1.  We have audited the attached Balance Sheet of APL Apollo Tubes
 Limited as at March 31, 2011 and also the Profit & Loss Account and
 Cash Flow Statement for the year ended on that date annexed hereto.
 These financial statements are the responsibility of the Company''s
 management. Our responsibility is to express an opinion on these
 financia 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 materia 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 financia statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion
 
 3.  As required by the Companies (Auditors'' Report) Order, 2003, as
 amended by the Companies (Auditor''s Report)(Amendment) Order,2004,
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of the Companies Act, 1956 and on the basis of such
 checks as we considered appropriate and according to the explanations
 furnished to us during the course of our audit, we give in the Annexure
 a statement specified in paragraph 4 and 5 of the said order.
 
 4.  Further to our comments in the annexure referred to above, we
 report that:
 
 (a) We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit.
 
 (b) In our opinion proper books of accounts as required by law has kept
 by the company so far as it appears from our examination of such books.
 
 (c) The Balance Sheet and Profit & Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of account.
 
 (d) In our opinion the Balance Sheet, the Profit & Loss Account and
 Cash Flow Statement are in compliance with the Accounting Standards
 referred to in sub section (3c) of section 211 of the Companies Act,
 1956
 
 (e) In our opinion and to the best of our information and according to
 the explanations given to us, the said Balance Sheet and Profit & Loss
 Account and Cash Flow Statement read together with the notes thereon
 give the information as required by the Companies Act,1956 in the
 manner so required and give a true and fair view:
 
 i) In so far as it relates to the Balance Sheet of the State of Affairs
 of the company as at March 31, 2011,
 
 i) In the case of Profit & 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 flows of the
 company for the year ended on that date
 
 (f) Based on representation made by all the Directors of the company to
 the Board and the information and explanations as made available to us
 by the company, none of the directors of the company prima-facie have
 any disqualification as referred to in clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956.
 
 Referred to in paragraph 3 of our report of even date
 
 1.  a) The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) A substantial portion of the fixed assets has been physically
 verified by the management during the year and in our opinion the
 frequency of verification is reasonable having regard to the size of
 the Company and the nature of its assets. No material discrepancies
 were noticed on such physical verification
 
 c) Fixed assets disposed off during the year were not significant.
 According to the information and explanations given to us, we are of
 the opinion that the disposal of fixed assets has not affected the
 going concern status of the company.
 
 2.  a) The inventories (excluding stocks with the third parties) have
 been physically verified during the year by the management. In respect
 of inventory lying with the third parties, these have substantially
 been confirmed by them In our opinion, the frequency of verification is
 reasonable.
 
 b) The procedures of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 c) In our opinion and according to the information and explanations
 given to us, the company is maintaining proper records of inventory and
 no material discrepancies were noticed on physical verifications.
 
 3.  a) The company has granted unsecured loan to its wholly owned
 subsidiary company, covered in the register maintained under Section
 301 of the Companies Act, 1956. The Maximum amount involved during the
 year was Rs. 2,359 Lacs (Rupees Two Thousand Three Hundred and Fifty Nine
 Lacs Only) and the year end balance of loan given to this company was Rs.
 1,491 Lacs (Rupees One Thousand Four Hundred and Ninety One Lacs Only).
 In our opinion the rate of interest and other terms and conditions on
 which loans have been given to companies, firms or other parties
 covered in the register maintained under section 301 of the Companies
 Act, 1956 are not, prima facie, prejudicial to the interest of the
 company.
 
 b) The company has not taken any unsecured loan from companies, firms
 or other parties covered in the register maintained under section 301
 of the Companies Act, 1956
 
 c) The rate of interest and other terms and conditions of the
 above-mentioned loan are not prima facie prejudicial to the interest of
 the company.
 
 d) The repayment of principal and interest are as per the agreed terms.
 
 4.  In our opinion and according to the information and explanations
 given to us there are adequate internal control procedures commensurate
 with the size of the company and the nature of its business with regard
 to purchases of nventory, fixed assets and with regard to the sale of
 goods and services. During the course of our audit, no major weakness
 has been noticed in the internal controls system
 
 5.  a) In our opinion and according to information and explanations
 given to us the transactions that needed to be entered in the register
 maintained under section 301 of the Act have been entered in the
 register.
 
 b) As per information and explanations given to us aforesaid
 transactions have been made at price which are reasonable having regard
 to the prevailing market price at the relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has not accepted any deposits within the
 meaning of provisions of sections of 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules, 1975
 
 7.  In our opinion the company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of account relating to
 materials, labour and other items of cost maintained by the company
 pursuant to the Rules made by the Centra Government for the maintenance
 of cost records under section 209 (1) (d) of the Companies Act, 1956 we
 are of the opinion that prima facie the prescribed accounts and record
 have been made and maintained. We have not made however a detailed
 examination of the record with a view to determine whether they are
 accurate or complete.
 
 9.  (a) According to the records of the company, the company is regular
 in depositing with appropriate authorities undisputed statutory dues
 including Provident Fund, Investor Education Protection Fund, Employees
 State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise
 Duty, Service Tax, Cess and other materia statutory dues applicable to
 it.
 
 (b) According to the information and explanations given to us, no
 undisputed amount payable in respect of Income Tax, Wealth Tax, Sales
 Tax, Customs Duty and Excise Duty, Service Tax, Cess etc. were
 outstanding as at March 31, 2011 for a period of more than six months
 from the date they became payable.
 
 (c) According to the information and explanation given to us and
 records of the company examined by us, the particulars dues of Sales
 Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty, Service Tax,
 Cess which have not been deposited on account of any dispute, are as
 follows:
 
 Name of the      Nature of Dues           Amount (Rs.)    Period to which
 Statue                                                  dues Related
 
 Central Excise   Central Excise levied 
                  u/s 11A of Central 
                  Excise                   36,70,183     07.08.1996
 Act,1944         Act,1944.
 
  ,,              Penalty u/s 11 AC of 
                  Central Excise Rules,
                  1944 read                36,70,183     07.08.1996
                  with Rule 9(2) & 173Q 
                  of Central Excise 
                  Act,1944.
 
  ,,              Recovery u/s 57 I (4) 
                  of Central Excise 
                  Act,1944 of               3,52,445     07.08.1996
                  modvat credit availed 
                  and utilised in 
                  contravention
                  of the provisions of 
                  Rule 57F(3) of 
                  Central Excise
                  Rules, 1944.
 
  ,,              Penalty u/s 11AC of 
                  Central Excise Rules,
                  1944 read                 3,52,445     07.08.1996
                  with Rule 9(2) & 173Q 
                  of Central Excise 
                  Rules,1944.
 
                  Central Excise duty 
                  levied u/s 11 A 
                  of Central Excise         4,53,676     15.08.1999
                  Act,1944.
 
  ,,              Penalty u/s 11 AC of
                  Central Excise 
                  Act,1944.                 4,53,676     15.08.1999
 
                  Penalty under Rule 
                  9(2) and 173Q of 
                  Central Excise            1,00,000     15.08.1999
                  Rules,1944.
 
  ,,              Penalty u/s 11 AC 
                  read with Rule 25 
                  of Central               40,00,000     1.12.2001 to
                  Excise Rule 2001/2002 
                  and 173Q of 
                  Central Excise Rules,
                  1944.                                  31.03.2004
 
  ,,              Central Excise duty 
                  demanded on Zinc 
                  ash/Dross in              6,46,425     May-08 to
                  terms of section 11A 
                  of Central Excise 
                  Act,1944.                              July-08
 
  ,,              Demand in Terms of 
                  section 11A on Zinc 
                  Ash/Dross                10,83,460     July-08 to
                  clearance.                             Mar-09
                  Penalty under Rule 25 
                  of Central Excise 
                  Rules 2002                  30,000
                  read with section 
                  11AC of Central Excise
                  Act 1944.
 
 U.P. Tax on      The constitutional 
                  validity of U.P. Tax 
                  on Entry of            4,47,60,767     Nov-08 to
 Entry of Goods   Goods in to Local 
                  areas Act, 2007 
                  had been                               Mar-11
 in to Local      Challenged.
                  areas Act, 2007
 
 Value Added      Reversal of Input tax 
                  credit on 
                  Consignment /            61,49,143     Jan-08 to
 Tax Act-2008     Stock Transfer                         Mar-08
 
 
 Name of the Statute                Authority where the Dispute is 
                                    Pending for Decision
 
 Central Excise Act,1944            Before the High Court Judicature 
                                    of Allahabad
 
 ,,                                 Before the High Court Judicature 
                                    of Allahabad
 
 ,,                                 Before the High Court Judicature 
                                    of Allahabad
 
 ,,                                 Before the High Court Judicature 
                                    of Allahabad
 
 ,,                                 Commissioner (Appeals)
                                    Central Excise, Noida
 
 ,,                                 Commissioner (Appeals)
                                    Central Excise, Noida
 
 ,,                                 Commissioner (Appeals)
                                    Central Excise, Noida
 
 ,,                                 CESTAT, New Delhi
 
 ,,                                 CESTAT, New Delhi
 
 ,,                                 CESTAT, New Delhi
 
 U.P. Tax on Entry of Goods
 in to Local areas Act, 2007        Before the High Court
                                    Judicature of Allahabad
 
 Value Added Tax Act-2008           Commercial Tax Tribunal,
                                    Ghaziabad
 
 10.  The company has no accumulated losses as at March 31, 2011 and has
 not incurred any cash losses during the financial year covered by our
 audit and in the immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given by the management, we are of the opinion that the company has not
 defaulted in repayment of dues to any financial institution, bank or
 debenture holders.
 
 12.  We have been informed that the company has not granted loans and
 advances on the basis of security by way of pledge of shares,
 debentures and other securities. Hence paragraph 4(XII) of the order is
 not applicable.
 
 13.  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 Companies (Auditors'' Report) Order, 2003 as amended 2004 are not
 applicable to the company.
 
 14.  The Company has maintained proper records of transactions and
 contracts in respect of trading in securities, debentures and other
 investment and timely entries have been made therein. All shares
 (except the shares held in the name of nominees of the company in
 wholly owned subsidiaries), debentures and other investments have been
 held by company in its own name.
 
 15.  The company has given corporate guarantee for securing working
 capital facilities sanctioned by Banks to its Subsidiary Companies. In
 our opinion, the terms and conditions on which the company has given
 said guarantees are not prejudicial to the interest of the company.
 
 16.  In our opinion and according to information and explanations given
 to us by the company the term loans have been 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 no funds raised on short-term basis have been used for long term
 investment.
 
 18.  According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to Parties
 and Companies covered in the register to be maintained under section
 301 of the Act. However, during the year 1,641,953 warrants were
 allotted on preferential basis to promoters group entity covering in
 the register to be maintained under Section 301 of the Act, entitling
 the warrant holder to get one equity share of Rs. 10 each for each
 warrant, converting withing 18 months from the date of allotment of
 warrants.
 
 19.  During the period covered by our audit report, the company has not
 issued any debentures.
 
 20.  The company has not raised any money from public issue and as such
 question of end use of money raised by public issue does not arise.
 
 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 the year ended March 31, 2011
 
                                                         for VAPS & Co.
 
                                                 Chartered Accountants, 
 
                                                Firm Regn. No. 003612 N
 
                                                               P K Jain
 
 Place: New Delhi                                               Partner
 
 Date: August 30, 2011                             Membership No. 82515