Auditor Report of Raasi Refractories Ltd.

Mar 31, 2015

We have audited the accompanying Financial Statements of RAASI REFRACTORIES LIMITED ("the Company"), which comprises the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year the ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to 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 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, 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 financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the 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 control system over financial reporting and the operating effectiveness of such controls. 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 on the financial statements.

Basis for qualified opinion

i. Attention is invited to Note No: 8 to Financial Statements regarding Loans from financial Institutions and in respect of the same an interest of Rs. 239.35 lacs (including previous years) is not provided. The profits and reserves of the company do not reflect the correct position to that extent and liability of the company is also understated to that extent.

ii. Attention is invited to Note No: 8 to Financial Statements regarding outstanding Statutory Liabilities and in respect of the same the interest / penalty payable is not provided. Due to absence of full details the amount of Interest / penalty could not be quantified.

iii. Attention is invited to Note No: 17 to Financial Statements, regarding the Other Income and in respect of the interest income the accrued interest of Rs.2.85 lacs on bank deposits is not recognized, the revenue of the Company & assets of the company are understated to that extent.

iv. As stipulated in the provisions of Section 138 of Companies Act, 2013, the company has not appointed an Internal Auditor.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis for Qualified Opinion Paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India:

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

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

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

Emphasis Matter

We draw attention to the following matters:

a) Note No: 10 to the financial statements on the matter of providing depreciation on fixed assets. The company has provided depreciation on Straight Line Method as per the provisions of (Schedule XIV) Companies Act, 1956 where as the company has to provide depreciation as per the provisions of (Schedule II) Companies Act, 2013.

b) Note No: 12 to the financial statements on matters relating to Inventories: The factory of the company was not functioning for about 18 Months due to various reasons like shortage of power, labour problems, shortage of raw materials, financial constraints etc, and the factory started operations from the middle of the financial year by which time most of the stocks are reported to be obsolete. Hence there is substantial depletion in the value of closing stock at the end of the financial year.

c) The confirmation of balances of payable & receivables have not been obtained. The receivables are netted from the trade payables and short term loans. There are some old claims, receivables in respect of which no provision is made for doubtful/irrecoverable debts as the company is hopeful of recovery /adjustment. Hence we are unable to express our opinion on payables & receivables and the consequent effect on the Financial Statements. Other Matter:

During the financial year on 28th February 2015 on behalf of Mr. Konda Laxmaiah & M/s. Ram Laxman Parboiled Rice Private Limited an open offer to the equity share holders of the company was made pursuant to and in compliance of SEBI Regulations, 2011 for substantial acquisition and takeover of the company.

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, and on the basis of such checks of the books and records of the Company information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. We have sought and, except for the possible effect of the matter described in point (a) of the emphasis paragraph above, 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, except as discussed in the basis for qualified opinion paragraph above in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books

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

d. In our opinion, except as discussed in the basis for qualified opinion paragraph above, and AS 15 on Accounting for Employee Benefits, the financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

f. The report on matters relating to Internal Financial Controls over financial reporting and the operating effectiveness of the same as specified in clause (i), is not mandatory for the Financial Year ending 31st March 2015, as per the Government of India notification dated October 14, 2014 on the same matter.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 23.1 to the financial statements;

ii. The Company has not made provision, as required under the applicable law or accounting standards, as the company is not foreseeing any material losses.

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

Annexure referred to in paragraph 1 of our report of even date

Re: RAASI REFRACTRORIES LIMITED

I. a) The Company has not maintained proper records showing full particular including quantitative details and situation of fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verification.

ii. a) As explained to us, inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) The procedures explained to us, which are followed by the management for physical verification of inventories, are in our opinion reasonable and adequate in relation to the size of the company and nature of its business.

c) The Company is maintaining proper records of inventory and the material discrepancies/ depletion noticed in the value of inventory is provided at the end of the financial year.

iii. No loans were granted by the Company, to any of the parties covered in the register maintained under section 189 of the Act. Hence the report on the related matters of this clause and sub-clauses (a) and (b) is not applicable.

iv. In our opinion and according to the information and explanations obtained by us, there is no defined adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and power.

v. The Company has not accepted any deposits from the public within the meaning of sections 73 to 76 or any other relevant provisions of the Act and rules framed there under.

