Auditor Report of Uttam Galva Steels Ltd.

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of M/S Uttam Galva Steels limited ("the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement, and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the 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 and presentation of these standalone Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), and cash flows, and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the standalone Ind AS financial statements.

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

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

Opinion

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

(a) in the case of the Balance Sheet, of the state of affairs (financial position) of the Company as at March 31, 2018;

b) in the case of the Statement of Profit and Loss, of the loss (financial performance including other comprehensive income) for the year ended on that date;

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

(d) in the case of the Statement of Changes in Equity, of the changes in equity for the year ended on that date.

Emphasis of Matters

We draw your attention to note no.33 in the Notes to the Financial Statements. The Company has defaulted in repayment of loans and interest thereon as mentioned in ''Annexure II'' to this report. As per directions of RBI dated 13.06.2017, the lenders have referred the matter to National Company Law Tribunal (NCLT) for resolution of debt. The financials have been prepared on the assumption of going concern as the management is of the opinion that the Company will remain in business for the foreseeable future.

Our Opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2016 ("the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act 2013, we give in the ''Annexure A'', a statement on the matters specified in paragraphs 3 and 4 of the Order.

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 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 it appears from our examination of those books;

c) The Company has no branch office and hence the company is not required to conduct audit under section 143 (8) of the Act;

d) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash flow statement, and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with the Companies (Accounts) Rules, 2014

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

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in ''Annexure B''. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s Internal Financial Controls over financial Reporting; and

h) 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 as per the Notes to the Financial Statement.

ii. The Company has made provision, as required under the applicable law or Indian Accounting Standards (Ind AS), for material foreseeable losses, and as required on long-term contracts including derivative contracts as per Notes to the Standalone Ind AS Financial Statement.

iii. During the year, no amounts were required to be transferred to the Investor Education and Protection Fund by the Company. The question of delay in transferring such sums does not arise.

The ''Annexure A'' referred to in Independent Auditor''s Report to the Members of the Company on the Financial Statements for the year ended 31^st March 2018, we report that:

(i) (a) According to the information and explanation given to us and based on the records produced before us, we are of the opinion that the Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) According to the information and explanation given to us, fixed assets were physically verified by the management according to a designed to cover all the locations which in our opinion, is reasonable having regard to the size of the company and the nature of its assets.

(c) According to the information and explanation given to us and based on the records produced before us, the title deeds of immovable properties are held in the name of the company.

(ii) According to the information and explanation given to us Inventory has been physically verified by the management during the year. No material discrepancies were noticed that would have an impact over the Financial Statements.

(iii) According to the information and explanation given to us, the Company has not granted during the year any unsecured loans. Hence this clause is not applicable to the Company.

(iv) According to the information and explanation given to us, we are of the opinion that in respect of loans, investments, guarantees, and security, provisions of section 185 and 186 of the Companies Act, 2013 have been complied with.

(v) According to the information and explanation given to us, the company has not accepted any deposits within the meaning of Section 73 to 76 of the Act and the rules framed there under.

(vi) According to the information and explanation given to us, the Company has maintained cost records as specified by the Central Government under subsection (1) of section 148 of the Act

(vii) (a) According to the books and records as produced and audited by us in accordance with generally accepted auditing practices in India and also Management representations, undisputed statutory dues in respect of Provident fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth tax, Service tax, Custom duty, Excise duty, Value Added Tax, Goods and Service Tax, Cess and other statutory dues, if any, applicable to it, has been regularly deposited with the appropriate authorities.

(b) According to the information and explanation given to us and the record produced before us, the disputed amount payable in case of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax or cess is as per ''Annexure I'' attached.

(viii) According to the information and explanation given to us and based on the records before us, the company has defaulted in repayment of dues to financial institutions and banks as per ''Annexure II'' attached.

(ix) According to the information and explanation given to us and the record produced before us, the company has not raised money by way of initial public offer or further public offer (including debt instruments) or by way of any term loan during the year.

(x) During the course of our examination of the books of account carried in accordance with the generally accepted auditing standards in India, we have neither come across any instance of fraud on or by the Company by its officers or employees, either noticed or reported during the year, nor have we been informed of such case by the Management.

(xi) According to the information and explanation given to us and the record produced before us, managerial remuneration has been paid during the year as per the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company as specified in the Nidhi Rules, 2014. Hence the provision of this clause is not applicable to the company.

(xiii) According to the information and explanation given to us and the record produced before us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Standalone Financial Statements etc., as required by the applicable Indian Accounting Standards.

(xiv) According to the information and explanation given to us and the record produced before us, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Hence the provision of this clause is not applicable to the company.

(xv) As per the information and explanation given to us and the record produced before us, the company has not entered into any non-cash transactions with directors or persons connected with them.

