Auditor Report of Tamil Nadu Steel Tubes Ltd.

Mar 31, 2015

REPORT ON FINANCIAL STATEMENTS: - We have audited the accompanying Financial statements of TAMILNADU STEEL TUBES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2015, and 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 Board of Directors is responsible for the preparation of these financial statements that gives a true and fair view of the financial position, financial performance and cash flows of the Company with the Accounting 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 preventing and detecting frauds and other irregularities, selection and application of the appropriate accounting policies, making judgments and estimates that are reasonable and prudent, and the 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 presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, 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 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 statement.

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 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 at 31.03.2015 ;

b) In the case of the Profit and 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 flows of the company for the year ended on that date.

REPORT ON OTHER LEGAL REGULATORY REQUIREMENTS As required by the Companies' (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of Section-143(3) of the Act, we give in the Annexure a statement on the matters specified in Paragraphs-3 and 4 of the Order.

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

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

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2013, dated 13.09.2013 of the Ministry of Corporate Affairs in respect of Section-133 of the Companies Act 2013;

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

f) With respect to the other matters included in the auditor's report and to the best of our information and according to the explanation given to us.

1 The company has disclosed the pending litigation on its financial position in its financial statement.

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

3 There has been no delay in transferring amount, required to be transferred, to the investor's education and protection fund by the company.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF TAMILNADU STEEL TUBES LIMITED, CHENNAI. ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2015.

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

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

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

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

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

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

(3) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section-189 of the Companies Act, 2013. Consequently, the provision of Clause 3(iii), (iiia) and (iiib) of the orders are not applicable to the Company.

(4) In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been not

(5) The company has not accepted any Deposits from the public within the meaning of section 73, 74, 75 and 76 of the Act and the rules framed thereunder to the extent notified.

(6) We have broadly reviewed the cost records maintained by the Company pursuant to the rules prescribed by the Central Government under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(7) (a) According to the records of the company undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities..

(b) According to the information and explanations given to us and the records of the company examined by us. There are no dues of income tax, wealth tax, service tax, sales tax, customs duty and excise duty and cess as on 31 of March, 2015 which have not been deposited on account of a dispute, are as follows :

S.No Nature of Disputed Amount Forum where the Dispute is Statutory Dues (Rs. in Lacs) Pending

1. INCOME TAX DUES:

i) Block Assessment 143.29 Appeal pending before the Hon'ble

ii) AY 1997-1998 37.28 Madras High Court

iii) AY 1999-2000 88.22 Appeal is filed before AIIT, Chennai

iv) AY 2011-2012 116.06

2. SERVICE TAX DUES: Pending for inclusion in

(From Nov. 1997 to 1.60 Modified Draft June 1998) Rehabilitation Scheme (MDRS) before BIFR (c) There is no amount required to be transferred by the company to the Investor Education and Protection Fund Account in accordance with provisions of the Companies Act and the rules made there under.

(8) The Company has not accumulated loss at the end of the financial year ended as on 31st March 2015, but has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

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

(10) According to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from a bank or financial institution

(11) Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not raised any term loans during the year, hence the provisions of clause 11 of companies (Auditor's Report) Order, 2015 is not applicable to the company.

(12) 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 material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the management.

FOR ABHAY JAIN & CO., Chartered Accountants (FRN No.: 000008S)

Place: Chennai SD/- Date : 30.05.2015 (A. K. JAIN-Partner) Membership No. 070224

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Mar 31, 2014

We have audited the accompanying Financial statements of TAMILNADU STEEL TUBES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2014, and 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 gives a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act 1956 ("the Act") read with the General Circular 15/2013 dt. 13th Sep. 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting policies generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that gives a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS'' RESPONSIBILITY

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

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

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

OPINION

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

a) In the case of the Balance Sheet, of the state of affairs of the Company at 31.03.2014;

b) In the case of the Profit and 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 flows for the year ended on that date.

REPORT ON OTHER LEGAL REGULATORY REQUIREMENTS

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

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 accounts as required by law have been kept by the Company so far as appears from our examination of those books.

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2013, dt. 13.09.2013 of the Ministry of Corporate Affairs in respect of Section-133 of the Companies Act 2013;

e) On the basis of written representations received from the directors as on March 31, 2014, 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 of Section-274(1g) of the Act.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF TAMILNADU STEEL TUBES LIMITED, CHENNAI, ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2014.

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

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

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

(c) In our opinion, the Company has not disposed off any substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

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

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

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

(3) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section-301 of the Companies Act, 1956. Consequently, the provision of Clauses-iii(b), iii(c) and iii(d) of the orders are not applicable to the Company.

(e) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has taken loans from an individual covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 100.82 Lakhs and the year end balance of loans taken from such parties was Rs. 100.82 Lakhs.

(f) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from an individual covered in the Register maintained under Section-301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(g) The Company is regular in repaying the principal amount as stipulated and has been regular in the payment of interest.

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

(5) a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, 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) As per information and explanations given to us, and in our opinion, the transaction entered into by the Company with parties covered u/s 301 of the Act and exceeding Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the time.

(6) The Company has not accepted any deposits from the public covered under section- 58A and 58AA of the Companies Act, 1956.

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

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

(9) (a) According to the records of the company undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us, there were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Service Tax, Sales-tax, Customs Duty and Excise Duty and Cess were in arrears, as on 31st March 2014, for a period of more than six months from the date they became payable.

(c) The disputed statutory dues aggregating to Rs. 386.45 Lakhs that have not been deposited on account of disputed matters pending before the appropriate authorities, are as under:

S. Nature of Disputed Amount Forum where the Dispute is No. Statutory Dues (Rs. in Pending Lacs)

1. INCOME TAX DUES:

i) Block Assessment 143.29

ii) AY 1997-1998 37.28 Appeal pending before the Hon''ble iii) AY 1999-2000 88.22 Madras High Court

iv) AY 2011-2012 116.06 Appeal is filed before CIT Appeal Chennai

2. SERVICE TAX DUES: Pending for inclusion in (From Nov. 1997 to Modified Draft Rehabilitation June 1998) 1.60 Scheme (MDRS) before BIFR

(10) The Company has accumulated loss of Rs. 6.17 Crores as on 31st March 2014, but has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

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

(12) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(13) The Company is not a Chit Fund or Nidhi/Mutual Benefit Fund/Society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

(14) According to the information and explanations given to us, the Company is not trading in Shares, Mutual Funds & Other Investments. Proper records & timely entries have been maintained in this regard & further investments specified are held in their own name.

(15) According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

(16) Based on our audit procedures and on the information given by the management, we report that the Company has not raised any terms loans during the year.

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

(18) Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

(19) The Company has no outstanding debentures during the period under audit.

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

(21) Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.

for ABHAY JAIN & CO., Chartered Accountants FRN No. : 000008S

Place: Chennai Sd/- Date : 30.05.2014 (A. K. JAIN) Partner Membership No. 070224

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Mar 31, 2012

1) We have audited the attached Balance Sheet of M/S. TAMILNADU STEEL TUBES LIMITED, as at 31st March 2012, the related Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2) We have conducted our audit in accordance with Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 the 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, we enclose in the Annexure a statement of matters specified in paragraph 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 where necessary for the purposes of our audit;

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

c) The Balance Sheet, Profit and loss Account and the Cash Flow Statement dealt with by this Report are in agreement with the books of accounts;

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

e) On the basis of written representation received from the Directors, as on 31st March 2012 and taken on record by the board of directors, we report that none of the Directors are disqualified as on March 31st, 2012 from being appointed as a director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

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

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

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

c) In the case of the Cash Flow Statement of the Cash Flow for the year ended as of that date.

ANNEXURE TO THE AUDITORS' REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF M/s TAMILNADU STEEL TUBES LTD., CHENNAI, ON THE ACCOUNTS FOR THE YEAR ENDED 31.03.2012.

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its Fixed Assets on the basis of available information.

(b) As explained to us, all the Fixed Assets have been physically verified by the management in a phased periodical manner, which in our opinion, is reasonable having regard to the size of the company and the nature of its Assets. No material discrepancies were noticed on such physical verification.

(c) In our opinion, the Company has not disposed off any substantial part of the fixed assets during the year and the going concern status of the Company is not affected.

(ii) (a) According to the information and explanations given to us, the Inventory has been physically verified during the year by the Management. In our opinion; the frequency of verification is reasonable. (b) 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) The company is maintaining proper records of inventories. There was no material discrepancy noticed on physical verification of inventories as compared to the Book Records.

(iii) (a) According to the information and explanations given to us, the Company has taken Loan from one individual covered in the Register maintained under Section 301 of the Companies Act, 1956. The Maximum amount involved during the year was Rs. 59.10 Lakhs and the year end balance of loan taken from such party was Rs. 100.81 Lakhs.

(b) According to the information and explanations given to us, the Company has not granted any loans to a Company or parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(c) According to the information and explanations given to us, the loans and advances granted is interest free and in the opinion of the management of the company, it is not prima facie prejudicial to the interest of the Company.

