Auditor Report of Chrome Silicon Ltd.

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements:

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

Management’s Responsibility for the Standalone Ind AS Financial Statements:

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

Auditor’s Responsibility:

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

4. 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.

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

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

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

Basis for Qualified Opinion

8. Non-provision of load shortfall charges for earlier years amounting to Rs 42,60,26,056, pending disposal of company’s objections by various administrative authorities as per the directions of Forum for Redressal of Consumer grievances of CPDCL as stated in Note No. 2.28(a) to the standalone Ind AS financial statements has resulted in understatement of the loss for the year.

9. Non-provision of FSA charges for the year 2008-09 totaling to Rs 5,28,19,683, pending resolution of the appeals pending before various judicial authorities as stated in Note No. 2.28(b) to the standalone Ind AS financial statements, has resulted in understatement of the loss for the year.

10. As stated in Note No 2.30 to the standalone Ind AS financial statements, the books of account are maintained under "going concern” concept, though the Ferro Alloys plant of the company did not carry out any production activities during the entire year, due to commercially unviable operations because of high power tariff, besides the entire workmen have been retrenched in earlier years.

11. The company has considered the diminution as temporary in nature as stated in Note No 2.34 to the standalone Ind AS financial statements the value of its investment of Rs 143,06,46,210 in the equity of M/s. Konaseema Gas Power Ltd, whose net-worth has completely been eroded and not in operation for more than four years.

12. Note No. 2.36 that balances lying in the lenders'', sundry creditors, like, suppliers'', service providers’, employees’ and customers'' accounts are subject to confirmation.

13. No physical verification of inventories has been carried out during the year. Further the inventory is lying with the company for more than five years. Accordingly, we are unable to express our opinion on the realisability of the amount at which the same are stated in the books of account.

Qualified Opinion

14. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraphs (08), (09), (10), (11), (12) & (13) above, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31st March, 2018, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

15. We draw attention to the following matters in the Notes to the standalone Ind AS financial statements:

a. Note No. 2.03 with marks (#) that 124.589 Lakhs of shares acquired by the company in Konaseema Gas Power Limited, the title in respect of which is in the process of transfer.

b. Note No. 2.35 that according to an internal technical assessment, there is no impairment in the carrying cost of cash Generating assets of the Company in terms of Accounting for Impairment of Assets (Ind AS 36) of Companies (Indian Accounting Standard) Rules, 2015.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements:

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

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

a) We have sought and, except for the matters described in the Basis for Qualified Opinion paragraphs 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) Except for the effects of the matter described in the Basis for Qualified Opinion paragraphs 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, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraphs above, in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) The matter described in the Basis for Qualified Opinion paragraphs above, in our opinion, may have an adverse effect on the functioning of the Company.

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

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraphs above.

h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we are unable to express any opinion as required under section 143 (3) of the Act 2013, as we could not carry -out any verification or review of its internal financial controls over financial reporting as the company has not carried-out any operations during the period under report.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note No. 2.28 to the standalone Ind AS financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There is a delay of thirty eight days in transferring amount which is required to be transferred during the year to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditor’s Report:

The Annexure referred in paragraph (16) in our Independent Auditor’s Report of even date to the members of the Company on the standalone Ind AS financial statements for the year ended 31 March 2018, we report that:

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

b) The fixed assets could not be physically verified by the management during the year in accordance with a phased programme of verification, due to closure of its plant for the entire year. Accordingly, we are unable to report on any material discrepancies between the fixed assets register and the assets physically available.

c) We are informed that the title deeds of some of the immovable properties are lodged with the bankers for which confirmation from the bankers could not be verified by us and rest of the title deeds for the rest of the properties could not be verified as the same are not produced for our verification.

ii) Physical verification of inventory could not be conducted during the year by the management due to closure of the plant for the entire year. As no physical verification of inventories has been carried out during the year under report, we are unable to report regarding the discrepancies between the physical stocks and the book records.

iii) The Company has not granted any loans, secured or unsecured, to Companies, Firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Consequently, clauses 3 (iii) (a), (b) and (c) of the Order are not applicable.

iv) According to the information and explanation given to us, the company has given two guarantees for loans taken by others from financial institutions in earlier years. During the financial year under report, the company has neither given any loans to the directors or any other persons in whom the director is interested nor given/provided any guarantee/security in connection with any loan taken by directors or such other persons as per the provisions of section 185 of the Companies Act, 2013. There are no investments made by the Company during the year and hence section 186 of the Companies Act, 2013 is not applicable.

v) The Company has not accepted any deposits. Consequently, the clause 3(v) of the order is not applicable to the Company.

vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 (‘the Act’), and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

vii) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, there are non-remittances/ delays in deposit/remittances of amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, the details of undisputed amounts payable in respect of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax or cess and other material statutory dues which were in arrears as at 31^st March 2018 for a period of more than six months from the date they became payable are as under:

Name of the statute/ Authority	Nature of dues	Period to which the amount relates	Amount (In Rupees)
Employee state Insurance Corporation Act 1948	Employer contribution	From 01.04.2012 to 31.03.2015	1,00,000
Employee state Insurance Corporation Act 1948	Employee contribution	From 01.07.2013 to 31.03.2015	26,216
Professional Tax 1975	Employee contribution	From 01.07.2012 to 31.03.2017	4,42,530
Central Sales Tax Act	Central sales tax	For the year 2011-12	5,57,248
Central Sales Tax Act	Central Sales Tax	For the year 2013-14	21,40,003
AP VAT Act, 2000	Value Added Tax	For the year 2013-14	7,89,829
Income Tax Act, 1961	Regular assessment tax	For the financial year 2011-12	5,17,92,344
Income Tax Act, 1961	Dividend Distribution Tax	For the financial year 2011-12	21,38,620 excluding interest
Income Tax Act, 1961	Income tax deducted at source	From 01.04.2012 to 31.08.2017	95,19,634
Service tax Act	Service tax including education cess	From 01.04.2012 to 31.08.2014	7,27,412
Central Excise Act	Excise duty	From 01.05.2013 to 31.08.2014	81,81,486 excluding interest
Greater Hyderabad Municipal Corporation Act	Property Tax	From 01.04.2012 to 31.03.2013	1,99,859

b) As at 31^st March 2018, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Service tax, duty of customs, duty of excise, value added tax except the following:

Name of the statute/ Authority	Nature of dues	Period to which the amount relates	Forum where dispute is pending	(*) Amount (In Rupees)
Central Sales Tax Act	Non submission of ‘C’ and ‘F’ forms	1996-97	Dy. Commissioner (Appeals)	18,68,890
Central Sales Tax Act	Non submission of ‘H’ forms	2008-09	Appellate Dy. Commissioner (CT)	11,86,633

(*) Net of pre deposits made

viii) In our opinion, the company has not obtained any Term Loans during the financial year under report. Consequently the clause 3(viii) of the order is not applicable.

ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year under report. Accordingly, paragraph 3 (ix) of the Order is not applicable.

x) During the course of our examination of the books of account 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 by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not paid/provided for managerial remuneration during the year. Consequently the clause 3(xi) of the order is not applicable.

xii) In our opinion, the company is not a Nidhi Company. Consequently the clause 3(xii) of the order is not applicable.

xiii) According to the information and explanations given to us and on overall examination of the records of the Company, we report that all transactions with related parties are in compliance with the provisions of sections 177 and 188 of the Companies Act, 2013 and the related party disclosures as required by relevant Indian Accounting Standards are disclosed in the standalone Ind AS financial statements.

xiv) The Company has not made any preferential allotment or private placement of shares or fully/ partly convertible debentures during the year under review. Consequently the clause 3(xiv) of the order is not applicable.

xv) The Company has not entered into any non cash transactions with the directors or persons connected with them during the year under report. Consequently the clause 3(xv) of the order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Consequently the clause 3(xvi) of the order is not applicable.

For C V RAMANA RAO & CO

Chartered Accountants

Firms’ Registration Number: 002917S

Sd/-

(Katyayani K)

Partner

Membership Number: 225030

Place: Visakhapatnam

Date: 30.05.2018

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Mar 31, 2015

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

Management's Responsibility for the Financial Statements:

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

Auditor's Responsibility:

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

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

5. 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.

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

7. 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

8. Non-provision of FSA charges for the years 2010-11 to 2012-13 totaling to Rs 19,06,53,769, pending resolution of the appeals pending before various judicial authorities as stated in Note No. 2.28(a) to the financial statements, has resulted in understatement of the loss for the year.

9. Non-provision of load shortfall charges for earlier years amounting to Rs 42,42,75,760, pending disposal of company's objections by the various administrative authorities as per the directions of Forum for Redressal of Consumer grievances of CPDCL as stated in Note No. 2.28(b) to the financial statements has resulted in understatement of the loss for the year.

10. As stated in Note No 2.30 to the financial statements, the books of account are maintained under "going concern" concept, though the Ferro Alloys plant of the company did not carry out any production activities during the entire year, due to commercially unviable operations because of high power tariff, besides the entire workmen have been retrenched during the year. Due to commercially unviable operations because of high power tariff

Qualified Opinion

11. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraphs (08), (09) & (10) above, 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, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

12. We draw attention to the following matters in the Notes to the financial statements:

a. Note No. 2.13 with marks (#) that 184.589 Lakhs of shares acquired by the company in Konaseema Gas Power Limited, the title in respect of which is in the process of transfer.

b. Note No. 2.35 that in the opinion of the board of directors of the company the diminution in the value of certain investments is temporary in nature and hence no provision towards diminution in the value of investments is considered necessary.

c. Note No. 2.36 that according to an internal technical assessment, there is no impairment in the carrying cost of cash Generating assets of the Company in terms of Accounting for Impairment of Asset (AS 28) of Companies (Accounting Standard) Rules, 2006.

d. Note No. 2.37 that balances lying in some of the lenders', suppliers', customers' accounts are subject to confirmation

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements:

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

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

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

b) Except for the effects of the matter described 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 the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid 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) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraphs above.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note No. 2.28 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable 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 TO THE AUDITORS REPORT REFERRED TO IN PARAGRAPH 8 OF OUR REPORT OF EVEN DATE:

The Annexure referred in paragraph (13) in our Independent Auditor's Report of even date to the members of the Company on the financial statements for the year ended 31 March 2015, we report that:

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

b) The fixed assets could not be physically verified by the management during the year in accordance with a phased programme of verification, due to closure of its plant for the entire year. Accordingly, we are unable to report on any material discrepancies between the fixed assets register and the assets physically available.

ii) a) Physical verification of inventory could not be conducted during the year by the management due to closure of the plant for the entire year.

b) As no physical verification has been conducted during the year, we are unable to report on the adequacy of the procedures of physical verification of inventory followed by the management.

c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. As no physical verification of inventories has been carried out during the year under report, we are unable to report regarding the discrepancies between the physical stocks and the book records.

iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013 ('the Act'). Consequently, clauses 3 (iii) (a) and 3 (iii) (b) of the Order are not applicable to the Company.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories fixed assets and sale of goods. The activities of the Company do not include sale of services. We have not observed any major weakness in the internal control system during the course of the audit.

v) The Company has not accepted any deposits. Consequently, the clause 3(v) of the order is not applicable to the Company.

vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 ('the Act'), and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

vii) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, there are non-remittances/ delays in deposit/remittances of amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, the details of undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax or cess and other material statutory dues which were in arrears as at 31st March 2015 for a period of more than six months from the date they became payable are as under:

Name of the Nature of Dues Statute/Authority

Employee Provident Employer Fund Act, 1952 contribution

Employee Provident Employee Fund Act, 1952 contribution

Employee state Employer Insurance contribution Corporation Act 1948

Employee state Employee Insurance contribution Corporation Act 1948

Professional Tax 1975 Employee contribution

Central Sales Tax Act Central sales tax

Central Sales Tax Act Central sales tax

Central Sales Tax Act Central sales tax

AP VAT Act, 2000 Value Added Tax

Income Tax Act, 1961 Regular assessment tax

Income Tax Act, 1961 Dividend Distribution Tax

Income Tax Act, 1961 Income tax deducted at source

Service tax Act Service tax including education cess

Central Excise Act Excise duty

Name of the Period to which the Amount Statute/Authority amount relates (in Rs)

Employee Provident From 01.04.2012 to 72,09,686 Fund Act, 1952 31.08.2014

Employee Provident From 01.04.2012 to 26,70,533 Fund Act, 1952 31.08.2014

Employee state From 01.07.2013 to 39,536 Insurance 31.08.2014 Corporation Act 1948

Employee state From 01.07.2013 to 24,200 Insurance 31.08.2014 Corporation Act 1948

Professional Tax 1975 From 01.07.2012 to 4,25,760 31.08.2014

Central Sales Tax Act For the year 2011-12 10,73,520

Central Sales Tax Act For the year 2012-13 3,30,578

Central Sales Tax Act For the year 2013-14 21,40,003

AP VAT Act, 2000 For the year 2013-14 7,89,829

Income Tax Act, 1961 For the financial year 4,24,16,585 2011-12

Income Tax Act, 1961 For the financial year 21,38,620 2011-12 excluding interest

Income Tax Act, 1961 From 01.04.2012 to 30,43,219 31.08.2014

Service tax Act From 01.04.2012 to 7,27,412 31.08.2014

Central Excise Act From 01.05.2013 to 81,81,486 31.08.2014

b) As at 31st March 2015, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Wealth-tax, Service tax, duty of customs, duty of excise, value added tax and Cess, except the following:

Name of the Nature of Period to which Statute/Authority Dues the amount relates

Central Sales Non submission 1996-97 Tax Act of 'C' and 'F' forms

Central Sales Non submission 2008-09 Tax Act of 'H' forms

Name of the Forum where (*)Amount Statute/Authority dispute is pending (in Rs)

Central Sales Dy. Commissioner 18,68,890 Tax Act (Appeals)

Central Sales Appellate 11,86,633 Tax Act Dy. Commissioner(CT)

(*) Net of pre deposits made

c) According to the information and explanations given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time stipulated.

viii) The Company has no accumulated losses as at the end of the financial year. However, it has incurred cash losses in the financial year covered by our audit and the immediately preceding financial year.

ix) The Company has neither taken any term loan from financial institutions or a bank nor issued any debentures. Consequently, the clause 3 (ix) of the Order is not applicable to Company.

x) According to the information and explanation given to us, the company has given two guarantees for loans taken by others from financial institutions. The guarantees given by the company along with other co-promoters to financial institutions on behalf of these two companies promoted by them are with the approval of shareholders in a general meeting and in accordance with the promoters' agreements. Having regard to the information and explanations given to us the said guarantees are not prejudicial to the interest of the company.

xi) According to the information and explanations given to us, the Company has not obtained any term loans. Consequently, the clause 3 (xi) of the Order is not applicable to Company.

xii) During the course of our examination of the books of account 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 nor the Company has been noticed or reported during the course of our audit.

For BRAHMAYYA & CO., Chartered Accountants (Firm Regd. No. 000513S) Sd/- (CA. C.V.RAMANA RAO) Camp : Hyderabad PARTNER Date : 28-05-2015 Membership No. 018545

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Mar 31, 2014

01. We have audited the accompanying financial statements of VBC Ferro alloys Limited, Hyderabad ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements:

02. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

03. 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.

04. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Basis of Qualification:

06. Non-provision of FSA charges for the years 2010-11 to 2012-13 totaling to Rs 19,06,53,769 pending resolution of the appeals pending before various judicial authorities as stated in Note no 2.28(2)(a) to annual accounts, has resulted in understatement of the loss for the year.

07. Non-provision of load shortfall charges for earlier years amounting to Rs 8,66,99,649, pending disposal of company''s objections by the various administrative authorities as per the directions of Forum for Redressal of Consumer grievances of CPDCL as stated in note no. 2.28(2)(b) to annual accounts has resulted in understatement of the loss for the year.

Qualified Opinion:

08. In our opinion and to the best of our information and according to the explanations given to us, subject to our remarks under paragraphs (06) and (07) above dealing with the Basis of Qualified Opinion the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

b. In the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and

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

Emphasis of Matters

09. We draw attention to note no 2.28 (3) to the financial statements relating the maintenance of books of account on "going concern concept" though the Ferro Alloys plant of the company did not carry any production activities during the year under report, due to non-supply of power by CPDCL, as described more elaborately, in paragraph (08) of the independent audit report. Our opinion is not qualified in respect of this matter

Report on Other Legal and Regulatory Requirements:

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

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

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

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

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

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

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

ANNEXURE TO THE AUDITORS REPORT REFERRED TO IN PARAGRAPH 8 OF OUR REPORT OF EVEN DATE:

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

b) The fixed assets could not be physically verified by the management during the year in accordance with a phased programme of verification, due to closure of its plant for the entire year. Accordingly, we are unable to report on any material discrepancies between the fixed assets register and the assets physically available.

c) The Fixed Assets disposed off by the Company during the year do not form a substantial part thereof.

ii) a) Physical verification of inventory could not be conducted during the year by the management due to closure of the plant for the entire year.

b) As no physical verification has been conducted during the year, we are unable to report on the adequacy of the procedures of physical verification of inventory followed by the management.

c) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. As no physical verification of inventories has been carried out during the year under report, we are unable to report regarding the discrepancies between the physical stocks and the book records.

iii) 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. Consequently, clauses 4(iii) (b) to (d) of the Order are not applicable.

b) The Company has not taken any new loans during the year, besides loans totaling to Rs 798.67 lakhs taken from two parties in earlier years, who are covered in the register maintained under section 301 of the Companies Act. 1956.

c) In our opinion and according to the information and explanations given to us , the rate of interest and other terms & conditions in respect of the loans are not prima facie prejudicial to the to the interest of the company.

d) The company in arrears of payment of interest of Rs.247.06 lakhs as on the date of Balance Sheet. However, the date of repayment of principal amount has not been stipulated.

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 with regard to purchase of inventory, fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts and arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations given to us, the contracts and arrangements made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

The Company has not accepted any deposits from public. Consequently the clause 4(vi) of the order is not applicable.

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

We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

a) According to the information and explanations given to us and on the basis of examination of the records of the Company, there are delays in deposit/ remittances of amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales-tax, wealth-tax, custom duty, excise duty, service-tax, cess and other material statutory dues during the year by the Company with the appropriate authorities.

b) According to the information and explanations given to us, the details of undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues which were in arrears as at 31st March 2014 for a period of more than six months from the date they became payable are as under:

Nature of Statute Nature of Dues Period for which the Amount amount relates (in Rs.)

Employee Provident Employer From 01.04.2012 to 64,02,508 Fund Act, 1952 contribution 31.08.2013

Employee Provident Employee From 01.04.2012 to 54,29,533 Fund Act,1952 contribution 31.08.2013

Employee state Employer From 01.07.2012 to 91684 Insurance contribution 31.08.2013 Corporation Act 1948

Employee state Employee From 01.07.2013 to 16316 Insurance contribution 31.08.2013 Corporation Act 1948

Professional Tax 1975 Employee From 01.07.2012 to 376980 contribution 31.08.2013

Central Sales Tax Act Central sales tax For the year 2011-12 1073520

Central Sales Tax Act Central sales tax For the year 2012-13 330578

Central Sales Tax Act Central sales tax From 01.04.2013 2104965 to 31.08.2013

AP VAT Act, 2000 Value Added Tax From 01.04.2013 711649 to 31.08.2013

Income Tax Act, 1961 Regular assessment tax For the financial year 38759642 2011-12 excluding interest

Income Tax Act, 1961 Income tax deducted From 01.04.2012 to 960991 at source 31.08.2013

Income Tax Act, 1961 Dividend Distribution For the financial year 2138620 Tax 2011-12 excluding interest

c) As at 31st March 2014, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Sales tax, Wealth-tax, Service tax, Customs duty, Excise Duty and Cess except the following:

Name of the Nature of (*)Amount Period of which the Statute the Dues (Rs. in amount relates Rs.)