(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of M/S Uttam Galva Steels Limited ("the Company”) as of 31^st March, 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being ade only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

ANNEXUREI

Sr. No.	Nature of Duty	Period	Amount (in Rs.)	Forum where dispute is pending
1	Service Tax	Oct-06 to Nov-09	13,15,490	Deputy Commissioner of Central Excise
2	Excise Duty	Mar-12 to May-12	17,77,180	Central Excise & Service Tax Appellate Tribunal (CESTAT)
3	Excise Duty	Dec-07 to Jun-08	30,82,563	Central Excise & Service Tax Appellate Tribunal (CESTAT)
4	Excise Duty	Dec-07 to Jun-08	64,84,307	Central Excise & Service Tax Appellate Tribunal (CESTAT)
5	Service Tax	Jul-10 to Dec-10	35,26,753	Central Excise & Service Tax Appellate Tribunal (CESTAT)
6	Service Tax	Mar-11, Jun-11, Aug-11 & Sep-11	25,02,879	Central Excise & Service Tax Appellate Tribunal (CESTAT)
7	Service Tax	Jan-11, Feb-11, Apr-11, May-11, Jul-11, Oct-11 to Dec-11.	24,15,279	Central Excise & Service Tax Appellate Tribunal (CESTAT)
8	Service Tax	01-01-2012	8,60,833	Central Excise & Service Tax Appellate Tribunal (CESTAT)
9	Excise Duty	May-07 to Sep-09	2,76,12,314	Additional Commissioner of Central Excise
10	Custom Duty	Financial Year 2008-09	11,67,80,968	Central Excise & Service Tax Appellate Tribunal (CESTAT)
11	Interest on Income tax	FY 2008-09	1,36,640	Centralized Processing Centre (CPC) - Bangalore
12	Income tax	FY 2012-13	6,910	Commissioner of Income Tax (Appeals)
Total			16,65,02,116

ANNEXURE II

Details of overdrafts (LC Devolvement) from banks as on 31.03.2018

Name of Lender	LC Devolvement (Figures in Crore)	Default from
State Bank of India	925.90	July,2016
Canara Bank	739.30	Februrary,2016
ICICI Bank Ltd	26.88	August,2016
Indian Overseas Bank	126.30	April,2016
Union Bank of India	208.91	March,2016
Punjab National Bank	363.68	March,2016
Bank of Baroda	95.73	June,2016
IDBI	265.45	April,2016
Total	2,752.15

Details of Term Loan Principal and Interest overdue as on 31^st March, 2018.

Name of Lender	Default in (Figures in Crore)		Default from
	Principal Repayment	Interest	Principal Repayment	Interest
State Bank of India	462.63	58.79	June,2016	June,2016
Canara Bank	178.20	20.08	July,2016	July,2016
Bank of India	63.12	20.98	July,2016	July,2016
ICICI Bank Ltd	166.32	18.74	July,2016	July,2016
Indian Overseas Bank	194.13	29.43	June,2016	April,2016
Union Bank of India	148.50	16.73	July,2016	July,2016
Punjab National Bank	248.15	42.24	March,2016	March,2016
Indian Bank	118.80	13.99	July,2016	July,2016
Bank of Baroda	121.60	17.39	June,2016	June,2016
Exim Bank	123.39	21.98	March,2016	March,2016
State Bank Of Mauritius Ltd	21.04	6.69	July,2016	July,2016
Afrasia Bank Ltd	15.87	4.68	July,2016	July,2016
Oriental Bank of Commerce	149.34	39.05	June,2016	April,2016
Syndicate Bank	148.75	44.81	March,2016	March,2016
Pheonix ARC Pvt Ltd	15.00	28.32	July,2017	March,2016
Vijaya Bank	193.75	56.77	March,2016	March,2016
Total	2,368.59	440.66

For Todarwal& Todarwal LLP

Chartered Accountants

ICAI Reg. No. : 111009W/W100231

Sunil Todarwal

Place: Mumbai Partner

Dated : 7^th April,2018 M. No. : 032512

---

Mar 31, 2017

TO THE MEMBERS OF

M/S UTTAM GALVA STEELS LIMITED

Report on the Stand-alone Ind-AS Financial

Statements

We have audited the accompanying Stand-alone Ind-AS financial statements of M/s Uttam Galva Steels Limited ("the Company”), which comprise the Balance Sheet as at 31^st March, 2017, the Statement of Profit and Loss (including other Comprehensive Income), the Cash Flow Statement, and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. Management''s Responsibility for the Stand-alone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act”) with respect to the preparation and presentation of these Stand-alone Ind-AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), and cash flows, and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind-AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

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 Stand-alone Ind-AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these Stand-alone Ind-AS 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 of the Stand-alone Ind-AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Stand-alone Ind-AS financial statements are free from material misstatement.

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

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

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

(a) in the case of the Balance Sheet, of the state of affairs (financial position) of the Company as at 31^st March, 2017,

(b) in the case of the Statement of Profit and Loss, of the loss (financial performance including other comprehensive income) for the year ended on that date;

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

(d) in the case of the Statement of Changes in Equity, of the changes in equity for the year ended on that date.

