Independent Auditor 's Report

The Annexure referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of Our Report of even date to the members of M/s.Sujana Metal Products Limited on the accounts of the company for the year ended 31st March, 2015.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

(i) In respect of its fixed assets:

(a) The company is in the process of updating proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) According to the information and explanations given to us, Fixed Assets had not physically verified by the management during the period under Audit.

(ii) In respect of its inventories:

(a) According to the information and explanations given to us, inventories have been physically verified 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 were 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 discrepancy was noticed on physical verification of stocks by the management as compared to book records.

(iii) According to the information and explanations given to us, 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.

(iv) 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 and services and during the course of our audit we have not observed any major weaknesses in such internal control system.

(v) As per the information and explanation given by the company, the Company has not accepted any deposits covered under section 73 to 76 of the Companies Act, 2013.

(vi) As per the information & explanations given by the management, maintenance of cost records has been prescribed and they were maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us, in respect of statutory dues.

(a) According to the records of the company, the Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there were no outstanding statutory dues as on 31st March, 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are amounts payable in respect of income tax, sales tax, customs duty and excise duty which have not been deposited on account of disputes. The details are as follows :

F.Y. to which Amount Name of the Statute matters pertain (Rs. in Lakhs)

Income Tax Act,1961 2008-11 1479.26

Central Excise Act,1944 1995-2013 1943.54

1998-2008 548.33

215 08

Customs Act,1962 2009 10 215.08

2012- 13 21.97

2013- 14 54.11

Foreign Exchange Management Act, 1999 1995-1996 300 (Previously FERA, 1973)

2002-03 438.13

APGST Act,1957 2003-04 786.88

2005- 06 593

2006- 07 241 34

Central Sales Tax Act, 1956 2007

2007- 08 42.68

2009-10 9.90

Tamilnadu Value Added Tax 2006-07 394.92 Act, 2006



Name of the Statute Forum where matter is pending

Income Tax Appellate Tribunal, Income Tax Act,1961 Commissioner of Income Tax (Appeal)

Central Excise &Service Central Excise Act,1944 Tax Appellate Tribunal, Commissioner of Central Excise



Commissioner (Customs), Customs Act,1962 Sea Port, Chennai, CESTAT Bangalore

Foreign Exchange Management Act, 1999 (Previously FERA, 1973) Hon 'ble High Court of Delhi

Sales Tax Appellate Tribunal, APGST Act,1957 Commercial Tax Officer



Appellate Deputy Commissioner, Central Sales Tax Act, 1956 Hon 'ble High Court of Andhra Pradesh

Tamilnadu Value Added Tax Act, 2006 Hon 'ble High Court of Tamilnadu

(c) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 2013 and Rules made there under within time.

viii. The Company does not have any accumulated loss at the end of the financial year not more than fifty percent of its net worth and has not incurred cash loss during the financial year covered by our Audit and in the immediately preceeding financial year.

ix. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, there have been delays in repayment of dues to Banks and financial institutions. Such delays have been summarized below indicating the maximum amount of delay and the maximum period reflected against each.

Maximum Amount Maximum period of Banks/Financial Institutions Default (Rs.) Default

Andhra Bank (Term Loan)

Principal 63,23,958 89

Andhra Bank (Add. Term Loan)

Principal 2,82,292 43

Interest 3,08,352 43

Andhra Bank (FITL I)

Principal 5,21,584 91

Interest 10,25,697 120

Bank Of India (Term Loan)

Principal 62,61,458 101

Bank Of India (Add. Term Loan)

Principal 2,80,208 111

Interest 3,15,154 80

Bank Of India (FITL I)

Principal 17,74,637 131

Interest 30,82,033 114

Bank Of India (FITL II)

Principal 7,61,111 237

Interest 2,60,570 273

Bank Of Baroda (FITL I)

Principal 2,41,238 53

Interest 3,40,349 58

Bank Of Baroda (FITL II)

Principal 3,62000 58

Interest 1,23,950 89

IDBI Bank (Term Loan)

Principal 22,55,208 120

IDBI Bank (Add. Term Loan)

Principal 2,66,667 120

Interest 2,03,041 181

IOB (Add. Term Loan)