vi. In our opinion and according to the information and explanations obtained by us the maintenance of cost records as specified under subsection (1) of section 148 of the companies Act, 2013 is not applicable.

vii. a) The Company is generally regular in depositing undisputed statutory dues and the arrears of outstanding statutory dues as at the end of the financial year for a period of more than 6 months are as follows:

Nature of statutory dues Amount In Lacs

AP VAT 19.10

CST 4.18

Excise Duty 40.09

ESI Company's Contribution 20.53

ESI Employee's Contribution 5.75

Provident Fund Company's Contribution 51.66

Provident Fund Employee's Contribution 13.83

LIC premium recovered from Employees 10.29

Professional Tax 0.39

TPS 0.59

Total 166.41

b) According to the information and explanations given to us, the following statutory liabilities are outstanding which are disputed as at the end of Financial Year 2014-15:

Nature of Dispute Pending Amount Remarks dues before (In Lacs)

Income Tax Income Tax 14.48 Appeal filed on 13.05.2013 commissioner against the Assessment order (Appeals) Dt: 28.03.203 for AY 2010-11

Payment of Joint 47.80 Case filed by Labour for Wage Commissioner payment of wages from Jan 2014 Labour to June 2014

Provident High Court AP 90.47 Writ Petition Filed against the Fund order of Asst. PF Commissioner for payment of PY from March, 2010 to Sep, 2012

c) According to the information and explanations given to us, there are no amounts required to be transferred to Investor Education & Protection Fund under the provisions of Companies Act, 1956.

viii. The Accumulated losses, Net worth and Cash losses for the Financial Year ended 31.03.2015 and Immediately preceding year are as follows:

Particulars Amount in Lacs As at 31.03.2015 As at 31.03.2014

Accumulated Losses 2280.32 587.99

Net Worth (1624.75) 67.63

Cash Loss 1588.41 251.91

ix. Based on our procedures and as per the information and explanations given to us, the company has defaulted in re-payment of dues to Financial Institutions to the Extent of Rs. 906.02 Lacs. There are no dues to Banks & Debenture holders.

x. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

xi. According to the information and explanations given to us and records examined by us the company has not availed any term loans during the current Financial Year.

xii. During the course of our examination of the books and records of the Company, carried out in accordance with the Generally Accepted Accounting Practice in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have we been informed of such case by t he management.

For SRB & Associates, Chartered Accountants, Firm Reg. No: 310009E

T. Lakshmi Narayana Partner Date: 30.05.2015 Membership No: 014674

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Mar 31, 2014

We have audited the accompanying financial statements of RAASI REFRACTORIES LIMITED which comprise the Balance sheet as at 31st March 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the

Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements does not give the information required by the Act in the manner so required

Basis for qualification:

1. The interest of Rs. 2,66,87,790/- on term loans from financial institutions is not provided. The losses are understated in profit & loss account to that extent.

Without qualifying our opinion on other issues we draw attention to note No 23.6, 23.7 and

24.2 in financial statements on economic sustainability of the entity in future unless mitigating measures are taken in due course by the management.

And Subject to above the financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

f. Since the central government has not issued any notification as to the rate at which the cess is to be paid under section 441a of the Companies Act, 1956 nor has it issued any rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the company.

The Annexure referred to in paragraph 1 of the Auditors'' Report of even date to the members of RAASI REFRACTORIES LIMITED on the financial statement for the year ended 31st March,2014.

1. (a) The Company has not maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) Fixed assets are reported to be physically verified by the management according to a phased programme designed to cover all the fixed assets once a year, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been reported. The inspection report of FixedAssets is not provided forverification.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

2. (a) The inventory has been reported to be physically verified by the management during the year-end.

In our opinion, the frequency of verification reported is reasonable.

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

(c) On the basis of our examination of the inventory records, in our opinion, the company is not maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were reported to be not material.The inspection report of Inventory is not provided forverification.

3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties

covered in the register maintained under section301 ofthecompaniesAct, 1956.

(b) The company has taken the following unsecured loans from companies covered in the register maintained under section 301 of the CompaniesAct, 1956.

(I) Unsecured loan taken from M/S Sarvesh Refractories Ltd in the earlier years with interest @ 1% per annum and the outstanding balance as on the Balance Sheet date is Rs 421.91 lacs as against the outstanding balance of Rs 418.15 lakhs outstanding at the end of the previous year.

