1.  We have audited the attached Balance Sheet of Adhunik Metaliks
 Limited (''the Company'') as at March 31, 2011 and also the Profit and
 Loss account and the Cash Flow statement for the year ended on that
 date annexed thereto. These financial statements are the responsibility
 of the Company''s management. Our responsibility is to express an
 opinion on these financial statements based on our audit.
 
 2.  We 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 the 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 of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 (''the
 Order''), we enclose in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that :
 
 i. 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;
 
 ii. 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;
 
 iii. The Balance Sheet, Profit and Loss account and Cash Flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the Balance Sheet, Profit and 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, read with paragraph 5 below;
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 5.  Without qualifying our opinion, we draw attention to Note no. 7(b)
 on Schedule 25 regarding utilisation of Securities Premium Account of
 Rs.1,289.03 lacs (^3,545.74 lacs) towards meeting the net deferred tax
 liability arisen during the year, pursuant to the Hon''ble High Court of
 Calcutta''s Order dated March 29, 2010. The above accounting treatment
 is not in line with the Accounting Standard 22 Accounting for Taxes on
 Income (AS-22) as notified by the Companies (Accounting Standards)
 Rules 2006 (as amended).
 
 6.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India :
 
 a) in the case of Balance Sheet, of the state of affairs of the Company
 as at March 31, 2011;
 
 b) in the case of Profit and Loss account, of the profit for the year
 ended on that date; and
 
 c) in the case of Cash Flow statement, of the cash flows for the year
 ended on that date.  
 
 Annexure to the Auditors'' Report
 (Referred to in our report of even date to the members of Adhunik
 Metaliks Limited as at and for the year ended 31st March, 2011)
 
 i) a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) All fixed assets have not been physically verified by the management
 during the year but there is a regular programme of verification in a
 phased manner to cover all the items of fixed assets over a period of
 three years which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. No material
 discrepancies were noticed on such verification of fixed assets during
 the year.
 
 c) There was no substantial disposal of fixed assets during the year.
 
 ii) a) The management has conducted physical verification of inventory
 at reasonable intervals during the year.
 
 b) The procedures of physical verification of inventory followed by the
 management are reasonable and adequate in relation to the size of the
 Company and the nature of its business.
 
 c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 iii) a) According to the information and explanations given to us, the
 Company has not granted any loan, secured or unsecured, to companies,
 firms or other parties covered in the register maintained under Section
 301 of the Companies Act, 1956.  Therefore, the provisions of clauses
 4(iii) (a) to (d) of the Order are not applicable to the Company and
 hence not commented upon.
 
 b) According to information and explanations given to us, the Company
 has not taken any loan, secured or unsecured, from companies, firms or
 other parties covered in the register maintained under Section 301 of
 the Companies Act, 1956.  Therefore, the provisions of clauses 4(iii)
 (e) to (g) of the Order are not applicable to the Company and hence not
 commented upon.
 
 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.
 During the course of our audit, we have not observed any major weakness
 or continuing failure to correct any major weakness in the internal
 control system of the company in respect of these areas.
 
 v) a) Based on 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 Act that need to be
 entered into the register under section 301, have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding the value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 vi) The Company has not accepted any deposits from the public within
 the provisions of section 58A, 58AA or any other relevant provisions of
 the Companies Act, 1956, and rules framed there under.
 
 vii) In our opinion, the Company''s internal audit system is
 commensurate with the size and nature of its business.
 
 viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956 for the products of the Company and are of the opinion that
 prima facie, the prescribed accounts and records have been made and
 maintained.
 
 ix) a) Undisputed statutory dues including provident fund, employees''
 state insurance, income-tax, sales-tax, wealth-tax, service tax,
 customs duty, excise duty, cess and other material statutory dues have
 generally been deposited with delays with the appropriate authorities.
 As explained, there is no amount due for deposit with Investor
 Education & Protection Fund.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the company in depositing the same.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty cess and
 other material statutory dues were outstanding, at the year end, for a
 period of more than six months from the date they became payable.
 
 c) According to the records of the Company, there are no dues
 outstanding of income-tax, sales-tax, wealth-tax, service tax, customs
 duty, excise duty and cess on account of any dispute except as
 mentioned below :
 
 Name of the   Nature of dues    Amount    Period to  
                                           which      Forum where
 statute                        (Rs. in 
                                  lacs)   the amount 
                                          relates     dispute is pending
 
 Orissa 
 Entry Tax     Entry tax on 
               machinery & 
               spares &          59.92      2002-08   Orissa Sales Tax 
                                                      Tribunal /
               Capital Goods                          Additional 
                                                      Commissioner of
                                                      Sales Tax. Cuttack
 
 Central 
 Sales Tax     Demand against 
               transfer of
               stock to         123.40      2003-04   Orissa Sales Tax
                                                      Tribunal, Cuttack
 (Orissa) 
 Rules 57      branches and
               consignment
               agents
 
 Central 
 Sales Tax     Demand against 
               discrepancies
               identified        20.05      2003-04   Deputy Commissioner
                                                      of Sales 
               during 
               investigation                          Tax, Rourkela
 
 Central 
 Sales Tax     Disallowance of
               sale against
               Form-C,           68.97      2004-08   Orissa Sales Tax
                                                      Tribunal, Cuttack,
               Form-H and 
               transfer of
               stock to branches                      Deputy Commissioner
                                                      of Sales Tax, 
                                                      Rourkela, 
                                                      Additional
                                                      Commissioner of
                                                      Sales Tax, Cuttac
 
 Orissa Value  Dispute on 
               account of 
               disallowance      140.16     2005-07   Orissa Sales Tax
                                                      Tribunal &
 Added Tax     of Input Tax 
               credit                                 High Court,Orissa,
                                                      Cuttack
 
 Orissa 
 Sales Tax     Dispute on 
               gross turnover      6.65     2003-05   Orissa Sales Tax
                                                      Tribunal, Cuttack,
               vis-à-vis taxable
               turnover                               Deputy 
                                                      Commissioner of
                                                      Sales Tax, Rourkela
 
 Orissa 
 Sales Tax     Demand against
               discrepancies
               identified         12.06     2003-04   Deputy Commissioner
                                                      of Sales
               during 
               investigation                          Tax, Rourkela
 
 Central 
 Excise and    Dispute on Cenvat 
               credit on
               structural      1,121.60     2003-09   CESTAT (Kolkata),
                                                      Additional
 Service Tax   steel used for
               construction
               of capital                             Commissioner
                                                     (Adjudication)
               goods, input, 
               classification, 
               excise duty                            Bhubaneswar, 
                                                      Commissioner
               on job work, 
               transaction 
               value for
               stock                                 (Appeal), 
                                                      Bhubaneswar
               transfer, short
               production 
               booking
 
 * Net of payments made by the Company under protest.
 
 x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 xi) Based on our audit procedures and as per the information and
 explanations given by the management, the Company has not defaulted in
 repayment of dues to banks except for a delay of less than 30 days in
 repayment of dues amounting to Rs. 2,896.90 lacs and that of 30 to 90
 days towards repayment oft 4,551.80 lacs.  However there was no amount
 outstanding against such defaults as on the balance sheet date.
 Further, as informed, there were no outstanding dues to the debenture
 holders and financial institutions.
 
 xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Order are not applicable.
 
 xiv) In our opinion, the Company is not dealing or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable.
 
 xv) According to the information and explanations given to us, the
 Company has pledged a part of its investments / given corporate
 guarantee for loans taken by two of its subsidiaries from banks, the
 terms and conditions whereof, in our opinion, are not prima- facie
 prejudicial to the interest of the Company. Further, the said corporate
 guarantee has been released by the bank on full repayment of the
 relevant loans as on 30th March 2011.
 
 xvi) Based on the information and explanations given to us by the
 management, term loans were applied for the purpose for which these
 loans were obtained.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 xviii) The Company has not made preferential allotment of shares during
 the year to parties and companies covered in the register maintained
 under section 301 of the Act.
 
 xix) The Company did not have any outstanding debentures during the
 year.
 
 xx) The Company has not raised any money through a public issue during
 the year.
 
 xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the year.
 
 
                                              For S. R. Batliboi & Co.
 
                                    Firm registration number: 301003E
 
                                                CHARTERED ACCOUNTANTS
 
 22 Camac Street                          
 
 Block ''C, 3rd Floor                                per R. K. AGRAWAL
 
 Kolkata-700 016.                                             Partner
 
 Date : May 20, 2011                             Membership No. 16667