Auditor Report of Bhuwalka Steel Industries Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of BHUWALKA STEEL INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 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 STANDALONE FINANCIALSTATEMENTS

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 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

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 31 March, 2015, its Loss and its cash flows for the year ended on that date.

EMPHASIS OF MATTER

We draw attention to:

1. Note 23 Sl No.7 (i) Other disclosure in respect of Finance cost not recognized in the books by the company for Rs.42,24,11,280/- in view of representation by management that they have disputed on account of unilateral withdrawal of CDR Package by the Banks.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and 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 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) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of 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 31 March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(e) 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:

a. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 23 serial number 01 (iii) and serial number 07 to the financial statements;

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

c. 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 INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

(i) In respect of its fixed assets:

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

(b) Some of the fixed assets were physically verified during the year by the Management in accordance with a programme of verification, which in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. Based on information, explanation and necessary documents pertaining to inventory like Excise Inventory registers, Physical verification report conducted by management and other supporting documents provided to us, we report that the management has conducted physical verification of Inventory at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(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.

(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 for the purchase of inventory and fixed assets and for the sale of goods and services, and during the course of our audit, we have not observed any major weakness in such internal control system.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub- section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us, in respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, except as mentioned in table below including Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Service Tax, Wealth Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities.

Sl.No Particulars Amount (Rs.)

1 EPF 4138183

2 ESI 1216929

3 TDS

a) TDS CONTRACT 1049217

b) TDS ON SALARY 368090

c) TDS ON RENT 541374

d) TDS ON PROF. & CONST. 1651896

e) TDS ON INTEREST 3194553

f) TDS ON Commission or Brokarage 15395

g) TCS ON Scrap 44243

4 SERVICE TAX Payable on GTA and Others 3001582

5 VAT 8930825

6 Profession Tax 358500

Total Rs. 24510787

(a) There were undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at 31 March 2015 for a period of more than six months.

Nature of dues Period Amount Due date pertaining to Rs.

TDS Apr-13 28415 5/7/2013

TDS May-13 58797 6/7/2013

TDS Jun-13 89936 7/7/2013

TDS Jul-13 86793 8/7/2013

TDS Aug-13 60224 9/7/2013

TDS Sep-13 71231 10/7/2013

TDS Oct-13 72516 11/7/2013

TDS Nov-13 144073 12/7/2013

TDS Dec-13 1082579 1/7/2014

TDS Jan-14 159679 2/7/2014

TDS Feb-14 77649 3/7/2014

TDS Mar-14 634670 4/7/2014

TDS Apr-14 101399 5/7/2014

TDS May-14 117374 6/7/2014

TDS Jun-14 175676 7/7/2014

TDS Jul-14 151057 8/7/2014

TDS Aug-14 230919 9/7/2014

Service Tax Mar-14 625158 4/5/2014

Service Tax Apr-14 6251 5/5/2014

Service Tax May-14 130049 6/5/2014

Service Tax Jun-14 150798 7/5/2014

Service Tax Jul-14 134817 8/5/2014

Service Tax Aug-14 161851 9/5/2014

EPF Sep-13 129291 10/15/2013

EPF Oct-13 129926 11/15/2013

EPF Nov-13 130368 12/15/2013

EPF Dec-13 331074 1/15/2014

EPF Jan-14 260505 2/15/2014

EPF Feb-14 258877 3/15/2014

EPF Mar-14 244953 4/15/2014

EPF Apr-14 228728 5/15/2014

EPF May-14 232330 6/15/2014

EPF Jun-14 111297 7/15/2014

EPF Jul-14 210863 8/15/2014

EPF Aug-14 204566 9/15/2014

ESI Oct-13 80407 11/20/2013

ESI Nov-13 82339 12/20/2013

ESI Dec-13 75253 1/20/2014

ESI Jan-14 78675 2/20/2014

ESI Feb-14 81000 3/20/2014

ESI Mar-14 80000 4/20/2014

ESI Apr-14 80530 5/20/2014

ESI May-14 82117 6/20/2014

ESI Jun-14 83118 7/20/2014

ESI Jul-14 84036 8/20/2014

ESI Aug-14 84036 9/20/2014

Profession Tax Mar-14 120475 4/20/2014

Profession Tax Apr-14 23425 5/20/2014

Profession Tax May-14 22400 6/20/2014

Profession Tax Jun-14 20300 7/20/2014

Profession Tax Jul-14 18575 8/20/2014

Profession Tax Aug-14 17575 9/20/2014

KVAT Mar-14 148551 5/20/2014

Total Rs. 8287501

Nature of dues Date of payment Nos. of days delayed

TDS Pending 693

TDS Pending 662

TDS Pending 632

TDS Pending 601

TDS Pending 570

TDS Pending 540

TDS Pending 509

TDS Pending 479

TDS Pending 448

TDS Pending 417

TDS Pending 389

TDS Pending 358

TDS Pending 328

TDS Pending 297

TDS Pending 267

TDS Pending 236

TDS Pending 205

Service Tax Pending 360

Service Tax Pending 330

Service Tax Pending 299

Service Tax Pending 269

Service Tax Pending 238

Service Tax Pending 207

EPF Pending 532

EPF Pending 501

EPF Pending 471

EPF Pending 440

EPF Pending 409

EPF Pending 381

EPF Pending 350

EPF Pending 320

EPF Pending 289

EPF Pending 259

EPF Pending 228

EPF Pending 197

ESI Pending 496

ESI Pending 466

ESI Pending 435

ESI Pending 404

ESI Pending 376

ESI Pending 345

ESI Pending 315

ESI Pending 284

ESI Pending 254

ESI Pending 223

ESI Pending 192

Profession Tax Pending 345

Profession Tax Pending 315

Profession Tax Pending 284

Profession Tax Pending 254

Profession Tax Pending 223

Profession Tax Pending 192

KVAT Pending 315

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Cess which have not been deposited as on 31 March 2015 on account of disputes are given below :-

Sr. Name of the Statute Nature of Dues Forum where No. dispute is pending

1 Central Excise Act, 1944 Excise Duty and Commissioner of service tax Central Excise (Appeals) CESTAT, High Court, Supreme Court

2 Income Tax Act, 1961 Income Tax Commissioner of Income Tax (Appeals), ITAT

Sr. Name of the Statute Amount No. (Rs.in lakhs)

1 Central Excise Act, 1944 885.12

2 Income Tax Act, 1961 116.70

(d) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder within time.

(viii) The Company have accumulated losses at the end of the financial year is Rs 1004.29Lakhs and the Company has incurred cash losses of Rs 76.69Lakhs during the financial year covered by our audit and in the immediately preceding financial year for Rs. 2221.26Lacs.

Due to losses the Net Worth of the company has eroded by more than 50% (without giving effect to the observation in Note 23 (7)(i)). The company has already filed Form C with BIFR.

(ix) In our opinion and according to the information and explanations given to us, the Company has defaulted in the repayment of dues to financial institutions, banks as mentioned in Note 23 (7)(ii).

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

for ASR Associates Chartered Accountants Place : Bangalore (CA A. S. Rafiq) Date : 11th July, 2015 Proprietor Membership No.204646 FRN No. 8877S

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Mar 31, 2014

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

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("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.

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

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

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

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 2014;

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

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

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

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE OF THE AUDITOR''S TO THE MEMBERS OF BHUWALKA STEEL INDUSTRIES LIMITED, BANGALORE, ON THE ACCOUNTS FOR THE PERIOD ENDED 31ST MARCH 2014.

1. The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. The Company has drawn up a program of physical verification of fixed assets at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

2. Based on information, explanations and necessary documents pertaining to inventory like excise inventory registers, physical verification report conducted by bank stock auditor and concurrent auditor, physical verification report conducted by management and other supporting documents provided to us, we report that the management has conducted physical verification of inventory at reasonable intervals. The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. a) As informed to us, the Company has not granted interest free unsecured loans and advances, to any company, covered in the register maintained under section 301 of the Companies Act, 1956.

b) As informed to us, the company has taken interest free unsecured loan from directors covered in the registered maintained under section 301 of the Companies Act, 1956 amounting to Rs.2,757.66 Lacs and the term and conditions whereof is not prejudicial to the interest of the company.

c) The loan was repayable on demand and no stipulation has been made for the repayment of loans taken by the company covered in the register maintained under section 301 of companies Act 1956, we are unable to comment on regularity of repayment of loans and interest on loan taken by Company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls system.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the companies Act have been entered in the register required to be maintained under section 301. In respect of transactions made in pursuance of such contracts or arrangements, with parties with whom transactions exceeding value of Rupees five lakhs have been entered into during the financial year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and 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 same.

9. (a) According to the records of the Company, the Company is not regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax,Customs Duty, Excise Duty, cess and some other statutory dues applicable to it with the appropriate authorities. We have observed delays in making payments of these liabilities on specified due dates as per relevant taxation law. "The details of over due statutory liabilites as on 31st March, 2014 are given below as observed during our audit".

Sl.No Particulars Amount (Rs.)

1 EPF 17,26,631

2 ESIC 4,86,247

TDS

a) TDS Contract 6,50,476

b) TDS Contract 5,32,316

c) TDS on Rent 2,55,239

d) TDS on Professional & Consultancy. 8,37,328

e) TDS on Interest 14,51,601

f) TDS on Commission and Brokerage 3,121

g) TCS on Scrap 44,243

3 Service Tax payable on GTA and others 19,99,891

4 Central Excise 3,53,159

5 VAT 16,48,551

6 Professional Tax 1,55,050

Total 1,01,43,853

(b) According to the information and explanations given to us, except mentioned in table below, no undisputed amounts payable in respect of 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 Statutory dues, applicable to it, were outstanding at the year and for a period of more than six months from the date they became payable.

Nature of dues Period Amount Due date pertaining to Rs.

TDS April-13 26,373 07/05/2013

TDS May-13 79,097 07/06/2013

TDS June-13 110,236 07/07/2013

TDS July-13 85,105 07/08/2013

TDS Aug-13 79,024 07/09/2013

TDS Sept-13 90,031 07/10/2013

Service Tax April-13 149,328 05/05/2013

Service Tax May-13 174,512 05/06/2013

Service Tax June-13 181,868 05/07/2013

Service Tax July-13 165,961 05/08/2013

Service Tax Aug-13 170,456 05/09/2013



Nature of Dues Date of payment Nos. of days delayed

TDS Pending 328

TDS Pending 297

TDS Pending 267

TDS Pending 236

TDS Pending 205

TDS Pending 175

Service Tax Pending 330

Service Tax Pending 299

Service Tax Pending 269

Service Tax Pending 238

Service Tax Pending 207

(c) Based on information and explanations given to us, such disputed statutory dues that have not been deposited on account of matters pending before appropriate appellate authorities are as under :-

Sr. Name of the Statute Nature of Dues Forum where dispute No is pending

1 Central Excise Act, 1944 Excise Duty and Commissioner of service tax Central Excise (Appeals) CESTAT, High Court, Supreme Court

2 Income Tax Act, 1961 Income Tax Commissioner of Income Tax (Appeals), ITAT



Name of the Statute Amount (Rs.in lakhs)

Central Excise Act, 1944 894.45

Income Tax Act, 1961 24.36

10. The Company''s accumulated losses at the end of the Financial Year were more than 50% of the networth. The company has not incurred any cash losses in the immediately preceding Financial Year. The Company has incurred cash losses of Rs.2221 lacs in the current Financial Year. The Company has to comply with provisions of The Sick Industrial Companies Act, 1985 (SICA ACT) as applicable to the company post this event.

11. Based on our Audit procedures and as per the information and explanations given by the management, the company has defaulted in repayment of loans and interest to Banks and Financial Institutions. Unpaid overdues interest and installments to banks and institutions as at 31.03.2014 aggregates to Rs.1,172.13 lacs including devolved L.C. unfunded at that date.

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

13. The company is not a chit fund or a nidhi/mutual benefit fund/society and hence clause 4 (xiii) of Companies (Auditor''s Report) Order 2003 is not applicable to the company.

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

15. According to the information and explanations given to us, the terms and conditions of the guarantee given by the company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

16. The term loans raised by the company were applied for the purpose for which they were raised. The company has not raised any fresh term loan during the financial year.

17. 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 on short-term basis have not been used for long-term investment.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued debentures and therefore the question of creation of securities in respect of debentures does not arise.

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

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit

for ASR Associates Chartered Accountants (CA A. S. Rafiq ) Proprietor Membership No.204646 FRN No. 8877S

Place : Bangalore Date : 25th July, 2014

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Sep 30, 2013

We have audited the accompanying financial statements of BHUWALKA STEEL INDUSTRIES LIMITED which comprise the Balance Sheet as at 30th Sep 2013, and the Statement of Profit and Loss and Cash Flow Statement for the period then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("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.

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

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

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

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 30th Sep 2013;

b) in the case of the Profit and Loss Account, of the profit/ loss for the period ended on that date; and

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

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

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

e) on the basis of written representations received from the directors as on 30th Sep 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 30* Sep 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company-Not Applicable

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE OF THE AUDITOR''S TO THE MEMBERS OF BHUWALKA STEEL INDUSTRIES LIMITED, BANGALORE, ON THE ACCOUNTS FOR THE PERIOD ENDED 30TH SEPTEMBER 2013.

1. The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. The Company has drawn up a program of physical verification of fixed assets at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

During the year company has sold house property (Inclusive of furniture and Fixtures) at Indira nagar, Bangalore of Rs 3,90,29,834/-( book Value) For Consideration of Rs. 8,22,00,000/-.

2. The management has conducted physical verification of inventory at reasonable intervals. The procedures of physical verification,of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. a) As informed to us, the Company has granted interest free unsecured loans and advances, to one company, covered in the register maintained under section 301 of the Companies Act, 1956. The maximum Amount involved during the year was nil lacs and year end balance was nil lacs.

b) In our opinion and as per the information and explanation given to us the terms & conditions, on which loans have been granted, are prima facie not prejudicial to the interest of the company.

c) The loan was repayable on demand and no stipulation has been made for the repayment of loans taken by the company covered in the register maintained under section 301 of companies Act 1956, we are unable to comment on regularity of repayment of loans and interest on loan granted by Company.

d) As informed to us, the company has taken interest free unsecured loan from directors covered in the registered maintained under section 301 of the Companies Act, 1956 amounting to Rs. 2,757.66/- Lacs and the terms and conditions whereof is not prejudicial to the interest of the company.

e) The loan was repayable on demand and no stipulation has been made for the repayment of loans taken by the company covered in the register maintained under section 301 of companies Act 1956, we are unable to comment on regularity of repayment of loans and interest on loan taken by Company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commeftsurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods atid services. During the course of our audit, no major weakness has been noticed in the internal controls system.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the companies Act have been entered in the register required to be maintained under section 301. In respect of transactions made in pursuance of such contracts or arrangements, with parties with whom transactions exceeding value of Rupees five lakhs have been entered into during the financial year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and 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 same.

9. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues except Income Tax Amounting 13.35/-Jacs including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities

According to the information and explanations given to us, no undisputed amounts payable in respect of 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 statutory dues, applicable to it, were outstanding at the year end for a period of more than six months from the date they became payable.

Based on information and explanations given to us, such disputed statutory dues that have not been deposited on account of matters pending before appropriate appellate authorities are as under :-

Sr. No. Name of the Statute Nature of Dues Forum where dispute Amount is pending (Rs.in lakhs)

1 Central Excise Act, 1944 Excise Duty and Before Commissioner (Appeals) 894.45 service tax CESTAT and High Court

2 Income Tax Act 1961 Income Tax Before ITAT 9.45

10. The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the immediately preceding financial year.

The Company has not incurred cash losses in the current financial year.

1.1. As per information furnished by the management, the company has been paying due principal installments, interest dues to banks and financial institutions. However delays have been observed on due dates.

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

13. The company is not a chit fund or a nidhi/mutual benefit fund/society and hence clause 4 (xiii) of Companies (Auditor''s Report) Order 2003 is not applicable to the company.

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

15. According to the information and explanations given to us, the terms and conditions of the guarantee given by the company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

16. The term loans raised by the company under as working capital term loan and funded interest term loan amounting Rs.3714.02/-lacs under CDR Scheme were applied for the purpose for which they were raised.

17. 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 on short-term basis have not been used for long-term investment.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued debentures and therefore the question of creation of securities in respect of debentures does not arise.

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

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



for ASR Associates

Chartered Accountants

Place : Bangalore (CA A. S. Rafiq )

Date : 21st November, 2013 Partner

Membership No.204646

FRN No. 8877S

---

Mar 31, 2012

We have audited the attached balance sheet of M/S. BHUWALKA STEEL INDUSTRIES LIMITED as at 31st March 2012 and also the profit and loss account and cash flow statement of the company 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.

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

We report as follows

1. 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 and verification of the books of account as we considered necessary and to the best of our knowledge and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above,

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 and 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 written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2012 from being appointed as a director in terms of Clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the company's accounting policies, give the information required by the Companies Act, 1956, in the manner so required read with other notes in Note 23 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 profit and loss account, of the loss of the company for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE OF THE AUDITOR'S TO

THE MEMBERS OF BHUWALKA STEEL INDUSTRIES LIMITED, BANGALORE, ON THE ACCOUNTS FOR

THE YEAR ENDED 31 ST MARCH 2012.

1. The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. The Company has drawn up a program of physical verification of fixed assets at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

2. The management has conducted physical verification of inventory at reasonable intervals. The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. a) As informed to us, the Company has granted interest free unsecured loans and advances, to one company,

covered in the register maintained under section 301 of the Companies Act, 1956. The maximum Amount involved during the year was 1.55 lacs and year end balance was 1.55 lacs.

b) In our opinion and as per the information and explanation given to us the term & conditions, on which loan have been granted, are prima facie not prejudicial to the interest of the company.

c) The loan was repayable on demand and no stipulation has been made for the repayment of loans taken by the company covered in the register maintained under section 301 of companies Act 1956, we are unable to comment on regularity of repayment of loans and interest on loan granted by Company.

d) As informed to us, the company has taken interest free unsecured loan from directors covered in the registered maintained under section 301 of the Companies Act, 1956 amounting to RsMl37.99/- Lacs and the term and conditions whereof is not prejudicial to the interest of the company.

e) The loan was repayable on demand and no stipulation has been made for the repayment of loans taken by the company covered in the register maintained under section 301 of companies Act 1956, we are unable to comment on regularity of repayment of loans and interest on loan taken by Company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls system.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the companies Act have been entered in the register required to be maintained under section 301. In respect of transactions made in pursuance of such contracts or arrangements, with parties with whom transactions exceeding value of Rupees five lakhs have been entered into during the financial year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 in respect of the manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and 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 same.

9. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income- tax, Sales-tax, Wealth Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities.

According to the information and explanations given to us, except mentioned in table below, no undisputed amounts payable in respect of 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 statutory dues, applicable to it, were outstanding at the year end for a period of more than six months from the date they became payable.

Nature Period Amount Date of Nos. of of Dues pertaining to Rs. Due date payment days delayed

TDS July 2011 1,46,734 07.08.2011 03.05.2012 270

TDS August 2011 50,080 07.09.2011 03.05.2012 239

TDS September 2011 1,38,917 07.10.2011 03.05.2012 209

Service tax October 2011 81,115 05.11.2011 06.06.2012 214

Service Tax November 2011 1,16,349 05.12.2011 06.06.2012 184



Based on information and explanations given to us, such disputed statutory dues that have not been deposited on account of matters pending before appropriate appellate authorities are as under

Sr. No. Name of the Statute Nature of Dues Forum where dispute Amount is pending (Rs.in lakhs)

1 Central Excise Act, 1944 Excise Duty and CESTAT 909.23 service tax

2 Income Tax Act 1961 Income Tax Commissioner of Income Tax (Appeal) 71.45



10. The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the immediately preceding financial year.

The Company has not incurred cash losses in the current financial year.

11. As per information furnished by the management, the company has been paying due principal installments, interest dues to banks and financial institutions. However delays have been observed on due dates. Defaults with respect to short term and long term loans have been detailed in Note no. 3(iii) and 4 (iii) of the notes forming part of the financial statements.

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

13. The company is not a chit fund or a nidhi/mutual benefit fund/society and hence clause 4 (xiii) of Companies (Auditor's Report) Order 2003 is not applicable to the company.

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

15. According to the information and explanations given to us, the terms and conditions of the guarantee given by the company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

16. The term loans raised by the company were applied for the purpose for which they were raised.

17. 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 on short-term basis have not been used for long-term investment.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued debentures and therefore the question of creation of securities in respect of debentures does not arise.

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

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

for ASR Associates

Chartered Accountants

Place : Bangalore (CA A. S. Rafiq)

Date : 1st August, 2012 Partner

Membership No.204646

FRN No. 8877S

---

Mar 31, 2011

We have audited the attached balance sheet of M/S. BHUWALKA STEEL INDUSTRIES LIMITED as at 31st March 2011 and also the profit and loss account and cash flow statement of the company 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.

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

We report as follows:

1. 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 and verification of the books of account as we considered necessary and to the best of our knowledge and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above,

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 and 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, subject to point No. (f) mentioned below.

e) On the basis of written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st 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 accounts read together with the company's accounting policies, give the information required by the Companies Act, 1956, in the manner so required except that the Current Liabilities (Acceptances) are stated lower in Schedule 11 by Rs.26,03,44,052/- and the same has been classified under Unsecured loans (refer note no.7(b) in Schedule 18), and futher company has not provided for leave encashment, gratuity and bonus on accrual basis as per Accounting standard 15, the same has been accounted on cash basis read with other notes in Schedule 18 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 of the company for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE OF THE AUDITOR'S TO THE MEMBERS OF BHUWALKA STEEL INDUSTRIES LIMITED, BANGALORE, ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2011.

1. The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. The Company has drawn up a programme of physical verification of fixed assets at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

During the year the company has not disposed off substantial part of the fixed assets.

2. The management has conducted physical verification of inventory at reasonable intervals. The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. (a) In our opinion and according to the information and explanation given to us the company has granted interest free and unsecured loan and advances to two companies covered in register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 1.80 lakhs and year end balance was Rs. 1.80 lakhs.

(b) In our opinion and as per the information and explanation given to us the terms and conditions, on which loans have been granted, are prima facie not prejudicial to the interest of the company.

(c) The loan was repayable on demand and no stipulation has been made for the repayment of loans taken by the company covered in the register maintained under section 301 of companies Act. 1956, we are unable to comment on regularity of the repayment of loan and interes thereon on loan taken by the company.

(d) In our opinion and according to the explanation given to us Company has taken interest free unsecured loans and advances from four parties listed in the register maintained under section 301 of the Companies Act 1956. The maximum amount involved dur4ing the year was Rs.1487.57 lakhs and the year end balance of such loans aggregated to Rs.1487.57 lakhs.

e) The loan was repayable on demand and no stipulation has been made for the repayment of loans taken by the company covered in the register maintained under section 301 of the Companies Act, 1956, we are unable to comment on regularity of repayment of loan and interest there on loan taken by the company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls system.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the companies Act have been entered in the register required to be maintained under section 301. In respect of transactions made in pursuance of such contracts or arrangements, with parties with whom transactions exceeding value of Rupees five lakhs have been entered into during the financial year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed maintenance of cost records under 4 section 209(1)(d) of the Companies Act, 1956 in respect of the manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and 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 same.

9. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of 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 statutory dues, applicable to it, were outstanding at the year end for a period of more than six months from the date they became payable. Based on information and explanations given to us, such disputed statutory dues that have not been deposited on account of matters pending before appropriate appellate authorities are as under :-

Sr.Name of the Statute Nature of Dues Forum where dispute Amount No is pending (Rs.in lakhs)

1 Central Excise Act, Excise Duty and CESTAT 683.67 1944 service tax

The Commissioner 225.56 of Central Excise (Appeals)

2 Income Tax Income Tax Income Tax Appellate 12.71 Tribunal

10. The Company has no accumulated losses at the end of the financial year.

11. As per information furnished by the management, the company has not defaulted in repayment of dues to banks, financial institutions and debenture holders except few delays in repayment of term loan installment. Company has since paid its overdue belonging to FY 2010-11.

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

13. The company is not a chit fund or a nidhi/mutual benefit fund/society and hence clause 4 (xiii) of Companies (Auditor's Report) Order 2003 is not applicable to the company.

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

15. According to the information and explanations given to us, the terms and conditions of the guarantee given by the company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

16. The term loans raised by the company were applied for the purpose for which they were raised.

17. 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 on short-term basis have not been used for long-term investment during the year.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued debentures and therefore the question of creation of securities in respect of debentures does not arise.

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

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For M.S. Dahiya & Co

Chartered Accountants

(CA Harsh Firoda)

Place : Bangalore Partner Date : 30th May 2011 Membership No.-409391 FRN No. 013855C

---

Mar 31, 2010

We have audited the attached balance sheet of M/S. BHUWALKA STEEL INDUSTRIES LIMITED as at 31st March 2010 and also the profit and loss account and cash flow statement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management; our responsibility is to express an opinion on these financial statements based on our audit.

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

We report as follows:

1. 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 and verification of the books of account as we considered necessary and to the best of our knowledge and according to the information and explanations given to us during the course of our audit, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments in the Annexure referred to in Paragraph 1 above,

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 and 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 written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of Clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the companys accounting policies, give the information required by the Companies Act, 1956, in the manner so required except that the Current Liabilities (Acceptances) are stated lower in Schedule 11 by Rs.14,50,41,843.00 and the same has been classified under Unsecured loans (refer note no. 7(a) in Schedule 18), read with other notes in Schedule 18 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 31s* March 2010;

ii) In the case of the profit and loss account, of the profit of the company for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OF BHUWALKA STEEL INDUSTRIES LIMITED, BANGALORE, ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2010.

1. The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. The Company has drawn up a programme of physical verification of fixed assets at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

During the year the company has not disposed off substantial part of the fixed assets.

2. The management has conducted physical verification of inventory at reasonable intervals. The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. As informed to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. As informed to us, the company has taken an interest free unsecured loan from a director covered in the registered maintained under section 301 of the Companies Act, 1956 amounting to Rs. 1,00,00,000/-(Maximum amount taken Rs. 1,00,00,000/-) and the term and conditions whereof is not prejudicial to the interest of the company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls system.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the companies Act have been entered in the register required to be maintained under section 301. In respect of transactions made in pursuance of such contracts or arrangements, with parties with whom transactions exceeding value of Rupees five lakhs have been entered into during the financial year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 in respect of the manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and 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 same.

9. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of 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 statutory dues, applicable to it, were outstanding at the year end for a period of more than six months from the date they became payable. Based on information and explanations given to us, such disputed statutory dues that have not been deposited on account of matters pending before appropriate appellate authorities are as under:-

Sr. No. Name of the Statute Nature of Dues Forum where dispute Amount

is pending (Rs.in lakhs)

1 Central Excise Act, 1944 Excise Duty and CESTAT 950.57

service tax

The Commissioner of

Central Excise (Appeals) 225.56

2 Sales Tax Karnataka The Sales Tax Appellate Tribunal 27.09

Sales Tax Act

10. The Company has ho accumulated losses at the end of the financial year. However, the Company has incurred cash losses in the immediately preceding financial year.

11. As per information furnished by the management, the company has not defaulted in repayment of dues to banks, financial institutions and debenture holders

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

13. The company is not a chit fund or a nidhi/mutual benefit fund/society and hence clause 4 (xiii) of Companies (Auditors Report) Order 2003 is not applicable to the company.

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

15. According to the information and explanations given to us, the terms and conditions of the guarantee given by the company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

16. The term loans raised by the company were applied tor the purpose for which they were raised.

17. 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 on short-term basis have not been used for long-term investment during the year.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued debentures and therefore the question of creation of securities in respect of debentures does not arise.

20. the Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For AVINASH BHANDARI

Chartered Accountants

Place : Bangalore (C.A. AVINASH BHANDARI)

Date : May 31, 2010 Proprietor

Membership No. 120644