(ii) Unsecured interest free loan taken from M/S Sarvesh Refractories Ltd during the earlier years Rs 100.00 lakhs for investment purpose is outstanding as on the Balance Sheet date

4. In our opinion and according to the information and explanation given to us there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures.

5. (a) In our opinion and according to the information and explanation given to us, the particulars of contracts or arrangements referred to in Section 301 of the CompaniesAct 1956 have been entered in the register required to be maintained under that section and the register is not produced for verifaction.

(b) In our opinion and according to the information and explanation given to us, there are no transactions made in purchase of such contracts or arrangements and exceeding Rs. five lakhs in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Sections 58Aand 58AA oftheActand the rules framed there under.

7. In our opinion, the company has no internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the books of accounts and records maintained by the company pursuant to the rules made by the Central Government for the maintenance of Cost records under section 209(1)(d) of The CompaniesAct 1956 and the company has appointed CostAuditors also. We are of the opinion that prima facie the prescribed accounts and records have been maintained.

9. (a) According to the information and explanations given to us and records of the company examined by us, in our opinion, the company is not regular in depositing undisputed statutory dues in respect of Service Tax, Provident Fund, ESI, Sales tax, Excise duty, with the appropriate authorities.

(b) According to the information and explanations given to us and records of the company examined by us, the following undisputed statutory liabilities are outstanding for more than six months as on the Balance Sheet date.

Name of the Statue Nature of dues Amount in Rs.

Service Tax Service Tax 1860353

Employee Provident Provident Fund 5031015 Fund Act, 1952

Employee''s State ESI 1840689 Insurance Act, 1948

Sales Tax VAT/CST 2328962

Centran Excise Act, Excise duty 5665724 1944

C. The provident fund authorities have issued prohibitory orders to the bankers in view of the failure of the company to remit the statutory dues.

10. The company has accumulated losses of Rs 587.99 Lakhs as at 31st March, 2014 and it has incurred a cash loss of Rs 251.91 Lakhs in the financial year 2013-14.

11. The Company is having the following outstanding dues to financial institutions, banks or debenture holders during the year.

Company name Amount (Rs in Lacs)

SREI Equipment Finance Pvt Ltd. 177.92

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

13. In our opinion and according to the information and explanations given to us, the company is not a chit fund/nidhi /mutual benefit fund/ society. Therefore the provisions of this clause of Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks and financial institutions.

16. In our opinion and according to the information and explanations given to us the term loans have been applied for the purposes for which they were raised.

17. According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis has been used for long term investment of the company.

18. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of theAct during the year.

19. The company has not issued any debentures and hence, the provisions of clause 4(xix) of the companies (Auditor Report) Order 2003 are not applicable.

20. The company has not raised any money by public issues during the year hence; the provisions of clause 4(xix) of the companies (Auditor Report) Order 2003 are not applicable.

21. It is observed that the following cases are filed against the company which are pending.

Case filed by forum Purpose Status Amount in Rs. Labour Union Labour Commissioner Wages Dues Pending 3350876 P.F. Authority Hon''ble High Court Appeal Pending 9047169 of A.P. against ATA order

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

For SRB & ASSOCIATES Chartered Accountants I.C.A.I Regn. No.310009E

T. Lakshmi Narayana Date: 30.05.2014 Partner Place: Hyderabad Membership No: 14674

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of RAASI REFRACTORIES LIMITED which comprise the Balance sheet as at 31st March 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit als o includes evaluati ng th e appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d. In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the

Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956.

f. Since the central government has not issued any notification as to the rate at which the cess is to be paid under section 441a of the Companies Act, 1956 nor has it issued any rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the company.

The Annexure referred to in paragraph 1 of the Auditors'' Report of even date to the members of RAASI REFRACTORIES LIMITED on the financial statement for the year ended 31st March, 2013.

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

(b) Fixed assets are physically verified by the management according to a phased programme designed to cover all the fixed assets once a year, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

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

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

(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section301 of the companies Act, 1956.

(b) The company has taken the following unsecured loans from companies covered in the register maintained under section 301 of the Companies Act, 1956.

(I) Unsecured loan taken from M/S Sarvesh Refractories Ltd in the earlier years with interest @ 1% per annum and the outstanding balance as on the Balance Sheet date is Rs 418.15 lacs as against the outstanding balance of Rs 414.42 lakhs outstanding at the end of the previous year.

