Auditor Report of Modern Steels Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Modern Steels Limited, which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditors' Responsibility

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

4. 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.

5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial 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.

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

Opinion

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

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2015;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 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 obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

d. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards specified under section 133 of the Act read with Rule 7, The Companies (Accounts) Rules, 2014.

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

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

i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE AUDITORS' REPORT

The Annexure referred to in our report to the members of the Company for the year ended 31st March, 2015. To the best of our knowledge and belief and information & explanation given to us, we further report that:- 1. a) Company has maintained proper records to show full particulars including quantitative details & situation of its fixed assets. b) As explained to us, the fixed assets have been physically verified by the management at reasonable intervals which in our opinion is appropriate having regards to size of the Company and nature of its assets. No material discrepancies have been noticed during the year. 2. a) The inventory of the Company has been physically verified by the management at reasonable intervals during the year. b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business. c) The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. The Company has granted loans, secured or unsecured to Companies, Firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. The same is mentioned herein as per the information and explanation given to us by the management.

a) The Company has granted unsecured loan to Modern Automotives Limited during the year. The maximum amount involved during the year is A 1.86 crores & yearend outstanding is A1.86 crores.

b) The rate of interest and other term & conditions of the above loan is, in our opinion, not prima facie prejudicial to the interest of the Company.

c) The receipts of principal amounts and interest have been regular as per stipulations.

d) There was no overdue amount.

4. In our opinion the Company's present internal audit system is commensurate with its size and nature of business, for purchase of inventory and fixed assets and for the sale of goods and services. The Company has regularly identified any weakness & corrective steps have been taken.

5. The Company has accepted deposits from Directors amounting to A 2.68 crores (including unpaid interest A 0.56 crores) as well as from corporate bodies amounting to A 3.94 crores (including unpaid interest A 0.16 crores). As per CDR report the amount of A 3.50 crores need to be infused & A 2.38 crores needed to be retained separately in form of unsecured loans by the Company. The Company has complied with the directives issued by the Reserve Bank of India & with the provisions of Section 73 to 76 of the Companies Act, 2013 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

6. On the basis of records produced to us, we are of the opinion that prima facie the cost records prescribed by the Central Government of India under Section 148(1) of the Companies Act, 2013 have been made & maintained & also cost audit will be conducted. We have not carried out any detailed examination of such account & records.

7. (a) According to the books and records as produced

and examined by us in accordance with generally accepted auditing practices in India and also based on management representations, undisputed statutory dues in respect of Provident Fund, Employee's State Insurance dues, Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Cess and other material statutory dues have generally been regularly deposited by the Company during the year with the appropriate authorities in India and there were no arrear outstanding in respect of above for a period of more than six months as on 31st March, 2015. (b) According to the records of the Company examined by us and the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute other than the following amounting to A 1.93 crores. The details are as under:-

NATURE OF FORUM WHERE YEAR DISPUTED DUES/NAME OF DISPUTE IS PENDING AMOUNT STATUTES (RS.)

