1.  We have audited the attached Balance Sheet of GALLANTT ISPAT
 LIMITED as at 31st March, 2011, the Profit & Loss Account and also the
 Cash Flow Statement for the year ended on that date, annexed thereto.
 These financial statements are the responsibility of the Company''s
 Management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free from material misstatement. An audit also
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of section 227(4A) of the
 Companies Act, 1956, we annex hereto a statement on the matters
 specified in paragraphs 4 and 5 of the said order.
 
 4.  Further to our comment in the annexure referred to in Paragraph 3
 above, we report that:
 
 a.  We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for my 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 the
 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 Accounts.
 
 d.  In our opinion, the Balance Sheet, Profit and Loss account and the
 Cash Flow Statement dealt 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 directors and
 taken on record by the Board of Directors, we report that none of the
 director is disqualified from being appointed as a director under
 clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956
 as on 31st March, 2011.
 
 f.  In our opinion and to the best of our knowledge and according to
 the explanation given to us, the said accounts read together with notes
 thereon give the information required by the Companies Act, 1956 in the
 manner as required, and give a true and fair view in conformity with
 the accounting principles generally accepted in India :
 
 i) In case of the Balance Sheet, of the state of affairs of the Company
 as at 31st March, 2011.
 
 ii) In the case of Profit & Loss Account, of the Profit of the Company
 for the year ended on that date.
 
 iii) In the case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date
 
 Annexure to the Auditor''s Report
 (Referred to in paragraph 3 of our report of even date)
 
 i) a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) Fixed assets have been physically verified by the Management.
 According to the information and explanation given to us, no material
 discrepancies were noticed on such verification.
 
 c) No fixed assets have been disposed during the year.
 
 ii) a) The inventory has 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) The Company has maintained proper records of its inventories. No
 material discrepancies were noticed on physical verification.
 
 iii) a) The Company had taken loan from other company covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 number of such parties is three and the maximum amount involved during
 the year was Rs.5840.11 Lacs and year end balance is Rs.1741.82 Lacs.
 The company has granted loans, secured or unsecured to Companies, firms
 or other parties, covered in the register maintained under section 301
 of the Act. The number of such party is one and the maximum amount
 involved during the year was Rs.150.00 Lacs and year end balance is Rs
 150.00 Lacs.
 
 b) In our opinion, the rate of interest and other terms and conditions
 on which loan has been taken and granted from company listed 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 amount and interest
 as stipulated and no amount is overdue.
 
 iv) 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 nature of its business, for the
 purchase of inventories, fixed asset and for the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness in internal control system.
 
 v) According to the information and explanation provided by the
 management, the transactions that need to be entered into the register
 maintained U/S 301 of the Companies Act, 1956 have been so entered. The
 transaction exceeding the value of rupees five lakhs in respect of each
 party have been entered during the year, whose market price at the
 relevant time of the transaction is not available before us to enable
 us to comment on the reasonability of the market prices at the relevant
 time.
 
 vi) The Company has not accepted any deposit from the public as
 stipulated under the Provisions of section 58A and 58AA of the
 Companies Act, 1956.
 
 vii) The Company has an internal audit system which, in our opinion, is
 commensurate with the size and nature of its business.
 
 viii) The Central Government has prescribed the maintenance of cost
 records under section 209(l)(d) of the Companies Act, 1956.
 
 ix) a) In our opinion and according to the information and explanations
 given to us, Company is generally been regular in depositing with
 appropriate authorities undisputed statutory dues, as required under
 this clause and applicable to the Company during the year.
 
 b) According to the information and explanations given to us, there is
 no undisputed amount payable in respect of statutory dues, outstanding
 for more than six months from the date they become payable as on 31st
 March, 2011.
 
 c) According to the information and explanations given to us, there are
 no statutory dues that have not been deposited with the appropriate
 authorities on account of any dispute.
 
 x) The Company has accumulated losses of Rs. 302.13 Lacs at the end of
 the financial year but has not incurred any cash losses during the
 financial year covered by our audit.
 
 xi) Based on our audit procedure and on the basis of information and
 explanations given by the management, the Company has not defaulted in
 repayment of dues to financial institutions or banks.
 
 xii) 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.
 
 xiii) The Company is not a chit fund or nidhi/mutual benefit
 fund/society, therefore clause 4(xiii) of the order is not applicable
 to the Company.
 
 xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures, other investments and contracts.
 
 xv) According to the information and explanations given to us, the
 company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 xvi) To the best of our knowledge and belief and according to the
 information and explanations given to us, term loans were applied for
 the purpose for which these were obtained.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, no funds
 raised on short term basis have been used for long term investment.
 
 xviii) The Company has not made any preferential allotment of shares
 during the year.
 
 xix) The Company has not issued any debentures during the year.
 
 xx) During the year the Company has raised funds throught public issue.
 The end use of funds has been disclosed in Note No. 8 of the Notes of
 Accounts forming part of the financial statements. The end use of
 money raised by Public issue has been verified by us.
 
 xxi) In our opinion and according to information and explanations given
 to us, no fraud on or by the Company has been noticed or reported
 during the course of our audit.
 
                                               For Anoop Agarwal & Co.
 
                                                Chartered Accountants
 
                                            (Registration No. 01739C)
 
                                                           (H.C Pant)
 
                                                              Partner
 
 Dated: May 28, 2011                             Membership No. 17694