(d) According to the information and explanations given to us, there is no over due amount of loans taken from or granted to Companies, Firms or other parties, listed in the Register maintained under Section 301 of the Companies Act 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our Audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the Register maintained under section 301 of the Companies Act, 1956 (1 of 1956) have been so entered. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of Contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our opinion and according to information and explanations given to us, the company has not accepted any deposits from the public during the year under Report.

(vii) In our opinion and according to information and explanation given to us, the Company has Internal Audit System commensurate with the size and nature of its business.

(viii) We have broadly reviewed the Books of Accounts relating to materials, labour and other other items of Cost maintained by the Company pursuant to the rules made by the Central Govt. for the maintenance of Cost Records under Section 209 (1) (d) of the Companies Act 1956, and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed Statutory Dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, VAT, Wealth Tax, Customs Duty, Excise Duty, Cess, and other material Statutory Dues as applicable.

(b) According to the information and explanation given to us, no undisputed amounts payable in respect of Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess are in arrears, at at 31st March 2012, for a period of more than six months from the date they became payable.

(c) The disputed statutory dues aggregating to Rs. 567.38 Lakhs that have not been deposited on account of disputed matters pending before the appropriate authorities, are as under:

Sl. Nature of Disputed Amount Forum where the Dispute No. Statutory dues (Rs. in is pending Lacs)

1. INCOME TAX DUES:

i) Block Assessment 164.09 ii) AY 1997-1998 40.09 Appeal pending before iii) AY 1999-2000 88.22 the Hon'ble iv) AY 2000-2001 257.06 Madras High Court

2. SERVICE TAX DUES: Pending for inclusion in (From Nov. 1997 to June 1.60 Modified Draft 1998) Rehabilitation Scheme (MDRS) before BIFR

3. Sales Tax Dues (Including interest and penalty) Appeal pending before Appellate

i) AY 2004-05 6.44 Assistant Commissioner ii) AY 2005-06 5.84 of Commercial Taxes, iii) AY 2006-07 4.04 Chennai

(x) In our opinion, the Accumulated Losses of the Company are not more than 50% of its net worth. The company has not incurred cash losses during the financial year covered by our audit report and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to Financial Institutions and Banks.

(xii) We are of the opinion, that the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a Chit Fund or Nidhi/Mutual Benefit Fund/Society. Therefore, the provisions of Clause 4 (xiii) of the Companies (Auditor's Report) Order 2003, are not applicable to the company.

(xiv) In our opinion, the Company is not dealing in or trading in Shares, Securities, Debentures and other Investments. Accordingly, the provisions of Clause 4 (xiv) of the Companies (Auditor's Report) Order 2003, are not applicable to the company.

(xv) In our opinion, the Company has not given any guarantee for the loans taken by others from banks or financial institutions is not prejudicial to the interest of the company. (xvi) In our opinion, the Company has not obtained any Term Loans during the Financial year.

(xvii) According to the information and explanations given to us and on the overall examination of the Balance Sheet of the Company, we report that no funds raised on shortterm basis have been used for long-term investments, no long-term funds have been used to finance short-term Assets except permanent Working Capital.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of Shares to Parties and Companies covered in the Register maintained under Section 301 of the Companies Act 1956.

(xix) According to the information and explanations given to us during the period covered by our Audit Report, the Company has not issued any debentures.

(xx) The Company has not raised any money by "Public Issue" during the year. Accordingly, the provisions of Clause 4(xx) of the Companies (Auditor's Report) Order 2003, is not applicable to the company.

(xxi) According to the information and explanations given to us no fraud on or by the company have been noticed or reported during the course of our Audit.



For ABHAY JAIN & CO., Chartered Accountants FRN No.: 000008S Sd/-

(A. K. JAIN) Partner M. No. 70224

Place: Chennai Date : 29.06.2012

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Mar 31, 2010

We have audited the attached Balance Sheet of Tamil Nadu Steels Tubes Ltd., Chennai as at 31st March 2010 and also the profit and Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We 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 the financial statements, whether the same 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) order 2004, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

Further to our comments in the annexure above, we state that:

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

b) In our opinion, proper books of accounts, as required by law been kept by the Company so far as it appears from our examination of those books (and proper return adequate for the purposes of our audit have been received from the branches not visited by us.)

c) The Balance Sheet and Profit and Loss Acc6unt referred to in this report are in agreement with the books of account.