Central Sales Non submission 1868890 1996-97 Tax Act of ''C'' and ''F'' forms

Central Sales Non submission 1186633 2008-09 Tax Act of ''H’ forms



Name of the Statue Forum where dispute is pending

Central Sales Tax Act Dy. Commissioner (Appeals)

Central Sales Tax Act Appellate Dy. Commissioner (CT)

(*) Net of pre deposits made

x) The Company has no accumulated losses. It has incurred cash losses in the financial year covered by our audit and also in the immediately preceding financial year.

xi) The Company has neither taken any term loan from a financial institution or a bank nor issued any debentures. Accordingly clause 4(xi) of order is not applicable.

xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Consequently the clause 4(xii) of the order is not applicable.

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Consequently the clause 4(xiii) of the order is not applicable.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other instruments. Consequently the clause 4(xiv) of the order is not applicable.

xv) According to the information and explanation given to us, the company has given two guarantees for loans taken by others from financial institutions. The guarantees given by the company along with other co-promoters to financial institutions on behalf of these two companies promoted by them are with the approval of shareholders in a general meeting and in accordance with the promoters’ agreements. Having regard to the information and explanations given to us the said guarantees are not prejudicial to the interest of the company.

xvi) In our opinion, the company has not obtained any term Loans, accordingly clause 4(xvi) of the order is not applicable.

xvii) According to the information and explanations given to us and on 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.

xviii) During the year, the Company has not made any preferential allotment of shares. Consequently the clause 4(xviii) of the order is not applicable.

The Company has not issued any debentures so far. Consequently clause 4(xix) of the order is not applicable.

xx) During the year, the Company has not raised money by Public issue. Consequently the clause 4(xx) of the order is not applicable.

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

For BRAHMAYYA & CO.,

Chartered Accountants

(Firm Regd. No. 000513S)

Sd/-

(CA. C.V.RAMANA RAO)

Camp : Hyderabad PARTNER

Date : 29-05-2014 Membership No. 018545

---

Mar 31, 2013

Report on the Financial Statements:

1. We have audited the accompanying financial statements of VBC Ferro Alloys Limited, Hyderabad ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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:

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

3. 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.

4. 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.

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

Opinion:

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

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

b. In the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and

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

Matter of Emphasis

7. We draw attention to note no 2.28(1) (d) to the financial statements relating to the Fuel Surcharge Adjustments (FSAs) levied by the Electricity Distribution Companies in Andhra Pradesh, which has been challenged by the company before the Hon''ble High Court of Andhra Pradesh and Hon''ble Appellate Tribunal of Electricity, New Delhi. The company is advised by legal experts that it has good case and accordingly no provision has been considered necessary in the accounts in this regard. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements:

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

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

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

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

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in the case of few assets in respect of which particulars required to be updated, the value in respect of which is not material.

b) The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information furnished to us, no material discrepancies have been noticed on such verification

c) According to the information and explanations furnished to us, the Fixed Assets disposed off by the Company during the year do not form a substantial part thereof, so as to affect the going concern assumption on preparation of the financial statements under report.

ii) a) Physical verification of inventory has been conducted during the year by the management at reasonable intervals.

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

iii) 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. Consequently, clauses 4(iii) (b) to (d) of the Order are not applicable.

b) The Company has taken new loans of Rs 298.67 Lakhs from two other parties during the year, besides a loan of Rs 500 lakhs in an earlier year from a party, who are covered in the register maintained under section 301 of the Companies Act. 1956.

c) In our opinion and according to the information and explanations given to us , the rate of interest and other terms & conditions in respect of the loans are not prima facie prejudicial to the to the interest of the company.

d) The company in arrears of payment of interest of Rs.58.64 lakhs as on the date of Balance Sheet. However, the date of repayment of principal amount has not been stipulated.

i) 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 with regard to purchase of inventory, fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

ii) a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts and arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the contracts and arrangements made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from public. Consequently the clause 4(vi) of the order is not applicable.

vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

ix) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, there are delays in deposit/ remittances of amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales-tax, wealth-tax, custom duty, excise duty, service-tax, cess and other material statutory dues during the year by the Company with the appropriate authorities.

b) According to the information and explanations given to us, the details of undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues which were in arrears as at 31st March 2013 for a period of more than six months from the date they became payable are as under:

Nature of Statute Nature of Dues Period for which the Amount amount relates (in Rs.)

Employee Provident Employer From 01.04.2012 to 2239074 Fund Act, 1952 contribution 31.08.2012

Employee Provident Employee From 01.04.2012 to 2057236 Fund Act, 1952 contribution 31.08.2012

Employee state Employer From 01.07.2012 to 92874

Insurance Corporation contribution 31.08.2012 Act 1948

Employee state Employee From 01.07.2012 to 33727

Insurance Corporation contribution 31.08.2012 Act 1948

Professional Tax 1975 Employee From 01.07.2012 to 69200 contribution 31.08.2012

Central Sales Tax Act Central sales tax For the year 2011-12 1073520

Income Tax Act Regular For the financial year 42809642 assessment tax 2011-12

Income Tax Act Income tax From 01.04.2012 to 1728 deducted at source 31.08.2012

c) As at 31st March 2013, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Sales tax, Wealth-tax, Service tax, Customs duty, Excise Duty and Cess except the following:

Name of the Nature of (*)Amount Period of which the Forum where Statute the Dues (Rs. in amount relates dispute is pending Rs.)