EXCISE DUTY

CENTRAL PUNJAB AND HARYANA 1989-90 6,47,885 EXCISE ACT 1944 HIGH COURT

CENTRAL COMMISSIONER 2007-08 2,56,533 EXCISE ACT 1944 (APPEALS), CHANDIGARH

CENTRAL COMMISSIONER 2007-08 to 2,59,085 EXCISE ACT 1944 (APPEALS), 2008-09 CHANDIGARH

CENTRAL COMMISSIONER 2004-05 to 89,56,212 EXCISE ACT 1944 (APPEALS), 2006-07 CHANDIGARH

CENTRAL CESTAT, NEW DELHI 2004-05 78,579 EXCISE ACT 1944

CENTRAL CESTAT, NEW DELHI 2002-03 to 15,87,580 EXCISE ACT 1944 2004-05

CENTRAL CESTAT, NEW DELHI 2005-06 to 11,30,998 EXCISE ACT 1944 2006-07

CENTRAL COMMISSIONER 2007-08 2,64,934 EXCISE ACT 1944 (APPEALS), CHANDIGARH

CENTRAL COMMISSIONER 2007-08 to 3,11,332 EXCISE ACT 1944 (APPEALS), 2008-09 CHANDIGARH

CENTRAL CESTAT, NEW DELHI 2004-05 to 3,55,235 EXCISE ACT 1944 2005-06

CENTRAL CESTAE, NEW DELHI 2008-09 1,10,550 EXCISE ACT 1944

CENTRAL CESTAT, NEW DELHI 2003-04 to 20,78,246 EXCISE ACT 1944 2007-08

CENTRAL COMMISSIONER 2004-05 5,16,272 EXCISE ACT 1944 (APPEALS), CHANDIGARH

CUSTOMS DUTY

CUSTOMS ACT CESTAT, AHMEDABAD 2004-05 25,35,450 1962

INCOME TAX

INCOME TAX ACT INCOME TAX A/Y 2005-06 1,64,482 1961 APPELLATE TRIBUNAL, & 2006-07 CHANDIGARH

8. The Company has accumulated losses as at 31st March, 2015 which are more than 50% of the net worth as on that date. It has suffered cash loss during the financial year ended on that date and also in the immediately preceding financial year.

6. There are no dues payable to financial institutions or debenture-holders. During the year ended 31st March 2015, the company has defaulted on timely payment of principal and payment of interest on term loans and cash credits. The delay with respect to interest and principal on term loans, up to 30 days amounting to A 8,68,820 and A 25,49,000 respectively and delay between 31-90 days amounted to A 3,34,51,204 and A 47,77,571 respectively. The delay with respect to interest on cash credit up to 30 days amounted to A 40,52,000 and delay between 31-90 days amounted to A 2,00,87,889

Apart from above as at the year end, the interest and principal outstanding on term loans amounting to A 1,68,59,586 and A 47,77,571 on cash credit interest amounted to A 75,61,309 has not been paid toll 31st March, 2015. As at the balance sheet date the periods of delay in these cases were up to 60 days

7. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

8. In our opinion & according to information & explanation given to us the term loans raised during the year have been applied for the purpose for which they were raised during the year.

9. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the Company was noticed or reported during the course of our audit.

For Aaryaa & Associates

Chartered Accountants

Firm Registration No. 015935N



Krishan Joshi

Place: Chandigarh Partner

Dated: 28th May, 2015 M. No.094478

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Mar 31, 2014

We have audited the accompanying financial statements of MODERN STEELS LIMITED, MANDI GOBINDGARH which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other Explanatory information.

Management''s Responsibility for the Financial Statements

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. 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.

Auditor''s Responsibility

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements 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, 2014;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we 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 Companies Act, 1956, we report that:

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

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

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

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

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

ANNEXURE TO THE AUDITORS''S REPORT

The Annexure referred to in our report to the members of the Company for the year ended 31st March, 2014. To the best of our knowledge and belief and information & explanation given to us, we further report that:-

1. a) The Company has maintained proper records to show full particulars including quantitative details & situation of its fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management which in our opinion is reasonable having regards to size of the Company and nature of its assets. No material discrepancies have been noticed during the year.

c) During the year substantial part of fixed assets have not been disposed off by the Company.

2. a) The inventory of the Company has been physically verified by the management during the year.

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

c) The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured granted by the Company to Companies, Firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanation given to us.

a) The Company has granted unsecured loan to one Company during the year. The maximum amount involved during the year is Rs.2.61 crores & year end outstanding is Rs.2.07 crores.

b) The rate of interest and other term & conditions of the above loan is, in our opinion, not prima facie prejudicial to the interest of the Company.

c) The receipts of principal amounts and interest have been regular as per stipulations.

d) There was no overdue amount.

In respect of loans, secured or unsecured taken by the Company to Companies, Firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanation given to us.

e) The Company has taken unsecured loan from three companies and eight parties during the year. The maximum amount involved during the year is Rs.4.86 crores and year end outstanding is Rs.4.80 crores.

f) The rate of interest and other terms and conditions of such loans are in our opinion, prima facie not prejudicial to the interest of the Company.

g) Payment of principal amount and interest have been regular/ as per stipulations.

4. There is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of fixed assets, inventory, sale of goods & services.

Further on the basis of our examination of books and records of the Company and according to information and explanations given to us we have neither came across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control procedures.