Other Matters

The Stand-alone financial statements of the Company for the year ended 31^st March, 2017 have been prepared under the Ind-AS specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015. The comparative figures have also been reinstated in accordance with the Ind-AS. A reconciliation statement, which reconciles the figures of the comparatives from erstwhile Accounting Standard to Ind-AS has been prepared and presented as a part of the Stand-alone Ind-AS financial statement.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order”) issued by the Central Government of India in terms of Sub-Section (11) of Section 143 of the Act, we give in the ''Annexure A'', 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 Company has no branch office and hence the Company is not required to conduct audit under Section 143(8) of the Act;

d) The Balance Sheet, the Statement of Profit and Loss, the Cash flow statement, and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

e) In our opinion, the aforesaid Stand-alone Ind-AS financial statements comply with the Ind-AS prescribed under Section 133 of the Act, read with the Companies (Accounts) Rules, 2014;

f) On the basis of the written representations received from the Directors as on 31^st March, 2017 taken on record by the Board of Directors, none of the Directors is disqualified as on 31^st March, 2017 from being appointed as a Director in terms of Section 164(2) of the Act;

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

The ''Annexure A'' referred to in Independent Auditor''s Report to the Members of the Company on the Financial Statements for the year ended 31^st March 2017, we report that:

(i) (a) According to the information and explanation given to us and based on the records produced before us, we are of the opinion that the Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) According to the information and explanation given to us, fixed assets are physically verified by the management according to a phased programme designed to cover all the locations which in our opinion, is reasonable having regard to the size of the company and the nature of its assets

(c) According to the information and explanation given to us and based on the records produced

h) 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 as per the Notes to the Financial Statement.

ii. The Company has made provision, as required under the applicable law or Ind-AS for material foreseeable losses, and as required on long-term contracts including derivative contracts as per Notes to the Stand-alone Ind-AS Financial Statement.

iii. During the year, no amounts were required to be transferred to the Investor Education and Protection Fund by the Company. The question of delay in transferring such sums does not arise.

iv. The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8^th November, 2016 to 30^th December,

2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management.

before us, the title deeds of immovable properties are held in the name of the company.

(ii) According to the information and explanation given to us Inventory has been physically verified by the management during the year. No material discrepancies were noticed that would have an impact over the Financial Statements.

(iii) According to the information and explanation given to us, the Company has not granted during the year any unsecured loans. Hence this clause is not applicable to the Company

(iv) According to the information and explanation given to us, we are of the opinion that in respect of loans, investments, guarantees, and security, provisions of Section 185 and 186 of the Act have been complied with.

(v) According to the information and explanation given to us, the Company has not accepted any deposits within the meaning of Section 73 to 76 of the Act and the rules framed there under.

(vi) According to the information and explanation given to us, the Company has maintained cost records as specified by the Central Government under Sub Section (1) of Section 148 of the Act

(vii) (a) According to the books and records as

produced and audited by us in accordance with generally accepted auditing practices in India and also Management representations, undisputed statutory dues in respect of Provident fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth tax, Service tax, Custom duty, Excise duty, Value Added Tax, Cess and other statutory dues, if any, applicable to it, has been regularly deposited with the appropriate authorities.

(b) According to the information and explanation given to us and the record produced before us, the disputed amount payable in case of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax or cess is as per ''Annexure I'' attached.

(viii) According to the information and explanation given to us and based on the records produced before us, the Company has defaulted in repayment of dues to financial institutions and banks as per ''Annexure II'' attached.

(ix) According to the information and explanation given to us and the record produced before us, the Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or by way of any term loan during the year.

(x) During the course of our examination of the books of account carried in accordance with the generally accepted auditing standards in India, we have neither come across any instance of fraud on or by the Company by its officers or employees, either noticed or reported during the year, nor have we been informed of such case by the Management.

We have audited the internal financial controls over financial reporting of Uttam Galva Steels Limited ("the Company”) as of 31^st March 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered

(xi) According to the information and explanation given to us and the record produced before us, managerial remuneration has been paid during the year as per the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company as specified in the Nidhi Rules, 2014. Hence the provision of this clause is not applicable to the Company.

(xiii) According to the information and explanation given to us and the record produced before us, all transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and the details have been disclosed in the Stand-alone Financial Statements etc., as required by the applicable Ind-AS.

(xiv) According to the information and explanation given to us and the record produced before us, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Hence the provision of this clause is not applicable to the Company.

(xv) As per the information and explanation given to us and the record produced before us, the company has not entered into any non-cash transactions with Directors or persons connected with him.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31^st March, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Todarwal & Todarwal

Chartered Accountants

(ICAI Reg No : 111009W) Sd/-

Sunil Todarwal

Place: Mumbai Partner

Date : 28^th April, 2017 (Membership No. : 032512)

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Mar 31, 2015

We have audited the accompanying financial statements of Uttam Galva Steels Limited ('the Company'), which comprise the Balance Sheet as at March 31, 2015, the Profit and Loss Statement 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 Stand-alone Financial Statements

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

Auditor's Responsibility

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

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

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

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

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 31st March, 2015;

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

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

Emphasis of Matters:

We draw attention to Note to the financial statements which indicates that the Company has revalued the land situated at Pali Road Complex and credited the revaluation amount equivalent to Rs.614.53 Crores to the revaluation reserve. Further we draw attention to Note to the financial statements which indicates that Company has transferred land amounting to Rs. 347.36 crores to stock in trade with a view to deal in plots (land).