Central Sales Non sub mission 1868890 1996-97 Dy. Commissioner Tax Act of ''C'' and ''F'' (Appeals) forms

Central Sales Non submission 1186633 2008-09 Appellate

Tax Act of ''H'' forms Dy. Commis sioner (CT)

Income Tax Act Income Tax 30741412 Assessment Year CIT (Appeals), 2008-09 Hyderabad

(*) Net of pre deposits made

x) The Company has no accumulated losses. It has incurred cash losses in the financial year covered by our audit and however in the immediately preceding financial year it has not incurred cash losses.

xi) The Company has neither taken any term loan from a financial institution or a bank nor issued any debentures. Accordingly clause 4(xi) of order is not applicable.

xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Consequently the clause 4(xii) of the order is not applicable.

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Consequently the clause 4(xiii) of the order is not applicable.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other instruments. Consequently the clause 4(xiv) of the order is not applicable.

xv) According to the information and explanation given to us, the company has given two guarantees for loans taken by others from financial institutions. The guarantees given by the company along with other co-promoters to financial institutions on behalf of these two companies promoted by them are with the approval of shareholders in a general meeting and in accordance with the promoters'' agreements. Having regard to the information and explanations given to us the said guarantees are not prejudicial to the interest of the company.

xvi) In our opinion, the company has not obtained any term Loans, accordingly clause 4(xvi) of the order is not applicable.

xvii) According to the information and explanations given to us and on 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.

xviii) During the year, the Company has not made any preferential allotment of shares. Consequently the clause 4(xviii) of the order is not applicable.

xix) The Company has not issued any debentures so far. Consequently clause 4(xix) of the order is not applicable.

xx) During the year, the Company has not raised money by Public issue. Consequently the clause 4(xx) of the order is not applicable.

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

For BRAHMAYYA & CO.,

Chartered Accountants

(Firm Regd. No. 000513S)

Sd/-

(CA. C.V.RAMANA RAO)

Camp : Hyderabad PARTNER

Date : 30-05-2013 Membership No. 018545

---

Mar 31, 2012

1 We have audited the attached Balance Sheet of VBC Ferro Alloys Limited, Hyderabad as at 31st March, 2012, the Statement of Profit and Loss for the year ended on that date and cash flow statement for the year ended on that date. 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. These 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 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 as we considered appropriate and according to the information and explanations given to us, we set out 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 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 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 such books.

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

d) In our opinion the Balance Sheet and Statement of Profit and Loss dealt with by this report comply with the accounting standards referred to in Sub Section (3c) of Section 211 of the Companies Act, 1956.

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

i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2012.

ii) in the case of the statement of Profit and Loss, of the Profit for the year ended on that date.

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

f) On the basis of written representations received from the Directors as on March 31st, 2012 and taken on record by the Board of Directors, we report that none of the directors is 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 Act.

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in the case of few assets in respect of which particulars required to be updated, the value in respect of which is not material.

b) The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information furnished to us, no material discrepancies have been noticed on such verification

c) The Fixed Assets disposed off by the Company during the year do not form a substantial part thereof.

ii) a) Physical verification of inventory has been conducted during the year by the management at reasonable intervals.

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

iii) 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. Consequently, clauses 4(iii)(b) to (d) of the Order are not applicable.

b) The Company has not taken any new loans during the year. However it has taken a loan of Rs 500 lakhs in an earlier year from a party, who is covered in the register maintained under section 301 of the Companies Act. 1956.

c) In our opinion and according to the information and explanations given to us , the rate of interest and other terms & conditions in respect of the loans are not prima facie prejudicial to the to the interest of the company.

d) The company in arrears of payment of interest of Rs.77.07 lakhs as on the date of Balance Sheet. However, the date of repayment of principal amount has not been stipulated.

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 with regard to purchase of inventory, fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

v) a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts and arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the contracts and arrangements made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits from public. Consequently the clause 4(vi) of the order is not applicable.

vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

ix) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales-tax, wealth-tax, custom duty, excise duty, service-tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues which were in arrears as at 31st March, 2012 for a period of more than six months from the date they became payable.

c) As at 31st March, 2012, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Sales tax, Wealth-tax, Service tax, Customs duty, Excise Duty and Cess except the following:

Name of the Nature of (*)Amount Period of which the Forum where Statute the Dues (Rs.in amount relates dispute is pending lakhs)

Central Sales Non submission 18.69 1996-97 Dy. Commissioner

Tax Act of 'C' and 'F' (Appeals) forms

Central Sales Non submission 23.84 2008-09 Appellate Tax Act of 'H' forms Dy. Commissioner (CT)

Income Tax Act Income Tax 4.96 Assessment Year CIT (Appeals), 2008-09 Hyderabad

(*) Net of pre deposits made

x) The Company has no accumulated losses and has not incurred cash losses in the financial year covered by our audit and the immediately preceding financial year.

x) The Company has neither taken any term loan from a financial institution or a bank nor issued any debentures. Accordingly clause 4(xi) of order is not applicable.

xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Consequently the clause 4(xii) of the order is not applicable.

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Consequently the clause 4(xiii) of the order is not applicable.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other instruments. Consequently the clause 4(xiv) of the order is not applicable.

xv) According to the information and explanations given to us, the company has given two guarantees for loans taken by others from financial institutions. The guarantees given by the company along with other co-promoters to financial institutions on behalf of two companies promoted by them are with the approval of shareholders in a general meeting and in accordance with the promoters' agreements. Having regard to the information and explanations given to us the said guarantees are not prejudicial to the interest of the company.

xvi) In our opinion, the company has not obtained any term Loans, accordingly clause 4(xvi) of the order is not applicable.

xvii) According to the information and explanations given to us and on 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.

xviii) During the year, the Company has not made any preferential allotment of shares. Consequently the clause 4(xviii) of the order is not applicable.

xix) The Company has not issued any debentures so far. Consequently clause 4(xix) of the order is not applicable.

xx) During the year, the Company has not raised money by Public issue. Consequently the clause 4(xx) of the order is not applicable.

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

For BRAHMAYYA & CO.,

Chartered Accountants

(Firm Regd. No. 000513S)

Sd/-

(CA. C.V.RAMANA RAO)

Camp : Hyderabad PARTNER

Date : 24-05-2012 Membership No. 018545

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of VBC Ferro Alloys Limited, as at 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. These 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 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 as we considered appropriate and according to the information and explanations given to us, we set our 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 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, the company has kept proper books of account, as required by law so far, as appears from our examination of such books.

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

d) In our opinion the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in Sub Section (3c) of Section 211 of the Companies Act, 1956.

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

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March 2011.

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

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

f) On the basis of written representations received from the Directors as on March, 31, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE TO THE AUDITORS REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE:

1.1 The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets, except in the case of few assets in respect of which particulars required to be updated, the value in respect of which is not material.

1.2 The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information furnished to us, no material discrepancies have been noticed on such verification.

1.3 During the year under report the company has not disposed off any of its fixed assets.

2.1 Physical verification of inventory has been conducted during the year by the management at reasonable intervals.

2.2 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.

2.3 On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on such verification between the physical stocks and the book records were not material.

3.1 The Company has not granted any loans either secured or unsecured to companies, firms or other parties which are covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly sub-clauses (b), (c) and (d) of clause (iii) of paragraph 4 of the order are not applicable.

3.2 The Company has not taken any new loans during the year. However it has taken a loan of Rs. 500 lakhs in an earlier year from a party, who is covered in the register maintained under section 301 of the Companies Act. 1956.

3.3 In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions in respect of the loans are not prima facie prejudicial to the interest of the Company.

3.4 The company in arrears of payment of interest of Rs 101.76 lakhs as on the date of Balance Sheet. However, the date of repayment of principal amount has not been stipulated.

4.1 In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control systems.

5.1 According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered

5.2 In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time.

6.1 The company has not accepted deposits from public. Accordingly the Clause (vi) of paragraph 4 of the Order is not applicable to the company.

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

8.1 According to the information and explanations given to us, maintenance of cost records is not required under section 209(1) (d) of the Companies Act, 1956 in respect of the business activities carried out by the company.

9.1 According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, Investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

9.2 According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess and other material statutory dues applicable to it were in arrears as at 31st March 2011 for a period of more than six months from the date they became payable.

9.3 As at 31st March 2011, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Sales Tax, income-tax, Wealth-tax, Service tax, Excise Duty and Cess, except the following:

Name of the Nature of (*)Amount Period of which the Statute the Dues (Rs. in amount relates lakhs)

AP General Sales Tax 2.61 1991-92 Sales Tax Act

Central Sales Non submi 25.69 1996-97 Tax Act of ssion ‘C' and ‘F' forms

Income Tax Act Income Tax 197.24 Assessment Year 2008-09



Name of the Forum where dispute Statute is pending

AP General Hon'ble High Court of Andhra Padesh Sales Tax Act

Central Sales Dy. Commissioner (Appeals) Tax Act

Income Tax Act CIT (Appeals), Hyderabad

(*) Net of pre deposits made

10.1 The company has no accumulated losses and has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year. 11.1 The company has neither taken any term loan from a financial institution or a bank nor issued any debentures. Accordingly clause (xi) of paragraph 4 of the order is not applicable.

12.1 The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly clause (xii) of paragraph 4 of the order is not applicable.

13.1 In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/ society. Accordingly, clause (xii) of paragraph 4 of the order is not applicable.

14.1 In our opinion, the Company is not dealing in or trading in shares, debentures and other instruments. Accordingly, clause (xiv) of paragraph 4 of the Order is not applicable.

15.1 According to the information and explanations given to us, the company has given two guarantees for loans taken by others from financial institutions. The guarantees given by the company along with other co-promoters to financial institutions on behalf of two companies promoted by them are with the approval of shareholders in a general meeting and in accordance with the promoters' agree- ments. Having regard to the information and explanations given to us the said guarantees are not prejudicial to the interest of the company.

16.1 In our opinion, the company has not obtained any term loans, accordingly clause (xvi) of paragraph 4 of the Order is not applicable.

17.1 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 investment.

18.1 According to the information and explanation 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 Act. Accordingly clause (xviii) of paragraph 4 of the Order is not applicable.

19.1 The Company has not issued any debentures during the year accordingly clause (xix) of paragraph 4 of the Order is not applicable.

20.1 During the year, the Company has not raised money by public issue. Accordingly clause (xx) of paragraph 4 of the Order is not applicable.

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

For BRAHMAYYA & CO., Chartered Accountants (Firm Regd. No.000513S) Sd/- (C.V.RAMANA RAO) PARTNER Membership No. 018545

Camp : Hyderabad Date : 26-07-2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of VBC Ferro Alloys Limited, as at 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. 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 icnersHy accepted in India. These Standards require that we plan and perform the audit to obtain reasonably 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 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 as we considered appropriate and according to the information and explanations given to us, we set our in me 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 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, the company has kept proper books of account, as required by iaw so far, as appears from our examination of such books.

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

d) In our opinion the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in Sub Section (3c) of Section 211 of the Companies Act, 1956.

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

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March

2010. ii) In the case of the Profit and Loss account, of the Profit for the year ended on that date. iii) In case of the cash flow statement, of the cash flows for the year ended on that date.

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

ANNEXURE TO THE AUDITORS REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE:

1.1 The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets, except in the case of few assets in respect of which particulars required to be updated, the value in respect of which is not material.

1.2 The fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information furnished to us, no material discrepancies have been noticed on such verification.

1.3 The fixed assets disposed-off by the company during the year do not form a substantial part thereof.

2.1 Physical verification of inventory has been conducted during the year by the management at reasonable intervals.

2.2 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.

2.3 On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on such verification between the physical stocks and the book records were not material.

3.1 The Company has not granted any loans either secured or unsecured to companies, firms or other parties which are covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly sub-clauses (b), (c) and (d) of clause (iii) of paragraph 4 of the order are not applicable.

3.2 The Company has not taken any new loans during the year. However it has taken a loan of Rs 500 lakhs in an earlier year from a party, who is covered in the register maintained under section 301 of the Companies Act. 1956.

3.3 In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions in respect of the loans are not prima facie prejudicial to the interest of the Company.

3.4 The company in arrears of payment of interest of Rs 189.41 lakhs as on the date of Balance Sheet. However, the date of repayment of principal amount has not been stipulated.

4.1 In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control systems.

5.1 According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

5.2 In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time.

6.1 The company has not accepted deposits from public. Accordingly the Clause (vi) of paragraph 4 of the Order is not applicable to the company.

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

8.1 According to the information and explanations given to us, maintenance of cost records is not required under section 209(1) (d) of the Companies Act, 1956 in respect of the business activities carried out by the company.

9.1 According to the records of the company, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, Investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

9.2 According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess and other material statutory dues applicable to it were in arrears as at 31st March 2010 for a period of more than six months from the date they became payable.

9.3 As at 31st March 2010, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Sales Tax, income-tax, Wealth-tax, Service tax, Excise Duty and Cess, except the following:

Name of the Nature of (*)Amount Period of which Forum where the amount Statute the Dues (Rs. in amount relates dispute is pending lakhs) AP General Non submission 7.07 1996-97 & 2001-02 Dy. Commissioner Sales Tax Act of G forms (Appeals) AP General Honble High Court Sales Tax Act Sales Tax 2.61 1991-92 of Andhra Padesh Central Sales Non submission 25.69 1996-97 Dy. Commissioner Tax Act of C and F (Appeals) forms Income Tax Act Income Tax 106.16 Assessment Year CIT (Appeals), 2007-08 Hyderabad

(*) Net of pre deposits made

10.1 The company has no accumulated losses and has not incurred any cash loss during the financial year covered by our audit and the immediately preceding financial year.

11.1 The company has neither taken any term loan from a financial institution or a bank nor issued any debentures. Accordingly clause (xi) of paragraph 4 of the order is not applicable.

12.1 The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly clause (xii) of paragraph 4 of the order is not applicable.

13.1 In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/ society. Accordingly, clause (xii) of paragraph 4 of the order is not applicable.

14.1 In our opinion, the Company is not dealing in or trading in shares, debentures and other instruments. Accordingly, clause (xiv) of paragraph 4 of the Order is not applicable.

15.1 According to the information and explanations given to i ,, the company has given two guarantees for loans taken by others from financial institutions. The guarantees given by the company along with other co-promoters to financial institutions on behalf of two companies promoted by them are with the approval of shareholders in a general meeting and in accordance with the respective promoters agreements. Having regard to the information and explanations given to us the said guarantees are not prejudicial to the interest of the company.

16.1 In our opinion, the company has not obtained any term loans, accordingly clause (xvi) of paragraph 4 of the Order is not applicable.

17.1 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that funds raised to the extent of Rs 555.42 lakhs on short-term basis have been used for long-term investment.

18.1 According to the information and explanation given to us, the company has made preferential allotment of shares to a party covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

19.1 The Company has not issued any debentures; during the year accordingly clause (xix) of paragraph 4 of the Order is not applicable.

20.1 During the year, the Company has not raised money by public issue. Accordingly clause (xx) of paragraph 4 of the Order is not applicable.

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



For BRAHMAYYA& CO., Chartered Accountants (Firm Regd. No.000513S) Sd/- (C. V.RAMAN A RAO) Camp : Hyderabad PARTNER Date : 14-05-2010 Membership No. 018545