1.  We have audited the attached Balance Sheet of MMTC Limited as at
 31st March, 20 HT the Profit and Loss Account and the Cash Flow
 Statement of the Company far the year ended on that date, both annexed
 thereto in which are incorporated the accounts of Corporate Office,
 Mica Division, Jhandewalan Regional Office and Sub-Regional Offices
 which are under Jhandewalan Regional Office audited by us and the other
 Regional Offices and Sub-Regional Offices audited by the other
 Auditors; and
 
 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 of material misstatements. An audit
 includes examining, on a test blasts, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and 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 (as
 amended) and read together with the Companies (Auditor''s Report) Order,
 2004 (hereinafter referred to as 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 records of the Company as
 we considered appropriate and according to the information and
 explanations given to us we give in the Annexure ''A'' 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: -
 
 (i) Non-provision of liability, if any, in case of extension of time /
 waiver / write off of GR-1 forms. (Refer Note No. 5)
 
 (ii) Balances under Sundry Debtors/claims Recoverable / Loans &
 Advances / Sundry Creditors / Other Liabilities have not been confirmed
 in some cases by the parties- Adjustments, if any, required upon such
 confirmation are not ascertainable, (Refer Note No. 31)
 
 (iii) Certain observations in respect of the internal control
 procedures, as stated in para (iv) ofannexure A '' to main audit report,
 which may have consequential effect on the accounts for the year,
 (effect not ascertainable).
 
 5.  We further report that: -
 
 (a) We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit except as otherwise stated in report;
 
 (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) Proper returns, adequate for the purpose of our audit have been
 received from Regional Offices, Sub Regional Offices and Branches not
 audited by us Reports of Regional Auditors have been considered while
 preparing our report;
 
 (d) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of accounts
 and with the audited returns from the Regional Offices;
 
 (e) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with Accounting
 Standards referred to in Section 211 (3C) of the Companies Act, 1956;
 
 (f) Being a Government Company, pursuant to the gazette notification
 No. GSR 829 (E) dated 21-10-2003 issued by Government of India,
 provisions of clause (g) of section 274 of the companies Act 1956 are
 not applicable to the company.
 
 We further report that, the impact of paragraphs 4(i) to 4(iii) above
 on the profit of the year and the assets and liabilities appearing in
 the Balance Sheet, could not be ascertained. In our opinion and to the
 best of our information and according to the explanations given to us7
 the said accounts read together with the Significant Accounting
 Policies and notes thereon, give the information required by the
 Companies Act, 1956 in the manner so required, other than as stated
 above, 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.
 
 ANNEXURE ''A'' TO AUDITOR''S REPORT Referred to in paragraph 3 of the
 Auditor''s Report of even date to the members of MMTC Limited on the
 financial statements for the year ended 31 st March 2011
 
 (I) In respect of fixed assets:
 
 (a) The Company has generally maintained proper records showing full
 particulars including quantitative details and situation of the fixed
 assets.
 
 (b) As explained to us, all the fixed assets have been physically
 verified by the Management during the year except Corporate Office,
 Regional Office Eellary and Jhandewalan which, in our opinion is
 reasonable having regard to the size of the company and the nature of
 its assets. No material discrepancies were noticed on such
 verification.
 
 (c) In our opinion and according to the information and explanations
 given to usT no substantial part of the fixed assets has been disposed
 off by the Company during the year and therefore the going concern
 assumption is not affected.
 
 (ii) In respect of its inventories:
 
 (a) As explained to us, the inventories excepting in case of goods in
 transit, stocks lying in Central / State Warehouses (where confirmation
 were obtained from the parties and relied upon) were physically
 verified during the year by the Management at reasonable intervals.
 
 (b) In our opinion, 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) On the basis of our examination of records of the inventory, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stock and
 the books of account were not material except in the case of inventory
 of coal at regional office Mumbai which has been properly dealt with in
 the hooks of account.
 
 (iii) In respect of loans:
 
 (a) As informed to us, the Company has not granted any loans, secured
 or unsecured to Companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.In
 view of this, sub clauses (b),(c) and (d) of clause (iii) are not
 applicable.
 
 (b) As informed to us, the Company has not taken any loam, secured or
 unsecured from Companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956. In
 view of this, sub clauses (e), (f) and (g) of clause (iii) are not
 applicable,
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed assets and for the sale of goods and
 services. Further, on the basis of our examination and according to the
 information and explanations given to us, we have neither come across
 nor have we been informed of any instance of major weaknesses in the
 aforesaid internal control systems
 
 However, the internal control mechanism needs to be strengthened in the
 following areas:
 
 (a) Active and prompt follow-up of old debts, advances, claims, court
 cases and recoveries etc arising out of execution of decrees/awards in
 favour of ike company, by respective Commodity Division.
 