Our opinion is not qualified/modified in respect of this matter

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("Order") issued by Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the annexure a statement of the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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 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 it appears from our examination of those books;

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

d. In our opinion the aforesaid Stand-alone financial statement comply with the Accounting standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,2014;

e. On the basis of the written representations received from the directors as on March 31, 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of section 164(2) of the Companies Act 2013; and

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 26.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, and as required on long-term contracts including derivative contracts if any.

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

(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date)

1. In respect of Fixed Assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets; site wise/ plant wise. With consideration to significant additions from time to time such records are being updated periodically.

(b) According to the information and explanation given to us, the Company is formulating a programme of verification by which all its fixed assets are verified in a phased manner.

(c) During the year the Company has not disposed of any part of the plant and machinery, disposal of fixed assets does not constitute a substantial part of the Company's fixed assets

2. In respect of Inventories:

(a) The inventory has been physically verified during the year by the management. In our opinion, 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 and inventories followed by the management are reasonable and adequate in relation to the size ofthe Company and the nature of its business.

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

3. In respect of the loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013:

(a) The Company has given loans to wholly owned subsidiaries of the Company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 58.38/- crore and the year-end balance is Rs. 55.39/- crore.

(b) In our opinion and according to the information and explanations given to us, the rate of interest, where applicable and other terms and conditions, are not prima facie prejudicial to the interest of the Company.

(c) The principal amounts are repayable on demand and there is no repayment schedule. The interest, where applicable, is payable on demand.

(d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest, where applicable, there are no overdue amounts.

4. In our opinion and according to the information and explanations given to us, the Company internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

5. The Company has not accepted any deposits from the public. Therefore, the provisions of clause (v) of the order are not applicable to the Company.

6. To the best of our knowledge and according to the information and explanations given to us, the Company has received the report of a Cost Auditor as prescribed the maintenance of cost records under Section 148 (1) of the Companies Act, 2013.

7. In respect of Statutory dues:

(a) According to the records of the Company, 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 any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2015 for a period of more than six months from the date of becoming payable.

(b) The disputed statutory dues aggregating to Rs. 25.78 crores, that have not been deposited on account of disputed matters pending before appropriate authorities are referred below:

Nature of Amount Period Forum where Duty in Rs dispute is Pending

Service Tax 35,29,749 July 05 to Central Excise July 07 and Service Tax Appellate Tribunal

Service Tax 1,61,751 April 06 to Central Excise October 06 and Service Tax Appellate Tribunal

Service Tax 25,02,879 March-11, Central Excise June-11, and Service August-11& Tax Appellate Tribunal September-11

Service Tax 24,15,279 January-11, Central Excise February-11, and Service April-11, May- Tax Appellate 11, July-11, Tribunal October-11 to December-11

Service Tax 8,60,833 January-12 Central Excise and Service Tax Appellate Tribunal

Excise Duty 3,34,33,367 July 10 to Central Excise Feb 11 and Service Tax Appellate Tribunal

Excise Duty 17,77,180 March-12 to Central Excise May-12 and Service Tax Appellate Tribunal

Excise Duty 8,68,16,345 April-07 to Central Excise March-12 and Service Tax Appellate Tribunal

Excise Duty 30,82,563 December-07 Central Excise to June-08 and Service Tax Appellate Tribunal

Excise Duty 64,84,307 December-07 Central Excise to June-08 and Service Tax Appellate Tribunal

Customs 11,67,80,968 F.Y. 2008- Commissioner of Duty 09 Customs

(c) There has been no occasion in case of the Company during the year under the report to transfer any sums due to the Investor Education and Protection Fund. The question of reporting delay in transferring such sums does not arise.

8. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by my audit and the preceding financial year.

9. Based on our audit procedures and according to the information and explanation given to us, the Company has not defaulted in the repayment of its dues to a Financial Institutions, Banks and Debenture Holders.

10. (a) The Company has given a corporate guarantee to Commissioner of Customs of Rs. 87.54 Crores for Export obligation of its Associate Company.

(b) The Company has given a corporate guarantee of Rs. 4.30 Crores on behalf of Joint Venture Company.

11. The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

12. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For M/s. Prakkash Muni & Associates Chartered Accountants Firm Registration No. 111792W

Sd/- Prakkash R. Muni Place: Mumbai Partner Date : 22ndMay, 2015 MembershipNo.30544

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of UTTAM GALVA STEELS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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 31st March, 2013;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the 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 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, Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act.