d) In our opinion, the Profit and Loss Account and Balance Sheet, referred to in Report comply with the applicable Accounting Standards referred to in Sub- Section 3 (c) of section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March 2010 from being appointed as directors in terms of clause (g) of sub - section (1) of Section 274 of the companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanation given to us, and Subject to :

Note no.2 of Notes forming part of accounts regarding charging of Stamp Duty on land (Rs. 3.08 Crores) acquisition to Profit and Loss Account, the said Balance Sheet and Profit and Loss Account read together with the notes thereon give the information required by the Companies Act 1956, in the manner so required and give true and fair view.

i) In the case of the Balance Sheet, of the State of affairs of the Company as at 31st March, 2010 and

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

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

Annexure to the Auditors Report (This is the Annexure referred to in our Report of even date)

In terms of the Information and Explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

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

b) According to the information and explanations given to us, fixed assets have been physically verified by the Management during the year. We have been informed that no material discrepancies were noticed on such physical Verification. None of the fixed assets are revalued during the year.

c) In our opinion, No substantial part of fixed assets has been disposed of during the year, which will affect its status as going concern.

(ii) According to the information and explanations given to us, the stock of Inventory has been physically verified during the. year by the Management at reasonable intervals. 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. The company has maintained proper records of inventory.

(iii) (a) The Company has taken unsecured loans from 9 other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(i) The Maximum amount involved during the year was Rs 86 Lakhs and the year end balance of loans taken from such parties was Rs. 73 Lakhs.

(ii) In our opinion, the terms and conditions whereof are not prejudicial to the interest of the company.

(iii) The company is regular in repaying the principal as stipulated. These are interest- free loans.

(b) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 (Act).

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. 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 weakness in the aforesaid internal control procedures.

(v) In our opinion and according to the information and explanations given to us, the company has not entered into any transactions in the previous financial year with respect to parties which need to be entered into a register in pursuance of section 301 of the Companies Act, 1956.

(vi) The company has not accepted deposits from the public within the meaning of sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion and according to information & explanation given to us, the company has in house Internal Audit System commensurate with the size & nature of its business.

(viii) The company has maintained cost records prescribed by the Central Government under Section 209(1) (d) of the Act for any of its products.

(ix) a) According to the records of the company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and any other statutory dues with the appropriate authorities, except in following cases:

S.No Nature Of dues pending Rs (In Lacs)

1 TNGST SALES TAX DUES(For the year 2000-01 & 2001-02) 30.46

2 UNCLAIMED DIVIDEND1993-94 (Not deposited with I.P.F.) 2761

According to the explanation given, the Company is in the process of revalidating the related dividend warrants)



(b) According to the information and explanations given to us, the following statutory dues have not been deposited on account of dispute:

Amount S.No Nature of Disputead (Rupees Forum where the dispute is pending statutory dues in Lacs)

1 INCOME TAX DUES:

i) AY 1990-91 to 2000-01 164.09 Appeal pending before the Honble Madras High Court.

ii) AY 1997-1998 38.22 Appeal pending before the Honble Madras High Court.

2 SERVICE TAX DUES: Pending for inclusion in modified draff (From Nov 1997 to June1998) 1.65 rehabilitation scheme before BIFR

(x) The Company has Accumulated Losses as on 31.3.2010, the said losses exceed 50% of net worth of the company. However the company has not incurred cash losses during the financial year covered by our audit report and in the immediately preceding financial year.

(xi) The Company entered in to an O.T.S. (One Time Settlement) with its Bankers viz. The Jammu & Kashmir Bank Ltd., whereby the Bankers have directed the Company to pay a sum of Rs.10 Crores, with interest, within the stipulated period, and if there is no violation in this condition, they may reduce the liability from Rs. 15.09 Crores to Rs.10 Crores after full and final payment. Accordingly, the company has agreed for this O.T.S. proposal and so far paid a sum of Rs.9.48 Crores as principal and a sum of Rs. 1.79 Crores as interest and is in the process of settling the O.T.S.

(xii) According to the records of the company examined by us and the information explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a Chit fund, Nidhi or Mutual benefit fund / Society.

(xiv) The Company is not dealing in or trading in Shares, Securities, Debentures and other investments.

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

(xvi) The Company has not obtained any term loans during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investments.

(xviii) The Company has not made preferential allotment of shares to Parties and Companies covered in the register maintained under section 301of the Companies Act.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

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

For KUMBHAT & CO

(Firm Registration No: 001609S)

Chartered Accountants

Place: Chennai (AJIT KUMBHAT)

Date: 26.06.2010. Partner

M.No. 19582