Principal 1,60,417 183

Interest 1,76,728 183

IDBI (FITL I)

Principal 3,74,358 120

Interest 4,54,355 150

Indian Bank (FITL I)

Principal 3,33,757 150

Indian Bank (FITL II)

Principal 2,55,556 335

IOB (FITL I)

Principal 4,35,663 150

Interest 17,07,364 59

IOB (FITL II)

Principal 5,20,000 92

Interest 2,04,174 61

Karnataka Bank Ltd (FITL II)

Principal 2,00,000 28

Interest 84,752 28

Karnataka Bank Ltd (FITL I)

Principal 42,200 76

Interest 2,22,361 76

Punjab National Bank (Term Loan)

Principal 94,63,542 149

PNB (Add. Term Loan)

Principal 4,22,917 43

Interest 4,51,297 43

PNB (FITL I)

Principal 9,17,472 149

Interest 16,74,533 180

PNB (FITL II)

Principal 4,37,902 18

Interest 5,36,137 18

State Bank of Patiala (FITL I)

Principal 5,48,148 91

Interest 14,18,745 122

State Bank of Patiala (FITL II)

Principal 9,23,333 89

Interest 3,08,137 119

x. According to the information and explanations given to us, the Company has given the guarantees for loans taken by others from a Bank or financial institution where of the terms and conditions are not prejudicial to the interest of the company.

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

xii. To the best of our knowledge and 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.

For CRK&ASSOCIATES Chartered Accountants Firm Reg. No: 010004S

C. Rajendra Kumar, FCA Place: Hyderabad Partner Date: 27th May, 2015 M No: 23103




Mar 31, 2014

We have audited the accompanying financial statements of M/s. SUJANA METAL PRODUCTS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31st, 2014, the Statement of Profit and Loss, Cash Flow Statement for the year ended, 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") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

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

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

Opinion

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

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

b. in the case of the Profit and Loss Account, of loss 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 (Auditors'' Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of Companies Act, 2013; and

e. on the basis of 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 March 31, 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 paragraph 1 of Our Report of even date to the members of M/s.Sujana Metal Products Limited on the accounts of the company for the year ended 31st March, 2014. Having regard to the nature of company''s business / Activities the clauses of 4(v), (vi), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of CARO are not applicable to the company.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

i. (a) The company is in the process of updating proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) According to the information and explanations given to us, Fixed Assets had not physically verified by the management during the period under Audit.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

ii. (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 discrepancy was noticed on physical verification of stocks by the management as compared to book records.

iii. (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 not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

(e) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Thus sub clauses (f) & (g) are not applicable to the company.

iv. In our opinion and according to the information and explanations given to us, there is generally an internal control procedure commensurate with the size of the company and the nature of its business. There should be strong internal control procedures for the purchase of inventories & fixed assets, payment for expenses and sale of goods. During the course of our audit, no other major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

v. As per the information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

vi. As per information & explanations 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 have been made and maintained. However, we have not made a detailed examination of the records to determine whether they are accurate or complete.

vii. (a) According to 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, Custom Duty, Excise Duty, cess to the extent applicable and any 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 of March, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are amounts payable in respect of income tax, sales tax, customs duty and excise duty which have not been deposited on account of disputes. They are detailed as follows,

Name of the Statute F.Y.to which Amount matters pertain (Rs. in Lakhs)

Income Tax Act,1961 2008-11 1479.25 Central Excise Act,1944 1995-2011 1688.15 2012-13 248.12



Customs Act,1962 1998-2008 548.33 2009-10 215.08 2012-13 21.97 2013-14 54.11

Foreign Exchange 1995-1996 300.00 Management Act,1999 (Previously FERA, 1973)

APGST Act,1957 2002-03 438.13 2003-04 786.88

Central Sales Tax Act,1956 2005-08 289.95 2009-10 9.90



Tamilnadu Value Added Tax 2006-07 194.92 Act 2006 2012-13 200.00



Name of the Statute Forum where matter is pending Income Tax Act,1961 Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeal)

Central Excise Act,1944 Central Excise &Service Tax Appellate Tribunal, Commissioner of Central Excise