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

ANNEXURE TO THE AUDITOR''S REPORT

(Referred to in paragraph 1 under the head "Report on Other Legal and Regulatory Requirements" of our report of even date)

1. In respect of its Fixed Assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets; site wise/ plant wise. With consideration to significant additions from time to time such records are being updated periodically.

b) According to the information and explanations given to us, the Company is formulating/ upgrading a programme of verification by which all the assets of the Company shall be verified in a phased manner, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. According to the information and explanation given to us no material discrepancies were noticed on such verification. The Company is yet to formulate a verification programme on assets such as furniture, computers etc.

c) During the year the Company has not disposed of any part of the plant and machinery, disposal of fixed assets does not constitute a substantial part of the Company''s fixed assets.

2. In respect of its inventories:

a) The inventory has been physically verified during the year by the management. In our opinion, 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 and inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

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

3. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956:

(a) The Company has given loans to a wholly owned subsidiary of the Company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 47.52 crore and the year-end balance is Rs. 45.96 crore.

(b) In our opinion and according to the information and explanations given to us, the rate of interest, where applicable and other terms and conditions, are not prima facie prejudicial to the interest of the Company.

(c) The principal amounts are repayable on demand and there is no repayment schedule. The interest, where applicable, is payable on demand.

(d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest, where applicable, there are no overdue amounts.

(e) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, the Company internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under Section 301 of the Companies Act, l956 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 / arrangements entered in Register maintained under section 301 Companies Act, 1956 and exceeding the Rs. 5,00,000 in respect of each party during the year have been made at prices which appear reasonable having regard to the prevailing market price at the relevant time as per information available with the Company.

6. The Company has not accepted any deposits from the public to which the provisions of 58A, 58AA or any other relevant provision of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, l975 apply. Therefore, the provisions of clause (vi) of the paragraph 4 of the order are not applicable to the Company.

7. In our opinion and according to information and explanation given to us, the Company has an internal audit system commensurate with the size and nature of its business.

8. To the best of our knowledge and according to the information and explanations given to us, the Company has received the report of a Cost Auditor as prescribed the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.

9. In respect of Statutory dues:

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 3l, 2013 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs. 16.37 crore, that have not been deposited on account of disputed matters pending before appropriate authorities are referred in Annexure A.

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and the preceding financial year.

11 . Based on our audit procedures and according to the information and explanation given to us, the Company has not defaulted in the repayment of its dues to a Financial Institutions, Banks and Debenture Holders.

12. According to the information and explanations given to us, No loans and advances have been granted by the Company on the basis of security by way of shares, debentures and other securities.

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

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

15. (a) The Company has given a corporate guarantee for loans taken by its wholly owned subsidiary Atlantis International Services Limited amounting to US $ 40 million to Standard Chartered Bank.

(b). The Company has given a corporate guarantee for loans taken by its step down subsidiary Ferro Zinc International FZE amounting to US $ 30 million to ICICI Bank.

(c) The Company has given a corporate guarantee to Commissioner of Customs of Rs 87.54 Crores for Export obligation of its Associate Company.

(d) The Company has given a corporate guarantee of Rs 4.30 Crores on behalf of Joint Venture Company.

16. The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, We are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

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

19. The Company has created securities / charges in respect of secured debentures issued.

20. During the period covered by our audit report, the Company has not raised any money by public issues.

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

Annexure "A" of the Audit Report

Sr. Nature Amount Period No. of Duty (Rs.)

1 Service Tax 1,74,118 November 2006 to November 2009

2 Service Tax 35,29,749 July 2005 to July 2007

3 Service Tax 1,61,751 April 2006 to October 2006

4 Excise Duty 64,84,307 December 2007 to June 2008

5 Excise Duty 30,82,563 December 2007 to June 2008

6 Excise Duty 3,34,33,367 July 2010 to February 2011

7 Customs Duty 11,67,80,968 F.Y. 2008-2009

Nature of Duty Forum where dispute is pending

Service Tax Commissioner of Central Excise (Appeals)

Service Tax Central Excise and Service Tax Appellate Tribunal

Service Tax Central Excise and Service Tax Appellate Tribunal

Excise Duty Central Excise and Service Tax Appellate Tribunal

Excise Duty Central Excise and Service Tax Appellate Tribunal

Excise Duty Commissioner Appeals

Customs Duty Commissioner of Customs

Note: In case of rejection of an appeal at any stage, penalty may be leviable.

For PRAKKASH MUNI & ASSOCIATES

Chartered Accountants

Firm Registration No: III792W

PRAKKASH R. MUNI.

