Bihar Tubes

1.  We have audited the attached Balance Sheet of BIHAR TUBES LIMITED
 as at 31 March, 2007 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 Companys
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by 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 (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors 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 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) The Balance Sheet and 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 subject
 to Note No. 20 of Schedule Q.
 
 (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 31 March, 2007.
 
 ii) 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.
 
 Annexure To The Auditors Report
 
 Re: Bihar Tubes Limited 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 have been physically verified during the year by
 the management. 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.
 The discrepancies noticed on verification between the physical stocks
 and the book records were not material and have been properly dealt
 with in the books of account.
 
 3.  a) 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.  Accordingly, the clauses
 (iii)(b), (iii)(c), (iii) (d) of the paragraph 4 of the Order, are not
 applicable.
 
 b) The company has. taken unsecured loan from fourteen companies, firms
 or other parties covered in the register maintained under section 301
 of the companies Act, 1956.  The maximum amount involved during the
 year was Rs. 13.53 Cr. and the year end balance of loans taken from
 such parties was Rs. 4.83 Cr. In our opinion the rate of interest and
 other terms and conditions on which loans have been taken from
 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.
 
 c) The company is regular in repaying the principal amounts as
 stipulated and has been regular in the payment of interest, ,if any.
 
 d) There is no overdue amount of loans taken from companies, firms or
 other parties covered in the register maintained under section 301 of
 the Companies Act, 1956.
 
 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 inventory, 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.
 
 5.  a) 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 arrangement that need to
 be entered into the register maintained under section 301 have been so
 entered.
 
 b) The transactions in pursuance of such contracts have been made at
 prices 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 complied with the provisions of sections
 58A and 58AA or any other relevant provisions of the Companies Act,
 1956, and the Companies (Acceptance of Deposit) Rules, 1975 with regard
 to the deposits accepted from the public.  The Company Law Board /
 National Company Law Tribunal or Reserve Bank of India or any court or
 any other any Tribunal has passed no order in respect of the aforesaid
 deposits.
 
 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 Central Government for the maintenance of cost
 records under section 209 (1) (d) of the Companies Act, 1956 we are of
 the opinion that these rules do not apply in the case of the company.
 
 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 material 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 31 March, 2007 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:
 
 
 Date of            Nature            Amount
 the State          of Dues           in Rs.
 
 
 1. Central     Central Excise     4,53,626.00
 Excise duty    Duty levied u/s
                11-A. of CE
                Act, 1944
 
 2.  Central    Penalty u/s        4,53,626.00
 Excise duty    11-A of CE
                Rule, 1944
 
 3. Central     Penalty under      1,00,000.00
 Excise duty    Rule 9(2} and
                173Q of CE     
                Rule, 1944     
 
 4. Central     Penalty u/s       40,00,000.00
 Excise duty    11 AC read with
                rule 25 of CE                              
                Rule, 2001/2002  
                and 173Q of CE
                Rule, 1944     
 
 Period to         Authority where
 which the         the cheque is           
 amount rates      pending for decision
 
 
 07-.08.1999       Commissioner of Central Excise and Customs
                   (Appeals), Noida UP.   
 
 
 07.08.1999                   -DO-
 
 07.08.1999                   -DO-
 
 01.12.2001        CESTAT New Delhi
 to 31.3.04
 
 
 10.  The company has no accumulated losses as at 31 March, 2007 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 a 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.
 
 13.  In our opinion the company is not a chit fund or a nidhi / mutual
 benefit fund / society. There fore, the provisions of clause 4 (xiii)
 of the Companies (auditors report) Order, 2003 are not applicable to
 the company.  
 
 14.  In our opinion, the company is not dealing in or trading in
 shares, securities, debentures and other investments.  Accordingly, the
 provisions of clause 4 (xiv) of the Companies (auditors report) Order,
 2003 are not applicable to the company.
 
 15.  The company has not given any guarantee for loans taken by others
 from bank or financial institutions.
 
 16.  In our opinion 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 the ho funds raised on short-term basis have been used for, long
 term investment.
 
 18.  Based on our examination of records and the information provided;
 to us by the management we report that the company has not made
 preferential allotment of shares to parties and companies covered in
 the register maintained under section 301 of the Act.
 
 19.  During the period covered by our audit report the company has not
 issued any debentures.,
 
 20.  The company has 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 VAPS & Co.
 
                                               Chartered Accountants,
                                                          P. K. Jain,
 Place: New Delhi                                            Partner
 Dated: 6 August, 2007                         Membership No.: 82515