Customs Act,1962 Commissioner (Customs), Sea Port, Chennai, CESTAT Bangalore Foreign Exchange Hon''ble High Court of Delhi Management Act,1999 (Previously FERA, 1973)

APGST Act,1957 Sales Tax Appellate Tribunal, Commercial Tax Officer

Central Sales Tax Act,1956 Appellate Deputy Commissioner, Hon''ble High Court of Andhra Pradesh

Tamilnadu Value Added Tax Hon''ble High Court of Act 2006 Tamilnadu

viii. The Company does not have any accumulated loss at the end of the financial year not more than fifty percent of its net worth and has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

ix. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, there have been delays in repayment of dues to Banks and financial institutions. Such delays have been summarized below indicating the maximum amount of delay and the maximum period reflected against each.

Maximum Amount Maximum Banks/Financial Institutions Default (Rs.in Lakhs) period of Default

Bank Of India

Principal 7.61 255 Interest 4.04 63

Bank Of Baroda

Principal 3.62 30 Interest 1.53 58

Indian Bank

Principa l 2.56 334 Indian Overseas Bank

Principal 5.20 46 Interest 2.49 3

Karnataka Bank Ltd

Principal 2.00 34 Interest 0.80 12

Punjab National Bank - 4315

Principal 10.98 35 Interest 3.99 30

State Bank Of Patiala

Principal 9.23 90 Interest 3.61 56

SASF Chennai (IDBI)

Principal 1472.00 669 Interest 637.02 700

SASF Vizag (IDBI)

Principal 1202.25 577 Interest 494.92 700

x. According to the information and explanations given to us, the company has given the guarantees for loan taken by others from a bank or financial institution where of the terms and conditions are not prejudicial to the interest of the company.

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

xii. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

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

For CRK&ASSOCIATES Chartered Accountants Firm Reg. No: 010004S

C.Rajendra Kumar, FCA Place: Hyderabad Partner Date: 30th May, 2014 M No: 23103


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of M/s. SUJANA METAL PRODUCTS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31st, 2013, the Statement of Profit and Loss, Cash Flow Statement for the year ended, 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, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

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

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

Opinion

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

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Profit and Loss Account, of loss 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 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on 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 clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of M/s. Sujana Metal Products Limited on the accounts of the company for the year ended 31st March, 2013. Having regard to the nature of company''s business / Activities the clauses of 4(v), (vi), (xii),(xiii), (xiv), (xviii), (xix) and (xx) of CARO are not applicable to the company.

1. On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

i. (a) The company is in the process of updating proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals in accordance with a programme of verification. Management has informed that no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

ii. (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 discrepancy was noticed on physical verification of stocks by the management as compared to book records.

iii. (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 not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

(e) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Thus sub clauses (f) & (g) are not applicable to the company.

iv. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business. There should be strong internal control procedures for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no other major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

v. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

vi. As per information & 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 have been made and maintained. However We have not made a detailed examination of the records to determine whether they are accurate or complete.

vii. (a) According to 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, Custom Duty, Excise Duty, cess to the extent applicable and any 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 except Income Tax as on 31st of March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are amounts payable in respect of income tax, sales tax, customs duty and excise duty which have not been deposited on account of disputes. They are detailed as follows.

Name of the Statute F.Y to which Amount in matters pertain Rs. (Lakhs)

2005-06 1517.25 Income Tax Act,1961 2009-10

1995-2010 1771.26 Central Excise 2012-13 246.46 Act ,1944

1998-99 308.28 Customs Act,1962 2008-09 215.08 2012-13 15.27

Foreign Exchange 1995-1996 630 Regulation Act,1973

2002-03 438.18 APGST Act,1957 2003-04 786.88

Central Sales Tax 2005-08 51.91 Act, 1956 2006-07 241.34





Name of the Statute Forum where matter is pending

Income Tax Act,1961 Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeal)

Central Excise Act,1944 Central Excise &Service Tax Appellate Tribunal, Commissioner of Central Excise

Customs Act,1962 Commissioner (Customs ), Sea Port, Chennai, CESTAT Bangalore

Foreign Exchange Hon''ble High Court of Delhi Regulatio Act,1973

APGST Act,1957 Sales Tax Appellate Tribunal Commercial Tax Officer

Central Sales Tax Act,1956 Appellate Deputy Commissioner, Hon''ble High Court of Andhra Pradesh

Tamilnadu Vaue Added Hon''ble High Court of Tamilnadu Tax ACt,2006

viii. The Company does not have any accumulated loss at the end of the financial year not more than fifty percent of its net worth and has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

ix. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, there have been delays in re-payment of dues to Financial Institutions.

Maximum Amount Maximum period Remarks Banks Default (Rs. of Default in lakhs)

SASF Chennai (IDBI)

Principal 736.00 304 CDR scheme not

Interest 352.08 335 approved by SASF

SASF Vizag (IDBI)

Principal 515.25 212 CDR scheme not

Interest 325.24 335 approved by SASF.

Due to CDR approval, Repayment schedule is postponed .So the Company does not fall under default in repayment for the banks namely IOB,BOI, ANDHRA BANK & PNB (LONG TERM) as per CDR during the year 2012-2013.

x. According to the information and explanations given to us, the company has given the guarantees for loan taken by others from a bank or financial institution where of the terms and conditions are not prejudicial to the interest of the company.

xi. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

xii. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short- term basis have been used for long-term investment by the Company.

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

For CRK&ASSOCIATES

Chartered Accountants

Firm Reg. No: 010004S

C. Rajendra Kumar, FCA

Place: Hyderabad Partner

Date : 28th May 2013 M No: 23103


Mar 31, 2012

1. We have audited the attached Balance Sheet of Sujana Metal Products Limited ("the Company") as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227 (4A) 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.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

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 dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 profit of the Company for the year ended on that date; and

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

5. On the basis of the written representations received from the Directors of the Company as on March 31, 2012 taken on record by the Board of Directors, we report that none of the Directors 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.

Annexure to the Auditors' Report

(Referred to in paragraph 3 of our report of even date)

i) Having regard to the nature of the Company's business/activities/result, clauses 4(v), (vi), (x), (xii),

(xiii), (xiv), (xviii), (xix) and (xx) of CARO are not applicable to the Company.

ii) In respect of its fixed assets:

a) The Company is in the process of harmonising its fixed asset register with a view towards reflecting full particulars including description, quantitative details and location / situation of its fixed assets.

b) The fixed assets have been physically verified during the year by the Management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. In view of the fact that the fixed asset register is in the process of harmonising, management has informed that discrepancies, if any, arising between the assets verified and the books and records would be dealt with in the year in which such harmonisation of the register is completed.

c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

iii) In respect of its inventory:

a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals, except the system of documentation for such verification needs to be strengthened.

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 were 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 inventories and no material discrepancies were noticed on physical verification.

iv) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, additional strengthening of the internal control procedures with regard to purchases of inventory and fixed assets and for the sale of goods is recommended so as to be commensurate with the current size of the Company and nature of its business. However, in our opinion management is taking reasonable steps to correct the said weaknesses and we have not observed any other continuing failure to correct major weaknesses in internal controls.

vi) In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

vii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of manufacture of steel products and are of the opinion that prima

facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

viii) According to the information and explanations given to us in respect of statutory dues:

a) Except for delays in deposit of Provident Fund, Employee's State Insurance, Income-tax, Wealth Tax, the company has been regular in depositing undisputed statutory dues including Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2012 for a period of more than six months from the date they became payable, except for the following:

Amount Year to which Name of Nature of Date of (Rupees in the amount Due date the Statute the Dues Payment lakhs) relates

Income Tax Income 192.87 2011-2012 June 15, 2011 and Not paid Act, 1961. Tax September 15, 2011

c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on March 31, 2012 on account of disputes are given below:

Financial Year Amount Name of the Statute to which matter (Rupees Forum where matter is pending pertains in lakhs)

Income Tax Act, 1961 2008-2009 837.08 Asst. commissioner of Income Tax

Central Excise Act, 1995-2009 1209.90 Custom Excise & Service Tax Appellate

1944 1995-1997 1.00 Tribunal

Commissioner of Customs (Appeals) Customs Act, 1962 1998-1999 306.28 Commissioner of Customs (Sea Port)

2008-2009 214 90 Custom Excise & Service Tax Appellate Tribunal

Foreign Exchange 1995-1996 530.00 Hon'ble High Court of Delhi Regulation Act, 1973

APGST Act, 1957 2002-2003 438.13 Sales Tax Appellate Tribunal 2003-2004 786.88 Commercial Tax Officer.