Place: Mumbai PARTNER

Date: 24th May 2013. Membership No.: 30544

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Mar 31, 2012

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

2. 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 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 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, We enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. On the basis of 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;

5. Further to our comments in the Annexure referred to in paragraph 3 & 4 above, we report that:

i) 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;

ii) 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;

iii) The Balance Sheet and the Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet and the Profit and Loss Account and cash flow statement dealt with by this report comply with the applicable accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

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

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

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

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

ANNEXURE TO THE AUDITORS' REPORT

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

1. In respect of its Fixed Assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets; site wise/ plant wise. With consideration to significant additions from time to time such records are being updated periodically.

b) According to the information and explanations given to us, the Company is formulating / upgrading a programme of verification by which all the assets of the Company shall be verified in a phased manner, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. According to the information and explanation given to us no material discrepancies were noticed on such verification. The company is yet to formulate a verification programme on assets such as furniture, computers etc.

c) During the year the Company has not disposed of any part of the plant and machinery, disposal of fixed assets does not constitute a substantial part of the Company's fixed assets.

2. In respect of its inventories:

a) The inventory has been physically verified during the year by the management. In our opinion, 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 and inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

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

3. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956:

(a) The Company has given loans to a wholly owned subsidiary of the Company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs 26.74 crore and the year-end balance is Rs 26.74 crore.

(b) In our opinion and according to the information and explanations given to us, the rate of interest, where applicable and other terms and conditions, are not prima facie prejudicial to the interest of the Company.

(c) The principal amounts are repayable on demand and there is no repayment schedule. The interest, where applicable, is payable on demand.

(d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest, where applicable, there are no overdue amounts.

(e) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, the Company's internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in 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 / arrangements entered in Register maintained under section 301 Companies Act, 1956 and exceeding Rs 5,00,000 in respect of each party during the year have been made at prices which appear reasonable having regard to the prevailing market price at the relevant time as per information available with the Company.

6. The Company has not accepted any deposits from the public to which the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 apply. Therefore, the provisions of clause (vi) of the paragraph 4 of the order are not applicable to the Company.

7. In our opinion and according to information and explanation given to us, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. In respect of Statutory dues:

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2012 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs 1.35 crore, that have not been deposited on account of disputed matters pending before appropriate authorities are referred in Annexure A.

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and the preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the Company has not defaulted in the repayment of its dues to a Financial Institutions, Banks and Debenture Holders.

12. According to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of security by way of shares, debentures and other securities.

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

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

15. (a) The Company has given a corporate guarantee for loans taken by its wholly owned subsidiary Atlantis International Services Limited amounting to US $ 40 million to Standard Chartered Bank.

(b) The Company has given a corporate guarantee for loans taken by its step down subsidiary Ferro Zinc International FZE amounting to US $ 30 million to ICICI Bank.

16. The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

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

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

19. The Company has created securities / charges in respect of secured debentures issued.

20. During the period covered by our audit report, the Company has not raised any money by public issues.

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

Annexure "A" of the Audit Report

Sr. Nature of Amount Period Forum where No. Duty (Rs) dispute is pending

1 Service Tax 1,74,118 November 06 to Commissioner of November 09 Central Excise (Appeals)

2 Service Tax 35,29,749 July 05 to July 07 Central Excise and Service Tax Appellate Tribunal

3 Service Tax 1,61,751 April 06 to Central Excise October 06 and Service Tax Appellate Tribunal

4 Excise Duty 64,84,307 Dec 07 to June 08 Central Excise and Service Tax Appellate Tribunal

5 Excise Duty 30,82,563 Dec 07 to June 08 Central Excise and Service Tax Appellate Tribunal

6 Excise Duty 1,09,107 July 10 Commissioner Appeals

Note: In case of rejection of an appeal at any stage, penalty may be leviable.

For Prakkash Muni & Associates

Chartered Accountants

Firm Registration No: 111792W

Prakkash R. Muni

Partner

Membership No.: 30544

Place : Mumbai

Date : 9th May, 2012

---

Mar 31, 2011

1. I have audited the attached Balance Sheet of UTTAM GALVA STEELS LIMITED as at 31st March, 2011 and the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. My responsibility is to express an opinion on these financial statements based on my audit.

2. I have conducted my audit in accordance with auditing standards generally accepted in India. Those Standards require that I 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. I believe that my audit provides a reasonable basis for my opinion.

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

4. On the basis of written representations received from the directors, as on 31st March, 2011, and taken on record by the Board of Directors, I 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.

5. Further to my comments in the Annexure referred to in paragraph 3 & 4 above, I report that:

i) I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

ii) In my 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;

iii) The Balance Sheet and the Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account;

iv) In my opinion, the Balance Sheet and the Profit and Loss Account and cash flow statement dealt with by this report comply with the applicable accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

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

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

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

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

ANNEXURE TO THE AUDITORS' REPORT

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

1. In respect of its Fixed Assets :

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets; site wise/ plant wise. With consideration to significant additions from time to time such records are being updated periodically.

b) According to the information and explanations given to me, the Company is formulating/ upgrading a programme of verification by which all the assets of the Company shall be verified in a phased manner, which in my opinion, is

reasonable having regard to the size of the Company and nature of its assets. According to the information and explanation given to me no material discrepancies were noticed on such verification. The company is yet to formulate a verification programme on assets such as furniture, computers etc.

c) During the year the Company has not disposed of any part of the plant and machinery, disposal of fixed assets does not constitute a substantial part of the company's fixed assets.

2. In respect of its inventories :

a) The inventory has been physically verified during the year by the management. In my opinion, the frequency of verification is reasonable.

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

c) On the basis of my examination of the records of inventory, I am of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records were not material and the difference found between physical and book records are adjusted appropriately.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956:

(a) The Company has given loans to a wholly owned subsidiary of the Company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs 9.43 crore and the year-end balance is Rs 1.94 crore.

(b) In my opinion and according to the information and explanations given to me, the rate of interest, where applicable and other terms and conditions, are not prima facie prejudicial to the interest of the Company.

(c) The principal amounts are repayable on demand and there is no repayment schedule. The interest, where applicable, is payable on demand.

(d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of

interest, where applicable, there are no overdue amounts.

(e) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In my opinion and according to the information and explanations given to me, the Company's internal control systems is commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and with regard to the sale of goods and services. During the course of my audit, I have not observed any continuing failure to correct major weakness in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In my opinion and according to the information and explanations given to me, the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In my opinion and according to the information and explanations given to me, the transactions made in pursuance of Contracts / arrangements entered in Register maintained under section 301 Companies Act, 1956 and exceeding Rs 5,00,000 in respect of each party during the year have been made at prices which appear reasonable having regard to the prevailing market price at the relevant time as per information available with the Company.

6. The Company has not accepted any deposits from the public to which the provisions of 58A, 58AA or any other relevant provision of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 apply. Therefore, the provisions of clause (vi) of the paragraph 4 of the order are not applicable to the Company.

7. In my opinion and according to information and explanation given to me, the Company has an internal audit system commensurate with the size and nature of its business.

8. To the best of my knowledge and according to the information and explanations given to me, the Central Government has not prescribed the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956, for any of the products of the Company.

9. In respect of Statutory dues :

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to me, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2011 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs. 5.53 crore, that have not been deposited on account of disputed matters pending before appropriate authorities are referred in Annexure A.

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the financial year covered by my audit and the preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to me, the Company has not defaulted in the repayment of its dues to Financial Institutions, Banks and Debenture Holders.

12. According to the information and explanations given to me, no loans and advances have been granted by the Company on the basis of security by way of shares, debentures and other securities.

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

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

15. (a) The Company has given a corporate guarantee

for loans taken by its wholly owned subsidiary Atlantis International Services Limited amounting to US $ 40 million to Standard Chartered Bank. (b) The Company has given a corporate guarantee for loans taken by its step down subsidiary Ferro Zinc International FZE amounting to US $ 30 million to ICICI Bank.

16. The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

17. According to the information and explanations given to me and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

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

19. The Company has created securities / charges in respect of secured debentures issued.

20. During the period covered by my audit report, the Company has not raised any money by public issues.

21. To the best of my knowledge and belief and according to the information and explanations given to me, no material fraud on or by the Company has been noticed or reported during the year.

Annexure "A" of the Audit Report

Sr. Nature of Amount Period Forum where dispute No. Duty (Rs.) is pending

1 Service Tax 1,74,118 November 06 Commissioner of to Central Excise November 09 (Appeals)

2 Service Tax 35,29,749 July 05 to Central Excise and July 07 Service Tax Appellate Tribunal

3 Service Tax 1,61,751 April 06 to Central Excise and October 06 Service Tax Appellate Tribunal

4 Excise Duty 2,86,57,168 December 06 Central Excise and to Service Tax Appellate November 07 Tribunal

5 Excise Duty 1,32,98,369 December 06 Central Excise and to Service Tax Appellate November 07 Tribunal

6 Excise Duty 64,84,307 December 07 Central Excise and to Service Tax Appellate June 08 Tribunal

7 Excise Duty 30,82,563 December 07 Central Excise and to June 08 Service Tax Appellate Tribunal J

Note :In case of rejection of an appeal at any stage, penalty may be leviable.

For Prakkash Muni & Associates

Chartered Accountants Firm Registration No. : 111792W

Place : Mumbai Prakkash R. Muni Dated : 30th May, 2011. Proprietor Membership No. 30544

---

Mar 31, 2010

1. I have audited the attached Balance Sheet of UTTAM GALVA STEELS LIMITED as at 31st March, 2010 and the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. My responsibility is to express an opinion on these financial statements based on my audit.

2. I have conducted my audit in accordance with auditing standards generally accepted in India. Those Standards require that I 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. I believe that our audit provides a reasonable basis for my opinion.