5. To the best of our knowledge and belief and according to the information and explanations given to us we are of the opinion that the transactions need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

7. In our opinion the Company''s present internal audit system is commensurate with its size and nature of business.

8. On the basis of records produced to us, we are of the opinion that prima facie the cost records prescribed by the Central Government of India under Section 209(1) (d) of the Companies Act, 1956 have been made & maintained. We have not carried out any detailed examination of such account & records.

9. (a) According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also based on Management representations, undisputed statutory dues in respect of Provident Fund, Employee''s State Insurance dues, Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Cess and other material statutory dues have generally been regularly deposited by the Company during the year with the appropriate authorities in India and there were no arrear outstanding in respect of above for a period of more than six month as on 31st March, 2014.

(b) According to the records of the Company examined by us and the information and explanations given to us, there are no dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute other than the following amounting to Rs.1.93 crores. The details are as under:-

NATURE OF DUES/ forum where dispute is pending YEAR DISPUTED NAME OF STATUTES AMOUNT

EXCISE DUTY

CENTRAL EXCISE PUNJAB AND HARYANA HIGH COURT 1989-90 6,47,885 ACT 1944

CENTRAL EXCISE COMMISSIONER (APPEALS), CHANDIGARH 2007-08 2,56,533 ACT 1944

CENTRAL EXCISE COMMISSIONER (APPEALS), CHANDIGARH 2007-08 2,59,085 ACT 1944 to2008-09

CENTRAL EXCISE COMMISSIONER (APPEALS), CHANDIGARH 2004-05 89,56,212 ACT 1944 to2006-07

CENTRAL EXCISE CESTAT, NEW DELHI 2004-05 78,579 ACT 1944

CENTRAL EXCISE CESTAT, NEW DELHI 2002-03 15,87,580 ACT 1944 to 2004-05

CENTRAL EXCISE CESTAT, NEW DELHI 2005-06 11,30,998 ACT 1944 to 2006-07

CENTRAL EXCISE COMMISSIONER (APPEALS), CHANDIGARH 2007-08 2,64,934 ACT 1944

CENTRAL EXCISE COMMISSIONER (APPEALS), CHANDIGARH 2007-08 3,11,332 ACT 1944 to2008-09

CENTRAL EXCISE CESTAT, NEW DELHI 2004-05 3,55,235 ACT 1944 to 2005-06

CENTRAL EXCISE CESTAT, NEW DELHI 2008-09 1,10,550 ACT 1944

CENTRAL EXCISE CESTAT, NEW DELHI 2003-04 20,78,246 ACT 1944 to 2007-08

CENTRAL EXCISE COMMISSIONER (APPEALS), CHANDIGARH 2004-05 5,16,272 ACT 1944

CUSTOMS DUTY

CUSTOMS ACT 1962 CESTAT, AHMEDABAD 2004-05 25,35,450

INCOME TAX

INCOME TAX ACT 1961 INCOME TAX APPELLATE TRIBUNAL, 2005-06 & 1,64,482 CHANDIGARH A/Y 2006-07

10. The Company has no accumulated losses as at 31st March, 2014. It has suffered cash loss during the financial year ended on that date and also in the immediately 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 any repayment of dues to financial institutions, banks, institution and has not issued any debentures.

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

13. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special / statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to it.

14. The Company has not dealt or traded in shares, securities debentures or other securities during the year.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion the term loans raised during the year have been applied for the purpose for which they were raised during the year.

17. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company, related information as made available

to us and as represented to us by the Management, funds raised on short term basis have not been used for long term investment.

18. According to the information and explanation given to us. During the year the Company has made preferential allotment of warrants which are convertible in equity shares at later date to four parties and one Company covered in register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures that were outstanding at any time during the year.

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

21. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the Company was noticed or reported during the course of our audit.