Central Sales Tax 2005-2008 51.91 Appellate Deputy Commissioner Act, 1956 2006-2007 241 34 Hon'ble High Court of Andhra Pradesh and Appellate Deputy Commissioner Tamilnadu Value 2006-2007 194.92 Hon'ble High Court of Tamilnadu Added Tax Act, 2006



ix) In our opinion and according to the information and explanations given to us, there have been delays in repayment of dues to banks and financial institution. Such delays have been summarized below

indicating the maximum amount of delay and the maximum period reflected against each.

Maximum Amount of Maximum Banks default (Rupees in period of lakhs) default (Days) IDBI

Principal 135.32 89

Interest 35.67 90

Punjab National Bank *

Principal 472.17 82

Interest 161.55 31

Andhra Bank *

Principal 278.83 82

Interest 98.82 94

Bank of India *

Principal 304.17 83

Interest 96.31 85

Indian Overseas Bank *

Principal 181.38 75 Interest 61.22 43



The above delays have been made good by the Company and there were no overdue amounts at the year end._

* The Company has applied for condonation of delay in payments.

Financial Institution-SASF

During the year there were delays in payments to SASF however the same could not be quantified as the Company is in re-schedulement of dues as explained in Note 41 of the financial statements.

x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institution are not prima facie prejudicial to the interests of the Company.

xi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application.

xii) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet, we report that, during the period prima facie, funds raised on short- term basis have not been used for long-term investment.

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

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 008072S)

Hyderabad C R Rajagopal

May 28, 2012 Partner

(Membership No. 23418)


Mar 31, 2011

1 We have audited the attached Balance Sheet of Sujana Metal Products Limited ("the Company") as at March 31, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the eighteen months period ended on that date, both 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227 (4A) 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.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

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 Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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, 2011;

(ii) in the case of the Profit and Loss Account, of the profit of the Company for the eighteen months period ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the eighteen months period ended on that date. 5) On the basis of written representations received from the directors as on March 31, 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2011 from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956.

Annexure to the Auditor's Report (Referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Company's business/activities, clauses (v), (vi), (x), (xii), (xiii), (xiv), (xix) and (xx) of CARO are not applicable to the Company.

(ii) In respect of its fixed assets:

(a) The Company is in the process of re-compiling / updating its fixed asset register with a view towards reflecting full particulars including description, quantitative details and location / situation of its fixed assets.

(b) Some of the fixed assets have been physically verified during the period by the Management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. In view of the fact that the fixed asset register is in the process of re-compilation / updating, management has informed that discrepancies, if any, arising between the assets verified and the books and records would be dealt with in the year in which such re-compilation of the register is completed

(c) The fixed assets disposed off during the period, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the period by the Management at reasonable intervals, except the system of documentation for such verification needs to be strengthened.

(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 were 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 inventories and no material discrepancies were noticed on physical verification.

(iv) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(v) In our opinion and according to the information and explanations given to us, additional strengthening of the internal control procedures with regard to purchases of inventory and fixed assets and for the sale of goods is recommended so as to be commensurate with the current size of the Company and nature of its business. However, in our opinion management is taking reasonable steps to correct the said weaknesses and we have not observed any other continuing failure to correct major weaknesses in internal controls.

(vi) In our opinion, the internal audit functions carried out during the period by firms of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(vii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of manufacture of steel products and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(viii) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund dues, Employee's State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us, details of undisputed amounts payable in respect of Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and Other material statutory dues which were in arrears as at March 31, 2011 for a period of more than six months from the date they became payable are given below:

Amount Year to which Nature of Nature of Date of (Rupees in the amount Due date Statute Dues Payment Lakhs) relates

Income Tax Income Tax 462.32 2010-2011 June 15, 2010 and Not paid Act, 1961 2.74 2001-2002 September 15, 2010 4.20 2002-2003 June, September, December and March of each year / period

Income Tax Fringe 7.56 2006-2007 January 23,2010 Not Paid

Act, 1961 Benefit Tax 8.51 2007-2008 February 24,2010

Wealth Tax Wealth Tax 0.88 2008-2009 September 30, 2009 Not paid Act,1957 1.08 2009-2010 September 30, 2010

(c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on March 31, 2011 on account of disputes are given below:

Financial Year Amount Name of the Statute to which matter (Rupees in Forum where matter is pending pertains Lakhs)

Central Excise Act, 1944 1995-2009 1,384.30 Custom Excise & Service Tax 1995-1997 1.00 Appellate Tribunal Commissioner of Customs (Appeals)

Customs Act, 1962 1998-1999 302.69 Commissioner of Customs (Sea 2008-2009 214.90 Port) Custom Excise & Service Tax Appellate Tribunal

Foreign Exchange Regulation 1995-1996 530.00 Hon'ble High Court of Delhi Act, 1973

APGST Act, 1957 2002-2003 488.13 Sales Tax Appellate Tribunal

2003-2004 786.88 Appellate Deputy Commissioner

Central Sales Tax Act, 1956 2002-2003 2,213.11 Commercial Tax Officer

2004-2005 13.38 Sales Tax Appellate Tribunal

2005-2008 58.58 Appellate Deputy Commissioner

2006-2007 241.34 Hon'ble High Court of Andhra Pradesh and Appellate Deputy Commissioner

Tamilnadu Value Added Tax 2006-2007 194.92 Hon'ble High Court of Tamilnadu Act, 2006



(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institution.

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not prima facie prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application.

(xii) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet, we report that, during the period prima facie, funds raised on short- term basis have not been used for long-term investment.

(xiii) According to the information and explanations given to us, the Company has made preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956 at a price which is prima facie not prejudicial to the interests of the Company.

(xiv) To the best of our knowledge and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the period.

For Deloitte Haskins & Sells

Chartered Accountants

Registration No. 008072S

Hyderabad C R Rajagopal

May 30, 2011 Partner

Membership No. 23418


Sep 30, 2009

1. We have audited the attached Balance Sheet of Sujana Metal Products Limited as at September 30, 2009, the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both 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.

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

3. As required by the Companies (Auditors Report) Order, 2003 (CARO) 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.

4. Further to our comments in the Annexure referred to in paragraph 3 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 it appears from our examination of those books;

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

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

e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 September 30, 2009;

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

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

5) On the basis of written representations received from the directors as on September 30, 2009 and taken on record by the Board of Directors, none of the directors is disqualified as on September 30, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditors Report (Referred to in paragraph 3 of our report of even date)

The nature of the Companys business/activities during the year was such that paragraphs 4 (xii), (xiii), (xiv) and (xix) of CARO are not applicable to the Company.

(i) In respect of its fixed assets:

(a) The Company is in the process of re-compiling its fixed asset register with a view towards reflecting full particulars including quantitative details and situation of its fixed assets.

(b) Some of the fixed assets have been physically verified during the year by the Management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. In view of the fact that the fixed asset register is in the process of re-compilation, management has informed that discrepancies, if any, arising between the assets verified and the books and records would be dealt with in the year in which such re- compilation of the register is completed

(c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventories:

(a) According to the information and explanations given to us, management has physically verified the inventory during the year. In our opinion, having regard to the nature of business and location of stocks, the frequency of verification is reasonable.

(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 according to the information and explanations given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt in the books of account.

(iii) According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, paragraphs 4 (iii) (a) to (iii) (g) of CARO are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services except that such systems need to be strengthened in respect of certain locations of the company in order to make it commensurate with the size and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal controls systems.

(v) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly paragraph (v) (a) and (b) of CARO are not applicable

(vi) According to the information and explanations given to us, the Company has not accepted any deposits to which the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 apply.

(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of steel products, pursuant to the order made by the Central Government for the 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 made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company.