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

4. On the basis of written representations received from the directors, as on 31st March, 2010, and taken on record by the Board of Directors, I report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956;

5. Further to my comments in the Annexure referred to in paragraph 3 & 4 above, I report that:

i) I have obtained all the information and explanations, which to the best of my

knowledge and belief were necessary for the purposes of my audit;

ii) In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my examination of those books;

iii) The Balance Sheet and the Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account;

iv) In my opinion, the Balance Sheet and the Profit and Loss Account and cash flow statement dealt with by this report comply with the applicable accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

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

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

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

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

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

1. In respect of its Fixed Assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets; site wise/ plant wise. With consideration to significant additions from time to time such records are being updated periodically.

b) According to the information and explanations given to me, the Company is formulating/upgrading a programme of verification by which all the assets of the Company shall be verified in a phased manner, which in my opinion, is reasonable having regard to the size of the Company and nature of its assets. According to the information and explanation given to me no material discrepancies were noticed on such verification. The company is yet to formulate a verification programme on assets such as furniture, computers etc.

c) During the year the Company has not disposed of any part of the plant and machinery, disposal of fixed assets does not constitute a substantial part of the companys fixed assets.

2. In respect of its inventories:

a) The inventory has been physically verified during the year by the management. In my opinion, the frequency of verification is reasonable.

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

c) On the basis of my examination of the records of inventory, I am of the opinion that the Company is maintaining proper record of inventory. The discrepancies noticed on verification between physical stocks and book records were not material and the difference found between physical and book records are adjusted appropriately.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956:

(a) The Company has given loans to a wholly owned subsidiary of the Company. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 9.35 crore and the year-end balance is Rs. 9.35 crore.

(b) In my opinion and according to the information and explanations given to me, the rate of interest, where applicable and other terms and conditions, are not prima facie prejudicial to the interest of the Company.

(c) The principal amounts are repayable on demand and there is no repayment schedule. The interest, where applicable, is payable on demand.

(d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest, where applicable, there are no overdue amounts.

(e) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In my opinion and according to the information and explanations given to me, the Company internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and with regard to the sale of goods and services. During the course of my audit, I have not observed any continuing failure to correct major weakness in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In my opinion and according to the information and explanations given to me, the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In my opinion and according to the information and explanations given to me, the transactions made in pursuance of Contracts / arrangements entered in Register maintained under section 301 Companies Act, 1956 and exceeding the Rs. 500,000 in respect of each party during the year have been made at prices which appear reasonable having regard to the prevailing market price at the relevant time as per information available with the Company.

6. In my opinion and according to the information and explanations given to me, the Company has not accepted any deposits from the public during the year covered by my audit report. Therefore, the provisions of clause (vi) of the paragraph 4 of the order are not applicable to the Company.

7. In my opinion and according to information and explanation given to me, the Company has an internal audit system commensurate with the size and nature of its business.

8. To the best of my knowledge and according to the information and explanations given to me, the Central Government has not prescribed the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956, for any of the products of the Company.

9. In respect of Statutory dues:

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to me, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2010 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs. 7.99 crores, that have not been deposited on account of disputed matters pending before appropriate authorities are referred in Annexure A.

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by my audit and the preceding financial year.

11. Based on my audit procedures and according to the information and explanation given to me, the Company has not defaulted in the repayment of its dues to a Financial Institutions, Banks and Debenture Holders.

12. According to the information and explanations given to me, No loans and advances have been granted by the Company on the basis of security by way of shares, debentures and other securities.

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

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

15 The Company has given a corporate guarantee for loans taken by its wholly owned subsidiary Atlantis International Services Limited amounting to US $ 40 million to Standard Chartered Bank.

16. The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

17. According to the information and explanations given to me and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short- term basis that have been used for long-term investment.

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

19. The Company has created securities / charges in respect of secured debentures issued.

20. During the period covered by my audit report, the Company has not raised any money by public issues.

21. To the best of my knowledge and belief and according to the information and explanations given to me, no material fraud on or by the Company has been noticed or reported during the year.



ANNEXURE A OF THE AUDIT REPORT



Sr. Nature of Duty / Tax Amount (Rs.) Period Forum where dispute No. is pending

1 Excise Duty 5,52,473 2003-04 High Court

2 Service Tax 95,67,013 2004-05 Central Excise and Service Tax Appellate Tribunal

3 Excise & Service Tax 10,05,475 2005-06 Central Excise and Service Tax Appellate Tribunal

4 Excise Duty 40,00,000 2005-06 Asst. Commissioner of Central Excise

5 Service Tax 28,90,855 2005-06 Central Excise and Service Tax Appellate Tribunal

6 Excise Duty 89,59,377 2005-06 Commissioner - Appeals

7 Excise Duty 2,86,57,168 Dec 06 to Central Excise and Nov 07 Service Tax Appellate Tribunal

8 Excise Duty 1,32,98,369 Dec 06 to Central Excise and Nov 07 Service Tax Appellate Tribunal

9 Excise Duty 74,94,371 Dec 07 to Central Excise and June 08 Service Tax Appellate Tribunal

10 Excise Duty 35,59,514 Dec 07 to Central Excise and June 08 Service Tax Appellate Tribunal



For Prakkash Muni & Associates

Chartered Accountants

Firm Registration No.: 111792W

Prakkash R. Muni

Proprietor

Place : Mumbai Membership No.: 30544

Date : 29th May, 2010