FOR A. GOEL & ASSOCIATES

Chartered Accountants Firm Registration No. 002743N

NEERAJ K. JINDAL Place : Chandigarh Partner Dated :26th June, 2014 M. No. 515077

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Mar 31, 2012

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

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

3. As required by Companies (Auditors' Report) order, 2003, issued by the Central Government of India in term of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

i) We have obtained all the information & explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

iv) In our opinion, the Balance Sheet, Statement of Profit and Loss 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) On the basis of written representations received from the directors as on 31st March, 2012, and taken on record by the Board of Directors; none of the director is disqualified as on 31st March, 2012 from being appointed as a Director in term of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Significant Accounting Policies and other notes thereon together 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 Statement of Profit & Loss, of the loss for the year ended on that date; and

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

REFERRED TO PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

To the best of our knowledge and belief and according to the information and explanations given to us, we further report that :-

1. a) The Company has maintained proper records to

show full particulars including quantitative details & situation of its fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management which in our opinion is reasonable having regards to size of the Company and nature of its assets. No material discrepancies have been noticed during the year.

c) During the year substantial part of fixed assets have not been disposed off by the Company.

2. a) The inventory of the Company has been physically verified by the management during the year.

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

c) The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured granted by the Company to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. According to the information and explanation given to us:

a) The Company has granted unsecured loan to two companies during the year. The maximum amount involved during the year is Rs 12.80 Crores & year end outstanding is Rs 1.86 Crores.

b) The rate of interest and other term & conditions of the above loan is, in our opinion, not prima facie prejudicial to the interest of the Company.

c) The receipts of principal amounts and interest have been regular as per stipulations.

d) There was no overdue amount.

In respect of loans, secured or unsecured taken by the Company from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. According to the information and explanation given to us.

e) The Company has taken unsecured loan from two companies and eight parties during the year. The maximum amount involved during the year is Rs 3.31 Crores and year end outstanding is Rs .2.28 Crores.

f) The rate of interest and other terms and conditions of such loans are in our opinion, prima facie not prejudicial to the interest of the Company.

g) Payment of principal amount and interest have been regular/ as per stipulations.

4. There is adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to the purchase of fixed assets, inventory, sale of goods & services. Further on the basis of our examination of books and records of the Company and according to information and explanations given to us we have neither came across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control procedures.

5. To the best of our knowledge and belief and according to to the information and explanations given to us we are of the opinion that the transactions need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

7. In our opinion the Company's present internal audit system is commensurate with its size and nature of business.

8. On the basis of records produced to us, we are of the opinion that prima facie the cost records prescribed by the Central Government of India under Section 209(1 )(d) of the Companies Act, 1956 have been made & maintained. We have not carried out any detailed examination of such account & records.

9. (a) According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also based on management representations, undisputed statutory dues in respect of Provident Fund, Employee's State Insurance dues, Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Cess and other material statutory dues have generally been regularly deposited by the Company during the year with the appropriate authorities in India and there were no arrear outstanding in respect of above for a period of more than six months as on 31s' March, 2012.

(b) According to the records of the Company examined by us and the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute other than the following amounting to Rs 2.12 Crores. The details are as under:-

