1.  We have audited the attached Balance Sheet of IFGL Refractoriness
 Limited (the Company) as at 31st March 2012, the Statement of Profit
 and Loss and the Cash Flow Statement of the Company for the year ended
 on that date, both 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 the disclosures in the Financial Statements. An audit also includes
 assessing the accounting principles used and the 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 (CARO)
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act, 1956, 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 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 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 Balance Sheet, the Statement of Profit and Loss
 and the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (e) in our opinion and to the best of our information and according to
 the explanations given to us, they 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 :
 
 (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 Statement of Profit and Loss, of the Profit of
 the Company for the year ended on that date and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5.  On the basis of the written representations received from the
 Directors as on 31st March 2012 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 Section
 274(1)(g) of the Companies Act, 1956.
 
 (REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)
 
 (i) Having regard to the nature of the Company''s business/activities,
 clauses (vi), (x), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of
 CARO are not applicable.
 
 (ii) In respect of its Fixed Assets :
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the Fixed Assets.
 
 (b) The Fixed Assets were physically verified during the year by the
 Management in accordance with a regular programme of verification
 which, in our opinion, provides for physical verification of all the
 Fixed Assets at reasonable intervals. According to the information and
 explanation given to us, no material discrepancies were noticed on such
 verification.
 
 (c) The Fixed Assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the Fixed Assets of the Company
 and such disposal has, in our opinion, not affected the Going Concern
 status of the Company.
 
 (iii) In respect of its inventory :
 
 (a) As explained to us, the inventories except material lying with
 third parties (which have substantially been confirmed) were physically
 verified during the year by the Management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanation
 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.
 
 (iv) The Company has neither granted nor taken any loans, secured and
 unsecured, to/from companies, firms or other parties listed in the
 Register maintained under Section 301 of the Companies Act, 1956.
 
 (v) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased are of special nature and suitable alternative sources are
 not readily available for obtaining comparable quotations, there is an
 adequate internal control system commensurate with the size of the
 Company and the nature of its business with regard to purchases of
 inventory and Fixed Assets and the sale of Goods and Services. During
 the course of our audit, we have not observed any major weakness in
 such Internal Control System.
 
 (vi) In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us :
 
 (a) The particulars of contracts or arrangements referred to Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transaction is in excess of Rs 5 lakhs in respect
 of any party, the transactions have been made at prices which are prima
 facie reasonable having regard to the prevailing market prices at the
 relevant time except in respect of sale of certain goods for which
 comparable quotations are not available and in respect of which we are
 unable to comment.
 
 (vii) In our opinion, the Internal Audit functions carried out during
 the year by a firm of Chartered Accountants appointed by the Management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 (viii) We have broadly reviewed the cost records maintained by the
 Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
 prescribed by the Central Government under Section 209(1)(d) of the
 Companies Act, 1956 and are of the opinion that prima facie the
 prescribed cost records have been maintained. We have, however, not
 made a detailed examination of the cost records with a view to
 determine whether they are accurate or complete.
 
 (ix) According to the information and explanations given to us in
 respect of Statutory Dues :
 
 (a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty, Cess and other material Statutory Dues
 applicable to it with the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Income Tax,
 Wealth Tax, Custom Duty, Excise Duty, Cess and other material Statutory
 Dues in arrears as at 31st March 2012 for a period of more than six
 months from the date they became payable.
 
 (c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax,
 Custom Duty, Excise Duty and Cess which have not been deposited as on
 31st March 2012 on account of disputes are given below :
 
 Statute    Nature of Dues   Forum where   Period to which   Amount 
                                                             involved
                             Dispute is 
                             pending       the amount 
                                           relates          (net of 
                                                             related
                                                             payments)
 
                                                            (Rs in lacs)
 
 Sales Tax
 
 Central 
 Sales Tax 
 Act, 1956  Sales Tax        Sales Tax 
                             Tribunal     1995-1996           1.14
 
            Sales Tax        Additional 
                            Commissioner 
                            of            1997-1998           0.47
 
            Sales Tax
 
            Sales Tax       Orissa High 
                            Court         1999-2000           2.17
 
            Sales Tax       Assistant 
                            Commissioner 
                            of            2003-2004           0.25
 
            Sales Tax       
 
 Orissa 
 Sales Tax 
 Act,1947   Sales Tax       Orissa Sales 
                            Tax Tribunal  1996-1997          39.91
                                          and 1997-1998
 
            Sales Tax       Orissa High 
                            Court         1999-2000           0.11
 
             Total                                           44.05
 
 Income Tax
 
 The Income 
 Tax 
 Act,1961   Income Tax       Income  Tax 
                             Appellate    Assessment Year    15.88
                             Tribunal, 
                             Kolkata      2005-2006
 
            Fringe 
            Benefit Tax      Deputy 
                             Commissioner Assessment Year     0.51
                             of Income 
                             Tax          2007-2008
 
            Income Tax       Deputy 
                             Commissioner 
                             of           Assessment Year    61.25
 
                             Income Tax   2008-2009
 
            Total                                            77.64
 
 Service 
 Tax
 
 Service 
 Tax Rules,
 1994       Service Tax      Joint Commis
                             sioner of    2006-2007           1.54
 
                             Central 
                             Excise, 
                             Customs & 
                             Service Tax
 
 (x) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 any banks. The Company has neither any outstanding dues to any
 Financial Institutions or Debenture Holders at the beginning of the
 year nor has it obtained any loans from such parties during the year.
 
 (xi) 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.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the Term Loans have been applied for the purposes for
 which they were obtained.
 
 (xiii) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that Funds raised on short-term basis have not been used during
 the year for long-term investment.
 
 (xiv) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no fraud on the
 Company has been noticed or reported during the year.
 
                                          For DELOITTE HASKINS & SELLS
 
                                                 Chartered Accountants 
 
                                             (Registration No. 302009E) 
 
                                                        A Bhattacharya
 
 Kolkata                                                       Partner
 
 19th May 2012                                  (Membership No. 054110)