 (b) Confirmation of outstanding balances and its periodic
 reconciliations.
 
 (c) Expeditious follow up of old Sales Tax cases / Appeals pending with
 Ctrurts /Appellate Authorities of CO, ROs andSROs including closed SROs
 to save on legal costs and interest payable on disputed additional
 demands-
 
 (v) (a) In our opinion and according to the information and
 explanations given to us, there are no contracts and arrangements
 referred to in Section 301 of the Companies Act 1956, particulars of
 which need to be entered into a register maintained under Section 301
 of the Act.  (b) Accordingly the provisions of the clause V(b) of
 paragraph 4 of the order (as amended) are not applicable to the company
 
 (vi) The directives issued by the Reserve Bank of India and the
 provisions of Section 58 A and 58AA or any other relevant provisions of
 the Companies Act, 1956 and the rules framed there-under have been
 complied with, in respect of deposits accepted from the 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 other
 Court or Tribunal in this regard.
 
 (vii)The Company has an internal audit system, which in our opinion is
 commensurate with the size of the Company and nature of its business.
 However efforts should be made for further improvement.
 
 (viii) As informed to us, the maintenance of cost records under Section
 209 (1) (d) of the Companies Act, 1956 has not been prescribed by the
 Central Government.
 
 (ix) (a) According to the information and explanations given to us
 and the records as produced and examined by us, in our opinion, the
 Company is regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, investor education
 and protection fund, employees state insurance, income-tax, sales-tax,
 wealth tax, service tax, customs duty, Excise Duty, Cess and other
 material statutory dues as applicable with the appropriate authorities
 and that no undisputed amounts payable in respect of the same were in
 arrears as at 31-03-2011 for a period of more than six months from the
 date they became payable.
 
 (b) According to the information and explanation given to us and the
 records of the Company examined by us, the particulars of dues of
 income tax / sales tax / wealth tax / service tax / custom duty /
 excise duty / cess (as applicable) as at March 31, 2011 which have not
 been deposited on account of any dispute, are referred to in
 Annexure-''f''
 
 (ix) The Company does not have any accumulated losses and has not
 incurred cash losses in the current financial year and in the
 immediately preceding financial year.
 
 (xi) According to the records of the Company examined by us and as per
 the information and explanations given to US, the Company has not
 defaulted in repayment of dues to any financial institution or bank or
 debenture holders during the year.
 
 (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; except
 certain loans to employees which have been granted on the basis of
 security of house and vehicles and in this regard proper documents &.
 records are maintained. In respect of loans to its employees other than
 those as stated already, are granted without any security.
 
 (xiii) In our opinion, the company is not chit fund or a Nidhi / Mutual
 benefit fund I society. Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (xiv) 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 (Auditor''s Report) Older,
 2003 (as amended) are not applicable to the Company.
 
 (xv) In our opinion and according to the information and explanations
 given to US the terms & conditions of the guarantee given by the
 company for loans taken by NINL from banks or financial institutions
 during the year are not prima-facie prejudicial to the interest of the
 Company.
 
 (xvi) According to the information and explanation given to usr the
 Company has not taken any term loans during the year. Hence, the
 provisions of clause 4(xvi) of the Companies (Auditor''s Report) Order
 2003 (as amended) are not applicable to the Company.
 
 (xvii) According to the information and explanations given to us and
 overall examination of the Balance Sheet of the company, we report that
 no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) 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.
 
 (xix) According to the information and explanations given to us, during
 the year covered by our audit report, the Company has not issued any
 debentures during the year and hence, the provision of clause No.
 4(xix) of the Companies (Auditor''s Report) Order 2003 (as amended) is
 not applicable to the Company.
 
 (xx) The Company has not Taised any money by way of Public Issue during
 the year, therefore the provision of clause 4(xx) of the Companies
 (Auditor''s Report) Order 2003 (as amended) is not applicable to the
 Company.
 
 (xxi) 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, and according to the information and
 explanations given to us, we have neither come across any instance of
 materia! fraud on/or by the Company, noticed or reported during the
 year, nor we have been informed for such case by the Management except
 at regional office Kolkata where an incidence of unauthorized lifting
 of hypothecated stock of 86,542 MT yellow peas covering value of f 1285
 million by two associates were reported,However the entire amount has
 been fully recovered towards full and final settlement of the total
 quantity sold to them on high seas basis,
 
                                             For N. K. Bhargava & Co.
 
                                               Chartered Accountants
 
                                                   F. R. No. 000429N
 
                                                 (CA N. K. BHARGAVA>
 
                                                             Partner
                                                       M. No. 080624
 
 Place: New Delhi
 Dated: 02.08.2011