(ix) In respect of statutory dues:

a. According to the information and explanations given to us, except for delays in deposit of provident fund dues, employee state insurance dues, taxes deducted at source, advance payment of income taxes and wealth tax, the company has been regular in depositing undisputed statutory dues including investor education and protection fund, custom duty, excise duty, cess, sales tax, service tax and any other material statutory dues applicable to it with the appropriate authorities during the year.

b. According to the information and explanations given to us, details of undisputed amounts payable in respect of provident fund investor education and protection fund, income tax, sales tax, wealth tax, service tax, custom duty, excise duty and any other material statutory dues which were in arrears as at September 30, 2009 for a year of more than six months from the date they became payable are given below:

Nature of Nature Amount Year to which Statute of Dues (Rupees) the amount relates

Income Income Tax 777,234 1998-1999 Tax Act, 273,574 2001-2002 1961 610,610 2002-2003

1,847,720 2003-2004

10,318,210 2005-2006

27,346,629 2006-2007

46,024,273 2007-2008

17,588,766 2008-2009

Income Fringe 1,676,860 2006-2007 Tax Act, Benefit 2,025,107 2007-2008 1961 Tax 3,086,813 2008-2009

Wealth Wealth 169,967 2007-2008 Tax Act, Tax 1957

Income Dividend 6,004 2006-2007 Tax Act, Distribution 750,249 2007-2008 1961 Tax



Name of the Due Date of Statue date Payment

Income Tax Act, 1961 July, September, Not December and Paid March of each year/period.

Income Tax Act, 1961 July, September, Not December and Paid March of each year/period.

Wealth Tax Act, 1957 September 30, Not 2008 paid

Income Tax Act, 1961 November 13, Not 2007 Paid January 12, 2009

c. According to the information and explanations given to us, details of dues of sales tax, income tax, custom duty, wealth tax, service tax, excise duty and cess which have not been deposited as on September 30, 2009 on account of any dispute are given below:

Name of the Financial Year to which Amount Forum where matter Statute matter pertains (Rupees) is pending

Central Excise Act, 1944 1995-2009 37,045,115 Custom Excise & Service Tax Appellate Tribunal

1993-2009 23,889,623 Commissioner of Customs and Central Excise

Customs Act, 1962 1998-1999 28,928,336 Commissioner of Customs (Sea Port)

Foreign Exchange 1995-1996 37,500,000 Honble High Court of Delhi Regulation Act, 1973

APGST Act, 1957 2002-2005 164,087,562 Honble High Court of Andhra Pradesh

2003-2004 78,688,077 Appellate Deputy Commissioner

AP Value Added 2005-2008 686,274,557 Honble High Court of Tax Act, 2005 Andhra Pradesh

Central Sales Tax 2002-2003 221,311,181 Commercial Tax Officer Act, 1956 2002-2006 1,337,612 Appellate Deputy Commissioner

Tamilnadu Value 2006-2007 19,491,531 Honble High Court of Added Tax Tamilnadu Act, 2006

Income Tax Act, 1961 1996-1998 26,701,045 Commissioner of Income Tax (Appeals)

(x) The Company does not have accumulated losses and has not incurred cash losses during the year covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, there have been delays in repayment of dues to a bank and financial institution. Such delays have been summarized below indicating the maximum amount of delay and the maximum period, with the year end corresponding amount reflected against each.

Lender Maximum Maximum amount of Period of Remarks Default Default (Rs.) (Days)

IDBI Bank Ltd.

Principal 13,532,074 86 Interest 14,584,532 32

Stressed Assets As per agreement, Stabilization Fund (SASF) 16,62,857 Equity

Principal 17,719,750 121 Shares of Rs.5 at

Interest 14,331,095 456 premium of Rs. 12.50 were allotted to SASF on November 19, 2009

(xii) In our opinion and according to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks and financial institutions are not prima facie prejudicial to the interest of the Company.

(xiii) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short-term basis have, prima facie, not been used for long-term investment.

(xv) The Company has made a preferential allotment of shares on exercise of warrants allotted in earlier years to parties covered in the register maintained under section 301 of the Companies Act, 1956. The prices at which shares are allotted are not prima facie prejudicial to the interest of the Company.

(xvi) During the year covered by our audit report, the Company has not raised any money by public issue.

(xvii) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For Deloitte Haskins & Sells Chartered Accountants

Secunderabad C R Rajagopal

December 30, 2009 Partner

Membership No.23418

 
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