Jindal Saw

We have audited the attached Balance Sheet of JINDAL SAW LIMITED as at
 31st December, 2008, 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 Companys
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 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 management, as well as evaluating the overall financial statement
 presentation.  We believe that our audit provides a reasonable basis
 for our opinion.
 
 A) 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, we enclose in the Annexure
 hereto, a statement on the matters specified in paragraphs 4 and 5 of
 the said Order, so far as applicable to the Company.
 
 B) Further to our comments in Annexure referred to in paragraph (A)
 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 appears from our examination of
 those 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 account of
 the Company.
 
 (d) 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, 1 956.
 
 (e) Based on written representations received from the directors and
 taken on record by the Board of Directors, we report that none of the
 directors of the company is disqualified as on 31st December, 2008 from
 being appointed as director of the company as referred to in clause (g)
 of sub section (1) of section 274 of the Companies Act 1956.
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 notes thereon give the information required by the Act 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 December, 2008 and
 
 ii) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date, and
 
 iii) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 AUDITORS REPORT
 
 ANNEXURE TO AUDITORS REPORT
 
 (REFERRED TO IN PARAGRAPH (A) IN OUR REPORT OF EVEN DATE FOR THE YEAR
 ENDED 31.12.2008)
 
 1.  a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) A major portion of the fixed assets, has been physically verified by
 the Management in accordance with a phased programme of verification
 adopted by the Company. In our opinion, the frequency of verification
 is reasonable having regard to the size of the Company and the nature
 of its assets. To the best of our knowledge, no material discrepancies
 have been noticed on such verification.
 
 c) The Company has not disposed off substantial part of fixed assets
 during the year and the going concern status of the Company is not
 affected.
 
 2.  a) As explained to us, the management during the year has
 physically verified inventories at reasonable intervals and in respect
 of stores and spares, there is a perpetual inventory system and a
 substantial part of such stocks has been verified during the year.
 However, stocks in the possession and custody of third parties and
 stock in transit as at 31st December, 2008 have been verified by the
 Management with reference to confirmation or statement of account or
 correspondence of the third parties or subsequent receipt of goods. In
 our opinion, the frequency of verification is reasonable.
 
 b) In our opinion and according to the information and explanations
 given to us, 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) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventories. The
 discrepancies noticed during physical verification of inventories as
 compared to book records were not material and the same have been
 properly dealt with in the books of account.
 
 3.  a) (i) The Company has given interest bearing demand loan to one
 subsidiary company covered in the register maintained under section 301
 of the Companies Act, 1956. The maximum amount involved and year end
 balance during the year in respect of said subsidiary is Rs.4583.28
 lacs.  The Company has not given any other loan to any Company or party
 covered under section 301 of the Companies Act, 1956.
 
 (ii) In our opinion and according to information and explanations given
 to us, the interest bearing demand loans with relevant terms and
 conditions on which loan has been given are, prima facie, not
 prejudicial to the interest of the Company.
 
 (iii) In respect of the aforesaid loans, the amount are repayable on
 demand, and hence, the question of irregularity on payment does not
 arise.
 
 (iv) The aforesaid loans is repayable on demand and therefore, the
 question of overdue amounts does not arise.
 
 b) As informed to us, the Company has not taken any loans, secured or
 unsecured from Companies, firms or other parties listed in the register
 maintained under section 301 of the Companies Act, 1956. Thus Paragraph
 4 (iii) (f) & (g) of the order, is not applicable.
 
 4.  In our opinion and according to information and explanations given
 to us, having regard to the explanation that some of the items
 purchased are of special nature and suitable alternative sources do not
 exist for obtaining comparable quotations, there are adequate internal
 control system commensurate with the size of the Company and the nature
 of its business with regard to purchases of inventories, fixed assets
 and with regard to the sale of goods and services. During the course of
 our audit, we have not observed any major weaknesses in internal
 control system of the Company.
 
 5.  a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts or arrangements that need to be entered
 into the register maintained under section 301 of the Companies Act, 1
 956 have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions with parties with whom transactions
 exceeding the value of Rupees five lacs have been entered into during
 the financial year are at prices, which are reasonable, having regard
 to the prevailing market prices 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 of the Companies Act, 1956 and the Companies (Acceptance
 of Deposits) Rules, 1975 with regard to the deposits accepted from the
 public.
 
 7.  In our opinion, the Company has an adequate internal audit system
 commensurate with the size and the nature of its business.
 
 8.  We have broadly reviewed the accounts and records maintained by the
 Company in respect of manufacture of steel and steel products to which
 the said rules are made applicable pursuant to the order made by the
 Central Government for maintenance of cost records prescribed under
 Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion
 that prima facie, the prescribed records have been made and maintained.
 We have not, however, made a detailed examination of such records with
 a view to determine whether these are accurate and complete.
 
 9.  a) According to the information and explanations given to us, the
 Company is generally regular in depositing with the appropriate
 authorities undisputed statutory dues including Provident Fund,
 Employees State Insurance, Sales Tax, Income Tax, Custom duty, Investor
 Education & Protection fund, Excise Duty, Cess, Service Tax and
 Royalty. There are no arrears as at 31st December, 2008 for a period of
 more than six months from the date they become payable.  Amount due and
 outstanding for a period exceeding 6 months as at 31st December, 2008
 to be credited to Investor Education and Protection Fund of Rs. 28.58
 lacs, which are held in abeyance due to pending legal cases, has not
 been considered.
 
 b) According to the information and explanation given to us, the dues
 in respect of sales tax, excise and custom duty that have not been
 deposited with the appropriate authorities on account of dispute and
 the forum where the disputes are pending are given below:
 
 Particulars           Period to
                       which the
                       amount
                       related
 
 Sales Tax             2002-03
 
 Sales Tax             2005-06
 
 Excise Duty           2005-06
 
 Service Tax           2003-04
 
 Forum where           Amount
 matter is             Rs in lacs
 pending
 
 Honble High          626.31
 Court of Gujrat,
 Ahmedabad
 
 Joint Commissioner     47.81
 (Appeal), Rajkot
 
 CESTAT, Ahmedabad      58.97
 Joint Commissioner,    28.25
 Central Excise, Rajkot
 
 10.  The Company has no accumulated losses at the end of the financial
 year. The Company has not incurred any cash losses during the financial
 year covered by our audit and in the immediately preceding financial
 year.
 
 11.  According to the information and explanation given to us, the
 Company has not defaulted in repayment of dues to the banks and
 debenture holders.
 
 12.  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.
 Therefore,the provision of clause 4(xii) of the Companies (Auditors
 Report) Order, 2003 are not applicable to the Company.
 
 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 ore 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.  In our opinion, and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantee for loans taken by others from banks, or financial
 institutions are not prima facie, prejudicial to the interest of the
 company.
 
 16.  In our opinion, and according to information and explanation given
 to us, the term loans have been applied for the purpose for which they
 were raised, other than temporary deployment pending application.
 
 17. According to the information and explanations given to us and on an
 overall examination of the Balance Sheet of the company, in our
 opinion, there are no funds raised on short-term basis, which 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 maintained under section 301 of
 the Companies Act, 1956.
 
 19.  According to the information and explanations given to us, the
 Company has created security for the debentures issued.
 
 20.  The Company has not raised any money through a public issue during
 the year.
 
 21.  During the course of our examination of the books and records of
 the Company, and according to the information and explanations given to
 us by the management, we report that no fraud on or by the Company has
 been noticed or reported during the course of our audit.
 
                                                     N.C. Aggarwal
                                                           Partner
                                                       M.No.005951
 
                                                For & on behalf of
 Place : New Delhi                              N.C. AGGARWAL & CO.
 Dated : 30th March,2009                     Chartered Accountants