1.  We have audited the attached Balance Sheet of JSW Steel Limited
 (the Company) as at 31 st March, 2011, the Profit and Loss Account
 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 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 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 misstatements. 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 (Auditors 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 as follows:
 
 (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 Profit and Loss Account 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 Profit and Loss Account 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, the 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, 2011;
 
 (ii) in the case of the Profit and Loss Account, 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, 2011 taken on record by the Board of
 Directors, none of the Directors is disqualified as on 31st March, 2011
 from being appointed as a director in terms of Section 274(1)(g) of the
 Companies Act, 1956.
 
 Annexure to the Auditors Report
 (Referred to in paragraph 3 of our report of even date)
 
 1.  Having regard to the nature of the Companys business/activity,
 Clauses (i-c), (iii), (vi), (x), (xii), (xiii), (xiv), (xviii) and (xx)
 of CARO are not applicable to the Company.
 
 2.  In respect of its fixed assets:
 
 a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 b) Some of the fixed assets were physically verified during the year by
 the management in accordance with a programme of verification, which in
 our opinion provides for physical verification of all the fixed assets
 at reasonable intervals. According to the information and explanations
 given to us, no material discrepancies were noticed on such
 verification.
 
 3.  In respect of its inventories:
 
 a) As explained to us, inventories were physically verified during the
 year by the management at reasonable intervals, except for inventories
 lying with third parties where confirmations have been received.
 
 b) As the Companys inventory of raw materials mostly comprises bulk
 materials such as coal, coke, pellets etc. requiring technical
 expertise for establishing the quality and the quantification thereof,
 the Company has hired independent agencies for physical verification of
 such stocks. Relying on the above, according to the information and
 explanation furnished 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 has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased/ sold are of special nature and suitable alternate sources
 for obtaining comparable quotations are not readily available, there
 are adequate internal control systems commensurate with the size of the
 Company and the nature of its business for the purchase of inventory
 and fixed assets and for the sale of goods. During the course of our
 audit we have not observed any major weaknesses in such internal
 controls.
 
 5.  In respect of contracts or arrangements entered in the register
 maintained in pursuance of Section 301 of the Companies Act, 1956 and
 according to the information and explanations given to us:
 
 a) The particulars of the contracts or arrangements referred to in
 Section 301 that needed to be entered into the register, maintained
 under the said section have been so entered.
 
 b) Where each of such transaction is in excess of X 5 lacs 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.
 
 6.  In our opinion, the Company has an adequate internal audit system
 commensurate with the size and the nature of its business.
 
 7.  We have broadly reviewed the books of account and records
 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 steel, steel
 products and electricity and are of the opinion that prima facie the
 prescribed accounts and records have been made and maintained. We have,
 however, not made a detailed examination of the records with a view to
 determining whether they are accurate or complete. To the best of our
 knowledge and according to the information and explanations given to
 us, the Central Government has not prescribed the maintenance of cost
 records for any other product of the Company.
 
 8.  According to the information and explanations given to us in
 respect of its statutory dues:
 
 a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Income-tax, Wealth- tax, Sales-tax,
 Service tax, Custom duty, Excise duty, Cess, Investor Education and
 Protection Fund and any 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, Customs Duty, Excise Duty, Cess and other material
 statutory dues in arrears as at 31st March, 2011 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,
 Customs Duty, Excise Duty and Cess which have not been deposited as on
 31st March, 2011 on account of disputes are given below :
 
 Rs. in crores
 
 Name of 
 Statute    Nature of   Amount  Period to which   Forum where dispute
            the dues               the amount           is pending
                                   relates
 
 Income 
 Tax Act,   Income Tax    0.49     2002 - 2003     Commissioner of
 1961                                              Income Tax (Appeal)
 
 The Bombay Sales Tax    14.27     2000 - 2002,    The Joint
 Sales Tax 
 Act,                              2003 - 2005     Commissioner of
 1959                                              Sales Tax (Appeals),
                                                   Thane
 
 Chapter 
 V of       Service Tax  18.90     2005 - 2009     Customs, Excise and
 the 
 Finance Act,                                      Service Tax Appellate
 1994                                              Tribunal
 
 Chapter 
 V of       Service Tax   0.31     2005 - 2006     The Commissioner
 the 
 Finance Act,                                       of Central Excise
 1994                                              (Appeals), Mangalore
 
 The Custom  Customs      2.14     2004 - 2005     Supreme Court of
 Act,1962    Duty                                  India.
 
 The Custom  Customs     43.71     2001 - 2002     High Court of
 Act,1962    Duty                                  Karnataka
 
 The Custom  Customs     13.01     2001 - 2002,    Customs, Excise and
 Act,1962    Duty                  2008 - 2011     Service Tax Appellate
                                                   Tribunal
 
 The Custom  Customs      1.89     2009 - 2010     Commissioner of
 Act,1962    Duty                                  Custom, Guntur
 
 The Central Excise Duty 40.79     2000 - 2008     Customs, Excise and
 Excise 
 Act,1944                                          Service Tax Appellate
                                                   Tribunal.
 
 The Central Excise Duty 49.34     2000 - 2010     Customs, Excise and
 Excise 
 Act,1944                                          Service Tax Appellate
                                                   Tribunal
 
 The Central Excise Duty  0.35     2007 - 2008,    The Commissioner
 Excise 
 Act,1944                          2009 - 2010     of Central Excise
                                                   (Appeals), Mumbai
 
 The Central Excise Duty  5.97     2009 - 2010    The Commissioner of
 Excise 
 Act,1944                                         Central Excise, Dadar
 
 The Central Excise Duty  0.19     2004 - 2005    The Commissioner of
 Excise 
 Act,1944                                         Central Excise, Thane
 
 The Central Excise Duty  0.19     2005 - 2007    Additional
 Excise 
 Act,1944                                         Commissioner, Salem
 
 9.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 financial institutions, banks and debenture holders.
 
 10.  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 subsidiaries (including step down
 subsidiaries) from banks are prima facie not prejudicial to the
 interests of the Company.
 
 11.  To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were, prima facie, applied by the Company during
 the year for the purposes for which the loans were obtained, other than
 temporary deployment pending application.
 
 12.  According to the information and explanations given to us, and on
 an overall examination of the balance sheet of the Company, funds
 raised on short-term basis have, prima facie, not been used during the
 year for long-term investment.
 
 13.  According to the information and explanations given to us and the
 records examined by us, securities/charges have been created in respect
 of the debentures issued.
 
 14.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company was noticed or reported during the year.
 
 
 
                                           For Deloitte Haskins & Sells
 
                                                  Chartered Accountants
                                               Registration No. 117366W
 
                                                       P. B. Pardiwalla
 
 Place: Mumbai                                                  Partner
 
 Date: 16 May 2011                                 Membership No. 40005