1.  We have audited the attached Balance Sheet of NELCAST LIMITED, as
 at 31st March, 2011, the Profit & Loss Account and the Cash Flow
 Statement of the Company for the year ended on that date annexed
 thereto. These financial statements are responsibility of the Company
 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 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our Audit provides reasonable
 basis for our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 issued
 by the Central Government of India in terms of section 227 (4A) of the
 Companies Act, 1956, we give 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 above, we
 report that:
 
 (a) We have obtained all the information and explanation, 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 the
 books of the Company;
 
 (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 all the mandatory
 Accounting Standards referred to in sub- section (3C) of Section 211 of
 the Companies Act, 1956;
 
 (e) On the basis of written representations received from the Directors
 as on 31st March, 2011 and taken on record by the Board of Directors,
 in our opinion, none of the Directors are disqualified from being
 appointed as Director under Section 274(1)(g) of 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 with the notes on
 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 Cash Flow Statement, of the Cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 (This is the Annexure referred to in our Report of even date)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 Management during the year, but there is a regular programme of
 verification 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) There was no disposal of substantial fixed assets during the year.
 
 (ii) (a) The Management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured to/from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act,1956.
 
 (iv) In our opinion, there is an adequate internal control procedure
 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 no major weaknesses have
 been noticed in the internal controls in these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the transactions that need to be
 entered into the register maintained under Section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 have been made at prices, which are reasonable,
 having regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has accepted deposits from the public. In our opinion,
 the directives issued by the Reserve Bank of India and the provisions
 of sections 58 A and 58 AA or any other relevant provisions of the Act
 and the rules framed there under, where applicable have been complied
 with.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 (viii) The Central Government has not prescribed the maintenance of
 cost records by the Company under section 209(1)(d) of the Companies
 Act, 1956 for any of its products.
 
 (ix) (a) According to the records provided to us, the Company is
 regular in depositing undisputed statutory dues including Provident
 Fund, Employees State Insurance, Income-Tax, Sales Tax, Wealth Tax,
 Custom Duty, Excise Duty, Service Tax, Cess and any other statutory
 dues with the appropriate authorities.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income-tax, Wealth-tax,
 Sales-tax, Customs Duty, Excise Duty, