We have audited the attached Balance Sheet of JSL Stainless Limited, as
 at 31st March 2011 and the Profit & Loss Account and also the Cash Flow
 Statement of the Company 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.
 
 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.
 
 1) As required by the Companies (Auditor''s Report) Order, 2003 (as
 amended) (herein after called The Order) issued by the Central
 Government of India in terms of Section 227 (4A) of the Companies Act,
 1956, and on the basis of such checks of the books and records of the
 company as we considered appropriate, we enclose in the Annexure a
 statement on the matters specified in the paragraphs 4 and 5 of the
 said Order.
 
 2) Further to our comments in the Annexure referred to in Paragraph 1
 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 and proper returns adequate for the purpose of our audit
 have been received from the branches not visited by us;
 
 c) The reports on the accounts of the branch audited by other Auditors
 have been forwarded to us and have been appropriately dealt with by us
 in preparing our report;
 
 d) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of account
 and with the audited accounts from the branch;
 
 e) In our opinion, the Balance Sheet, Profit & Loss Account and Cash
 Flow Statement referred to in this report comply with the Accounting
 Standards referred to in sub section (3C) of Section 211 of the
 Companies Act, 1956;
 
 f) On the basis of 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 March, 2011
 from being appointed as a Director of the company in terms of clause
 (g) of sub section (1) of section 274 of the Companies Act, 1956;
 
 g) Without qualifying attention is drawn to;
 
 (i) Note no. 28 (C) (i) (a) of schedule 20 regarding pending necessary
 approvals for managerial remuneration as explained in the said note.
 
 (ii) Note no. 7 (b) of schedule 20 regarding pending confirmations of
 balances of certain secured loans as stated in the said note.
 
 (iii) Note no. 13 (c ) of schedule 20 regarding investment and loan &
 advances to certain subsidiary companies, for the reason stated in said
 note, no provision for diminution in value is necessary in the opinion
 of management.
 
 h) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 Significant Accounting Policies and Notes thereon, 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 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; and
 
 (iii) In the case of Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 (Referred to in Paragraph 1 of our report of even date to the Members
 of JSL Stainless Limited on the Financial Statements for the year ended
 31st March, 2011)
 
 1.  (a) The company has maintained proper records in respect of its
 fixed assets showing full particulars, including quantitative details
 and situation of fixed assets.
 
 (b) We have been informed that certain fixed assets of the company have
 been physically verified by the management according to a phased
 programme of periodic verification which, in our opinion, is reasonable
 having regard to the size of the company and nature of fixed assets. As
 informed, no material discrepancies between book records and physical
 inventory have been noticed in respect of the fixed assets physically
 verified during the year.
 
 (c) As per records and information and explanations given to us, no
 substantial part of fixed assets has been disposed off during the year.
 
 2.  (a) As informed, the inventory of the company at all its locations,
 except stocks lying with third parties, in transit and part of the
 stores and spares, have been physically verified by the management
 either at the end of the year or after the year end, and in respect of
 stores and spares, there is perpetual inventory system and a
 substantial portion of the stocks have been verified during the year.
 In our opinion, the frequency of verification is reasonable.
 
 (b) According to the information and explanations given to us, the
 procedures of physical verification of inventory 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; in
 respect of process stock, the records are updated as and when physical
 verification has been carried out. The discrepancies noticed on such
 physical verification of inventory as compared to book records were not
 material.
 
 3.  (a) As informed to us, the company has not given 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 provisions of clause 4 (iii) (b) to (d) of The Order
 are not applicable.
 
 (e) As informed to us, the company has not taken any loan, secured or
 unsecured, from companies, firms, or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Accordingly, the provisions of clause 4 (iii) (f) & (g) of The Order
 are not applicable.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanations that certain items
 purchased/sold are of special nature for which, as explained, suitable
 alternatives sources, do not exist for obtaining comparative
 quotations, taking into consideration the quality, usage and such other
 factors, there are adequate internal control systems commensurate with
 the size of the company and nature of its business with regard to
 purchase of inventory, fixed assets and for the sale of goods and
 services. Further, on the basis of examination of the books and records
 of the company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given, we have neither come across nor have we been
 informed of any instance of major weaknesses in aforesaid internal
 control systems.
 
 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 in
 the register maintained under section 301 of the Companies Act, 1956
 have been so entered.
 
 (b) In our opinion and having regard to our comments in paragraphs 4
 above, and according to the information and explanations given to us,
 transactions made in pursuance of contracts or arrangements entered
 into the register maintained under section 301 of the Companies Act,
 1956 and exceeding the value of rupees five lacs in respect of each
 party during the year have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time where
 such market prices are available.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has complied with the directives issued by the
 Reserve Bank of India and the provisions of Section 58A, 58AA or any
 other relevant provisions of the Companies Act, 1956 and the Rules
 framed there under with regard to deposits accepted from public. We
 have been informed that no order has been passed by Company Law Board
 or National Company Law Tribunal or Reserve Bank of India or any Court
 or any other Tribunal in this regard.
 
 7.  In our opinion, the company has an internal audit system
 commensurate with the size of the company and nature of its business.
 
 8.  We have broadly reviewed the books of accounts 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 in respect of the Company''s products and are of the opinion
 that, prime facie, the prescribed records have been made and
 maintained. We are, however, not required to make a detailed
 examination of such books and records.
 
 9.  (a) In our opinion and according to the information and
 explanations given to us, undisputed statutory 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 have generally been
 regularly deposited during the year with appropriate authorities. No
 undisputed amount payable in respect of the aforesaid statutory dues
 were outstanding as at last day of the financial year for a period of
 more than six months from the date they became payable.
 
 (b) In our opinion and according to the information and explanations
 given to us, there are no dues in respect of Wealth Tax that have not
 been deposited with appropriate authorities on account of disputes and
 the dues in respect of Income Tax, Excise duty, Service Tax, Sales Tax,
 Custom Duty and Cess that have not been deposited with appropriate
 authorities on account of dispute and the forum where the dispute is
 pending are as given below:
 
 Name of     Nature of     Amount   Period to which 
                                    the             Forum where dispute
                                                    is pending
 the 
 statute     the Dues     (Rs. in 
                             Lacs)  amount relates
 
 Central      Excise         1.69      1995-96      Hon''ble High Court,
                                                    New Delhi
 Excise Act   Duty
 
                           658.08      1999-04      Hon''ble High Court
                                                    of Punjab & Haryana.
 
                            27.19      2004-06      CESTAT, Delhi.
 
                             7.57      2000-01      CESTAT, Delhi.
 
                           113.07      2005-08      CESTAT, Delhi.
 
                           180.10      2008-10      CESTAT, Delhi.
 
                            57.14      1994-96      Commissioner of
                                                    Central Excise,Rohtak
 
                             7.63      1994-95      Add. Commissioner of
                                                    Central Excise,Rohtak
 
                             0.39      1996-97      Commissioner 
                                                    (Appeals), Gurgaon
 
                             0.98      2008-09      Commissioner 
                                                    (Appeals), Gurgaon
 
                            23.73      2009-10      Commissioner 
                                                    (Appeals), Gurgaon
 
                            18.02      1995-97      Joint Commissioner 
                                                    of Central Excise, 
                                                    Rohtak
 
                             6.53      2005-07      CESTAT, Bangalore
 
                         3,309.88      2005-10      Commissioner of
                                                    Central Excise,
                                                    Bhubaneshwar
 
                            70.50      2009-11      Commissioner of
                                                    Central Excise,
                                                    Bhubaneshwar
 
 The Custom  Custom         10.00      2008-09      Hon''ble High Court,
                                                    Delhi
 Act, 1962   Duty
 
                            60.00      2008-09      CESTAT, Delhi
 
 Finance Act Service Tax   745.67      2003-06      CESTAT, Delhi
 
                             7.64      2008-10      CESTAT, Delhi
 
 Sales Tax 
 Act         Sales Tax       3.00      1993-94      Hon''ble High Court
                                                    of Punjab & Haryana
 
                            65.06      2002-05      Commissioner of 
                                                    Sales Tax Odisha,
                                                    Cuttack
 
             O VAT         179.57      2005-06,     Stay petition before
                                                    Additional 
                                                    Commissioner
                                       2006-07 &    of Sales Tax and 
                                                    Writ Petition before
                                                    High 
                                       2007-08      Court, Cuttack
 
 Entry Tax   Entry Tax       22.71     2004-05      Commissioner of
                                                    Sales Tax Odisha,
                                                    Cuttack
 Act, 1999
 
                            351.65     2007-08      Hon''ble Supreme Court
 
                             79.56     2008-09      Hon''ble Supreme Court
 
                             15.76     2009-10      Hon''ble Supreme Court
 
                          4,129.01     2010-11      Hon''ble Supreme Court
 
 Income Tax  Income Tax   6,103.86     2004-05,     Commissioner of
                                                    Income Tax
                                                    (Appeals), Delhi
 Act 2005-06,
 
                                       2006-07 &
                                       2008-09
 
                            517.52     2002-03 &    Hon''ble High Court,
                                                    Delhi
                                       2003-04
 
 10.  The company has no accumulated losses at the end of the financial
 year and it has not incurred cash loss during the year and also in the
 immediately preceding financial year.
 
 11.  In our opinion, on the basis of audit procedures and according to
 the information and explanations given to us, the Company has not
 defaulted in repayment of dues to financial institution/banks/
 debenture holders, in view of the debt restructuring approved under CDR
 mechanism as stated in note no.7 of schedule 20 and read together with
 notes no. 1 and 2 of schedule 4.
 
 12.  In our opinion and according to information and explanations given
 to us, no loans and advances have been granted by the company on the
 basis of pledge of shares, debentures and other securities.
 
 13.  The Company is not a chit fund or a nidhi / mutual benefit fund /
 society. Therefore, the provisions of Clause 4 (xiii) of The Order are
 not applicable to the Company.
 
 14.  In our opinion, and according to the information and explanations
 given to us, the company is not dealing or trading in shares,
 securities, debentures and other investments. Therefore, the provisions
 of Clause 4 (xiv) of The Order are not applicable to the Company.
 
 15.  In our opinion and 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. (Read with Note no. 20 of
 schedule 20)
 
 16.  In our opinion and on the basis of information and explanations
 given to us, the term loans raised during the year by the Company were
 applied for the purposes for which the loans were obtained where such
 end use has been stipulated by the lender, however pending utilization
 during the course of the year the loan fund has been temporarily
 deployed in mutual funds/bonds/deposited with banks.
 
 17.  On the basis of information and explanations given to us, and on
 the basis of an overall examination of the balance sheet of the
 Company, no funds raised on short-term basis have been used for
 long-term investments.
 
 18.  The Company has not made any preferential allotment of shares to
 parties or companies covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 19.  On the basis of the records made available to us, the Company has
 created necessary security and charge in respect of debentures
 outstanding at the year end.
 
 20.  The company has not raised any money through pubic issue during
 the year.
 
 21.  During the course of our examination of the books and records of
 the company carried out in accordance with the generally accepted
 auditing practices in India, we have neither come across any instance
 of material fraud on or by the company, noticed or reported during the
 year nor we have been informed of such case by the management.
 
                       For Lodha & Co.       For S.S. Kothari Mehta & Co.
 
                       Chartered Accountants Chartered Accountants
 
                       FRN: 301051E          FRN: 000756N
 
                       (N.K. Lodha)          (Arun K. Tulsian)
 
 Place:New Delhi       Partner               Partner
 
 Date :27th May, 2011  M. No. 85155          M. No. 89907