(ii) Unsecured interest free loan taken from M/S Sarvesh Refractories Ltd during the previous year Rs 100.00 lakhs for investment purpose is outstanding as on the Balance Sheet date

4. In our opinion and according to the information and explanation given to us there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures.

5. (a) In our opinion and according to the information and explanation given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanation given to us, there are no transactions made in purchase of such contracts or arrangements and exceeding Rs. five lakhs in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8. According to information and explanation given to us the Central Government has not prescribed maintenance of cost records for the company as required under Section 209 (1) (d) of the Companies Act, 1956 for any of the activities of the company.

9. According to the information and explanations given to us and records of the company examined by us, in our opinion, the company is generally regular in depositing undisputed statutory dues in respect of income tax, sales tax, customs duty, excise duty, cess with the appropriate authorities.

10. The company has accumulated losses as at 31 st March, 2013 and it has incurred a cash loss of Rs 89.38 Lakhs in the financial year 2012-13.

11. The Company did not have any outstanding dues to any financial institutions, banks or debenture holders during the year.

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

13. In our opinion and according to the information and explanations given to us, the company is not a chit fund/nidhi /mutual benefit fund/ society. Therefore the provisions of this clause of Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks and financial institutions.

16. In our opinion and according to the information and explanations given to us the term loans have been applied for the purposes for which they were raised.

17. According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis has been used for long term investment of the company.

18. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19 The company has not issued any debentures and hence, the provisions of clause 4(xix) of the companies (Auditor Report) Order 2003 are not applicable.

20 The company has not raised any money by public issues during the year hence; the provisions of clause 4(xix) of the companies (Auditor Report) Order 2003 are not applicable.

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

For SRB & ASSOCIATES

Chartered Accountants

I.C.A.I Regn. No.310009E

T. Lakshmi Narayana

Date: 30.05.2013 Partner

Place: Hyderabad Membership No: 14674

---

Mar 31, 2012

1. We have audited the attached Balance sheet of RAASI REFRACTORIES LIMITED as at 31a March 2012 and the related profit & Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor''s Report) Order, 2003 as amended by Companies (Auditor''s Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of The Companies Act, 1956'' of India (the ''Act'') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

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

(e) On the basis of written representations received from the directors, as on 31" March 2012, and taken on record by the Board of Directors, 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 Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached there to give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 3151 March, 2012;

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

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

(Referred to in paragraph 3 of the Auditors'' Report of even date to the members of RAASI REFRACTORIES LIMITED on the financial statement for the year ended 31" March, 2012)

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

(b) Fixed assets are physically verified by the management according to a phased Programme designed to cover all the fixed assets once a year, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

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

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

(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory by the management as compared to the records were not material.

3. According to information and explanation given to us:

(a) The company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The company has taken the following unsecured loans from companies covered in the register maintained under section 301 of the Companies Act. 1956.

(i) Unsecured loan taken from M/s Sarvesh Refractories Ltd. in the earlier years with interest @1% per annum and the outstanding balance as on the Balance Sheet date is Rs.414.42 lakhs as against the outstanding balance of Rs.410.72 lakhs at the end of previous year.

(ii) Unsecured interest free loan taken from M/s Sarvesh Refractory Ltd in the earlier years Rs. 100.00 lakhs for investment purpose is outstanding as on the Balance Sheet date.

4. - In our opinion and according to the information and explanation given to us there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures.

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

(b) In our opinion and according to the information and explanation given to us, there are no transactions made in pursuance of such contracts or arrangements and exceeding Rupees. Five Lakhs in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Companies Act, 1956. and the rules framed there under.

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

8. According to information and explanation given to us the Central Government has not prescribed maintenance of cost records for the company as required under Section 209 (1) (d) of the Companies Act, 1956.

9. (a) According to the information and explanations given to us and records of the company examined by us, in our opinion, the company is generally depositing undisputed statutory dues with delay inrespect of income tax, sales tax, customs duty, excise duty, cess with the appropriate authorities.

(b) The following undisputed statutory liabilities are outstanding for more than 6 months as on the balance sheet date. Provident Fund Rs. 34,58,881 T.D.S 1,19,986, CST Rs. 36,988, Vat 1,13,505, ESI Rs. 9,28,827, TDS Rs. 1,19,986 and Service Tax 13,52,781.