NATURE OF DUES/ FORUM WHERE DISPUTE YEAR DISPUTED NAME OF STATUTES IS PENDING AMOUNT RS EXCISE DUTY

CENTRAL EXCISE PUNJAB AND HARYANA 1989-90 6,47.885 ACT 1944 HIGH COURT

CENTRAL EXCISE COMMISSIONER (APPEALS), 2007-08 2,56,533 ACT 1944 CHANDIGARH

CENTRAL EXCISE COMMISSIONER (APPEALS), 2007-08 to 2,59,085 ACT 1944 CHANDIGARH 2008-09

CENTRAL EXCISE COMMISSIONER (APPEALS), 2007-09 8.50,927 ACT 1944 CHANDIGARH

CENTRAL EXCISE COMMISSIONER (APPEALS), 2004-05 to 89,56,212 ACT 1944 CHANDIGARH 2006-07

CENTRAL EXCISE CESTAT, NEW DELHI 2004-05 79,579 ACT 1944

CENTRAL EXCISE CESTAT, NEW DELHI 2002-03 to 15,87,580 ACT 1944 2004-05

CENTRAL EXCISE CESTAT, NEW DELHI 2005-06 to 11,30,998 ACT 1944 2006-07

CENTRAL EXCISE COMMISSIONER (APPEALS). 2007-08 2,64,934 ACT 1944 CHANDIGARH

CENTRAL EXCISE COMMISSIONER (APPEALS), 2008-09 & 1,46,314 ACT 1944 CHANDIGARH 2009-10

CENTRAL EXCISE COMMISSIONER (APPEALS), 2007-08 to 3,11,332 ACT 1944 CHANDIGARH 2008-09

CENTRAL EXCISE CESTAT, NEW DELHI 2004-05 to 3,55,235 ACT 1944 2005-06

CENTRAL EXCISE CESTAT, NEW DELHI 2008-09 1,10,550

NATURE OF DUES/ FORUM WHERE DISPUTE YEAR DISPUTED NAME OF STATUTES IS PENDING AMOUNT RS

CENTRAL EXCISE CESTAT, NEW DELHI 2003-04 to 20,78,246 ACT 1944 2007-08

CENTRAL EXCISE CESTAT, NEW DELHI 2004-05 5,16,272 ACT 1944

CUSTOMS DUTY CUSTOMS ACT 1962 CESTAT, AHMEDABAD 2004-05 25.35,450

INCOME TAX

INCOME TAX ACT 1961 COMMISSIONER (APPEAL), A/Y 2005-06 to 10,73,510 GURGAON 2010-11

10. The Company has no accumulated losses as on 31s' March, 2012. It has suffered cash loss during the financial year ended on that date and earned cash profit in the immediately 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 any repayment of dues to financial institutions, banks, institution and have not issued any debentures.

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

13. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special / statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to it.

14. The Company has not dealt or traded in shares, securities debentures or other securities during the year.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion the term loans have been applied for the purpose for which they were raised during the year.

17. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company, related information as made available to us and as represented to us by the management, funds raised on short term basis have not been used for long term investment.

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

19. The Company has not issued any debentures that were outstanding at any time during the year.

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

21. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the company was noticed or reported during the course of our audit.

FORA. GOEL& ASSOCIATES

Chartered Accountants

Firm Registration No. 002743N

ASHOK K. GOEL

Place : Chandigarh M.No. 81342

Dated : 18th May, 2012

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of MODERN STEELS LTD, MANDI GOBINDGARH as at 31st March, 2011 and also the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed there to. These financial statements are the responsibility of Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by Companies (Auditors Report) Order, 2003, issued by the Central Government of India in term of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

i) We have obtained all the information & explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

iii) The Balance Sheet, Profit & 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, Profit & 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) On the basis of written representations received from the Directors as on 31th March, 2011, and taken on record by the Board of Directors; none of the Director is disqualified as on 31s1 March, 2011 from being appointed as a Director in term of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Significant Accounting Policies and other notes thereon together 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 31th March, 2011;

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

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

REFERRED TO PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

To the best of our knowledge and belief and according to the information and explanations given to us, we further report that:-

1. a) The Company has maintained proper records to show full particulars including quantitative details & situation of its fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management which in our opinion is reasonable having regards to size of the Company and nature of its assets. No material discrepancies have been noticed during the year.

c) During the year substantial part of fixed assets have not been disposed off by the Company.

2. a) The inventory of the Company has been physically verified by the management during the year.

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

c) The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. a) The Company has granted loan to four Companies covered in register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs 18.00 Crores & year end outstanding is Rs 6.65 Crores. The rate of interest and other terms & conditions of the above loan is not prima facie prejudicial to the interest of the Company. The principal amount and interest are regular. There are no overdue amount exceeding Rs 1 lakh.

b) The Company has taken unsecured loan from two Companies and eight parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs 2.26 Crores and year end outstanding is Rs.57 Crores.

c) The rate of interest and other terms and conditions of the unsecured loans taken from the Companies covered in the register maintained under Section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company. The Company has been regular in the payment of principal and interest amount.

4. There is adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to the purchase of fixed assets, inventory, sale of goods & services. Further on the basis of our examination of books and

records of the Company and according to information and explanations given to us we have neither came across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control procedures.

5. To the best of our knowledge and belief and according to the information and explanations given to us we are of the opinion that the transactions need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

7. In our opinion the Companys present internal audit system is commensurate with its size and nature of business.

8. On the basis of records produced to us, we are of the opinion that prima facie the cost records prescribed by the Central Government of India under Section 209(1 )(d) of the Companies Act, 1956 have been made & maintained. We have not carried out any detailed examination of such Accounts records.

9. a) According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also based on Management representations, undisputed statutory dues in respect of Provident Fund, Employees State Insurance dues, Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Cess and other material statutory dues have generally been regularly deposited by the Company during the year with the appropriate authorities in India and there were no arrear outstanding in respect of above for a period of more than six month as on 31th March, 2011.

b) According to the records of the Company examined by us and the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute other than the following amounting to Rs 2.03 Crores. The details are as under:-

NATURE OF DUES/ FORUM WHERE DISPUTE IS PENDING NAME OF STATUTES

EXCISE DUTY

CENTRAL EXCISE ACT 1944 PUNJAB AND HARYANA HIGH COURT

CENTRAL EXCISE ACT 1944 COMMISSIONER (APPEALS), CHANDIGARH

CENTRAL EXCISE ACT 1944 COMMISSIONER (APPEALS), CHANDIGARH

CENTRAL EXCISE ACT 1944 COMMISSIONER (APPEALS), CHANDIGARH

CENTRAL EXCISE ACT 1944 COMMISSIONER (APPEALS), CHANDIGARH

CENTRAL EXCISE ACT 1944 CESTAT, NEW DELHI

CENTRAL EXCISE ACT 1944 CESTAT, NEW DELHI

CENTRAL EXCISE ACT 1944 CESTAT, NEW DELHI

CENTRAL EXCISE ACT 1944 COMMISSIONER (APPEALS), CHANDIGARH

CENTRAL EXCISE ACT 1944 CESTAT, NEW DELHI

CENTRAL EXCISE ACT 1944 CESTAT, NEW DELHI

CENTRAL EXCISE ACT 1944 CESTAT, NEW DELHI

CENTRAL EXCISE ACT 1944 CESTAT, NEW DELHI

CUSTOMS DUTY

CUSTOMS ACT 1962 CESTAT, AHMEDABAD

NATURE OF DUES/ YEAR DISPUTED AMOUNT Rs. NAME OF STATUTES

EXCISE DUTY

CENTRAL EXCISE ACT 1944 1989-90 6,47,885

CENTRAL EXCISE ACT 1944 2007-08 2,56,533

CENTRAL EXCISE ACT 1944 2007-08 to 2008-09 2,59,085

CENTRAL EXCISE ACT 1944 2007-09 8,50,927

CENTRAL EXCISE ACT 1944 2004-05 to 2006-07 91,48,349

CENTRAL EXCISE ACT 1944 2004-05 79,579

CENTRAL EXCISE ACT 1944 2002-03 to 2004-05 15,87,580

CENTRAL EXCISE ACT 1944 2005-06 to 2006-07 11,30,998

CENTRAL EXCISE ACT 1944 2007-08 3,97,401

CENTRAL EXCISE ACT 1944 2004-05 to 2005-06 3,55,235

CENTRAL EXCISE ACT 1944 2008-09 1,10,550

CENTRAL EXCISE ACT 1944 2003-04 to 2007-08 20,78,246

CENTRAL EXCISE ACT 1944 2004-05 5,16,272

CUSTOMS DUTY

CUSTOMS ACT 1962 2004-05 25,35,450

10. The Company has no accumulated losses as at 31th March, 2011. It has earned cash profit during the financial year ended on that date and in the immediately 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 any repayment of dues to financial institutions, banks, institutions and has not issued any debentures.

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

13. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special / statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to it.

14. The Company has not dealt or traded in shares, securities debentures or other securities during the year.

15. The Company has not given any guarantee for loans taken by others from bankor financial institutions.

16. In our opinion the term loans have been applied for the purpose for which they were raised during the year.

17. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company, related information as made available to us and as represented to us by the Management, funds raised on short term basis have not been used for long term investment.

18. According to the information and explanation given to us, during the year the Company has made preferential allotment of Equity shares to three parties covered in Register maintained under Section 301 of the CompaniesAct, 1956.

19. The Company has not issued any debentures that were outstanding at any time during the year.

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

21. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the Company was noticed or reported during the course of our audit.

FOR A. GOEL & ASSOCIATES Chartered Accountant Firm Registration No. 002743N

ASHOKK.GOEL M.No. 81342

Place : Chandigarh Dated : 12th May, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of MODERN STEELS LTD, MANDI GOBINDGARH as at 31st March, 2010 and also the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed there to. These financial statements are the responsibility of Companys management. Our responsibility is to express an opinion on these financial statements based on ouraudit.

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

3. As required by Companies (Auditors Report) Order, 2003 issued by the Central Government of India in term of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

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

i) We have obtained all the information & explanations, which to the best of our knowledge and belief were necessary for the purpose of ouraudit;

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

iii) The Balance Sheet, Profit & 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, 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) On the basis of written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors; none of the Director is disqualified as on 31st March, 2010 from being appointed as a Director in term of clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Significant Accounting Policies and other notes thereon together 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 & Loss Account, of the profit for the year ended on that date; and

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

REFERRED TO PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

To the best of our knowledge and belief and according to the information and explanations given to us, we further report that :-

1. a) The Company has maintained proper records to show full particulars including quantitative details & situation of its fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management which in our opinion is reasonable having regards to size of the Company and nature of its assets. No material discrepancies have been noticed during the year.

c) During the year substantial part of fixed assets have not been disposed off by the Company.

2. a) The inventory of the Company has been physically verified by the management during the year.

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

c) The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. a) The Company has granted loan to five companies covered in register maintained u/s 301 of the Companies Act, 1956. The maximum amount involved during the year is ? 13.89 Crore & year end outstanding is NIL. The rate of interest and other terms & conditions of the above loan is not prima facie prejudicial to the interest of the Company. The principal amount and interest are regular. There are no overdue amount exceeding ^ One lakh.

b) The Company has taken unsecured loan from two companies and eight parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year is ? 2.35 Crore and year end outstanding is ? 2.25 Crore.

c) The rate of interest and other terms and conditions of the unsecured loans taken from the Companies covered in the register maintained under Section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company. The Company has been regular in the payment of principal and interest amount.

4. There is adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to the purchase of fixed assets, inventory, sale of goods & services. Further on the basis of our examination of books and records of the Company and according to information and explanations given to us we have neither came across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control procedures.

5. To the best of our knowledge and belief and according to the information and explanations given to us we are of the opinion that the transactions need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. In our opinion and according to the information and explanation given to us, the transactions made in Pursuance of Contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

7. In our opinion the Companys present internal audit system is commensurate with its size and nature of business.

8. On the basis of records produced to us, we are of the opinion that prima facie the cost records prescribed by the Central Government of India under Section 209(1 )(d) of the Companies Act, 1956 have been made & maintained. We have not carried out any detailed examination of such Account & records.

9. a) According to the books and records as produced and examined by us in accordance with generally accepted auditing practices in India and also based on Management representations, undisputed statutory dues in respect of Provident Fund, Employees State Insurance dues, Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Cess and other material statutory dues have generally been regularly deposited by the Company during the year with the appropriate authorities in India and there were no arrear outstanding in respect of above for a period of more than six months as on 31.03.2010. b) According to the records of the Company examined by us and the information and explanation given to us there are no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute other than the following amounting to ? 2.32 Crore. The details are as under:-

10. The Company has no accumulated losses as at March 31, 2010. It has earned cash profit during the financial year ended on that date but incurred the cash loss in the immediate previous year.

11. Based on our audit procedure and according to the information and explanation given to us, the Company has not defaulted in any repayment of dues to financial institutions, banks, institutions and have not issued any debentures.

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

13. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special / statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to it.

14. The Company has not dealt or traded in shares, securities debentures or other securities during the year.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion the term loans have been applied for the purpose for which they were raised during the year.

17. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company, related information as made available to us and as represented to us by the Management, funds raised on short term basis have not been used for long term investment.

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

19. The Company has not issued any debentures that were outstanding at any time during the year.

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

21. As per the information and explanation given to us and on the basis of examination of records, no material fraud on or by the Company was noticed or reported during the course of our audit.

FOR A. GOEL& ASSOCIATES Chartered Accountants

Firm Registration No. 002743N

ASHOKK.GOEL

Place: Chandigarh Partner

Dated : 28th July, 2010 M.No. 81342