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Auditor Report of Vikash Metal & Power Ltd.

Mar 31, 2011

1. We have audited the attached Balance Sheet of VIKASH METAL & POWER LIMITED as at 31st March, 2011 and also the Profit & 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 conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

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

d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

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

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 & Loss Account, of the profit of the Company for the year ended on that date, and

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

Annexure to the Auditors' Report

(Referred to in Paragraph 3 of our Report of even date to the members of Vikash Metal & Power Limited on the financial statements for the year ended 31st March, 2011).

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

(b) We are informed that fixed assets of significant value have been physically verified by the management at reasonable intervals, in a phased programme and no material discrepancies were noticed in respect of the assets verified.

(c) The Company has not made any substantial disposal of Fixed Assets during the year.

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

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

(c) In our opinion, the Company has maintained proper records of inventories and the discrepancies noticed on physical verification as compared to book records were not material.

(iii) (a) The Company has not granted any loan during the year to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses (iii)(b), (c) and (d) of Para 4 of the Order are not applicable to the Company.

(b) The Company has taken interest free unsecured loans from four parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans are ? 25,239.31 Lacs and Rs. 16,965.62 Lacs respectively.

(c) The terms and conditions of loans taken as aforesaid are prima facie not prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans taken by the Company, there are no stipulations as to repayment thereof.

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

(v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit during the year from the public within the meaning of the provisions of Sections 58A and 58AA of the Companies Act, 1956, and the rules framed there under.

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

(viii) We have broadly reviewed the books of account and records maintained by the Company pursuant to the Order made by the Central Government for maintenance of cost records u/s 209(1 )(d) of Companies Act, 1956 and are of the opinion that prima fade the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us.

(ix) (a) According to the books and records examined by us, the Company is generally regular in depositing undisputed statutory dues Service Tax, Custom Duty, Sales Tax, Provident Fund, Professional Tax, Excise Duty and Cess.

According to the information and explanations given to us, there are no undisputed outstanding statutory dues as at 31 st March, 2011 for a period exceeding six months from the date they became payable.

(b) According to the records of the Company and the information and explanations given to us and upon our enquiries in this regard, details of statutory dues which have not been deposited on account of any dispute are as stated in Note 1 in Schedule 19 to the accounts.

(x) The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses in the financial year under report or in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given to us, the Company has not defaulted in repayment of loans and interest to banks and financial institutions except delays for few days in payment of interest on term loan on certain occasions. The term loan instalment and interest due on 31st March, 2011 for Rs. 1,087.30 Lacs has since been paid.

(xii) As explained to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) Clause (xiii) of the Order is not applicable, as the Company is not a chit fund company or nidhi/mutual benefit fund/society.

(xiv) The Company has maintained proper records of the transactions in respect of investments made during the year and timely entries have been made therein. All investments are held by the Company in its own name.

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

(xvi) The Company has not raised any new term loan during the year. The term loans outstanding at the beginning of the year were applied for the purposes for which they were taken.

(xvii)ln our opinion, and according to the information and explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

(xviii)The Company has not made fresh allotment of shares during the year to parties and companies covered in the Register maintained u/s 301 of the Companies Act, 1956.

(xix) No debentures have been issued by the Company and hence the question of creating security or charge in respect thereof does not arise.

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

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For S.JAYKISHAN Chartered Accountants FRN:309005E

CAV.NEWATIA Place :Kolkata Partner Dated : The 30th day of May, 2011 M. No. 062636


Mar 31, 2010

1. We have audited the attached Balance Sheet of VIKASH METAL & POWER LIMITED as at 31st March, 2010 and also the Profit & 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 conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

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

d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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

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

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

ii. in the case of the Profit & Loss Account, of the profit of the Company for the year ended on that date, and

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

Annexure to the Auditors Report

(Referred to in Paragraph 3 of our Report of even date to the members of Vikash Metal & Power Limited on the financial statements for the year ended 31st March, 2010)

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

(b) We are informed that fixed assets of significant value have been physically verified by the management at reasonable intervals, in a phased programme and no material discrepancies were noticed in respect of the assets verified.

(c) The Company has not made any substantial disposal of Fixed Assets during the year.

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

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

(c) In our opinion, the Company has maintained proper records of inventories and the discrepancies noticed on physical verification as compared to book records were not material.

(iii) (a) The Company has not granted any loan during the year to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses (iii)(b), (c) and (d) of Para 4 of the Order are not applicable to the Company.

(b) The Company has taken unsecured loans from three parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balance of such loans are Rs.15562.51 lacs and Rs. 14222.42 lacs respectively.

(c) The terms and conditions of loans taken as aforesaid are prima facie not prejudicial to the interest of the Company.

(d) In respect of the loans taken by the Company, there are no stipulations as to repayment thereof.

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

(v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit during the year from the public within the meaning of the provisions of Sections 58A and 58AA of the Companies Act, 1956, and the rules framed there under.

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

(viii) We have broadly reviewed the books of account and records maintained by the Company pursuant to the Order made by the Central Government for maintenance of cost records u/s 209(l)(d) of Companies Act, 1956 and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. The contents of these accounts and records have not been examined by us.

(ix) (a) According to the books and records examined by us, except for income-tax payments the Company is generally regular in depositing undisputed statutory dues Service Tax, Custom Duty, Sales Tax, Provident Fund, Professional Tax, Excise Duty and Cess.

According to the information and explanations given to us, except income-tax payment of Rs. 291.83 Lacs, there are no undisputed outstanding statutory dues as at 31st March, 2010 for a period exceeding six months from the date they became payable.

(b) According to the records of the company and the information and explanations given to us and upon our enquiries in this regard, details of statutory dues which have not been deposited on account of any dispute are as follows :

Nature of Dues Amount Forum where (Rs in lacs) dispute is pending

Sales Tax 671.86 Senior Joint Commissioner of Sales Tax

Central Sales Tax 13.99 Senior Joint Commissioner of Sales Tax

(x) The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses in the financial year under report or in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given to us, the Company has not defaulted in repayment of loans and interest to banks and financial institutions except delays for few days in payment of interest on term loan during the year and term loan installment and interest due on 31st March, 2010 for Rs. 1104.67 Lacs.

(xii) As explained to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) Clause (xiii) of the Order is not applicable, as the Company is not a chit fund company or nidhi/mutual benefit fund/society.

(xiv) Clause (xiv) of the Order is not applicable, as the Company has not dealt or traded in shares, securities, debentures or other investments during the year.

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

(xvi) The Company has not raised any new term loan during the year. The term loans outstanding at the beginning of the year were applied for the purposes for which they were taken.

(xvii) In our opinion, and according to the information and explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made fresh allotment of shares during the year to parties and companies covered in the Register maintained u/s 301 of the Companies Act, 1956.

(xix) No debentures have been issued by the Company and hence the question of creating security or charge in respect thereof does notarise.

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

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For S. JAYKISHAN

Chartered Accountants

FRN: 309005E

CA V.Newatia

Place: Kolkata Partner

Dated : The 29th day of May, 2010. Membership No. 062636

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