10. The company is having accumulated losses as at 31st March 2012 and it has not incurred any cash lossess in the current or financial year ended on that date or in the immediately preceding financial year.

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

12. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/ societies are not applicable to the Company.

13. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

14. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks orfinancial institutions.

15. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied forthe purposes for which they were obtained.

16 . According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment of the company.

17 . The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

18. The company has not issued any debentures and hence, the provisions of clause 4 (xix) of the companies (Auditor Report) Order 2003 are not pplicable.

19. The company has not raised any money by public issues during the year hence, the provisions of clause 4(xix) of the companies (Auditor Report) Order 2003 are not applicable.

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

For SRB & ASSOCIATES

Chartered Accountants

T. Lakshmi Narayana

Date: 30.05.2012 Partner

Place: Hyderabad Membership No: 14674

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of RAASI REFRACTORIES LIMITED as at 31st March 2010 and the related Profit & Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 as amended by Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

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

(e) 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 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 Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached there to give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

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

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

ANNEXURE TO AUDITORS REPORT

(Referred to in paragraph 3 of the Auditors Report of even date to the members of RAASI REFRACTORIES LIMITED on the financial statement for the year ended 31st March, 2010)

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

(b) Fixed assets are physically verified by the management according to a phased programme designed to cover all the fixed assets once a year, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

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

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

(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material.

3. According to information and explanation given to us:

(a) The company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The company has taken the following unsecured loans from companies covered in the register maintained under section 301 of the Companies Act .1956 .

(i) Unsecured loan taken from M/s Sarvesh Refractories Ltd. in the earlier years with interest @1% per annum and the outstanding balance as on the Balance Sheet date is Rs 407.06 lakhs as against the outstanding balance of Rs. 403.43 lakhs at the end of previous year.

(ii) Unsecured interest free loan taken from M/s Sarvesh Refractory Ltd during the previous year Rs. 100.00 lakhs for investment purpose is outstanding as on the Balance Sheet date.

4. In our opinion and according to the information and explanation given to us there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedures.

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

(b) In our opinion and according to the information and explanation given to us, there are no transactions made in pursuance of such contracts or arrangements and exceeding Rs. five lakhs in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8. According to information and explanation given to us the Central Government has not prescribed maintenance of cost records for the company as required under Section 209 (1) (d) of the Companies Act, 1956.

9. (a) According to the information and explanations given to us and records of the company examined by us, in our opinion, the company is generally regular in depositing undisputed statutory dues in respect of income tax, sales tax, customs duty, excise duty, cess with the appropriate authorities.

(b) The following undisputed statutory liabilities are outstanding for more than 6 months as on the balance sheet date.

Service Tax - Rs. 15,17,745.00

(c) According to the information and explanations given to us the following statutory dues are disputed and have not been paid.

(i) Income tax of Rs.59,72,805/- for the year F.Y 2005-06, Demand made by Dy Commissioner of Income Tax and the appeal pending before The Commissioner of Income Tax(Appeals) –IV, Hyderabad.

(ii) Sales Tax of Rs. 24,99,538 for the year 2004-05, Demand made by The Asst. Commissioner (CT), Nalgonda and on appeal by the company The Appellate Deputy Commissioner (CT), Hyderabad, Rural Division has remanded back the appeal to The Asst. Commissioner (CT), Nalgonda for revision.

10. The company has no accumulated losses as at 31st March, 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. As per the information and explanations given to us and the records verified by us, no repayments of principal or interest have been made in case of the following financial institutions:

Particulars Principal amount Interest Period due from

Rs. Rs.

Term loan from NIA 2,57,812 4,34,922 01.04.1999

Term loan from UIIC 2,51,625 4,22,928 01.04.1999

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

13. The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

17. According to the information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment of the company.

18. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The company has not issued any debentures and hence, the provisions of clause 4(xix) of the companies (Auditor Report) Order 2003 are not applicable.

20. The company has not raised any money by public issues during the year hence, the provisions of clause 4(xix) of the companies (Auditor Report) Order 2003 are not applicable.

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

For SRB & ASSOCIATES

Chartered Accountants

T. Lakshminarayana

Date: 27-08-2010 Partner

Place: Hyderabad Membership No.14674: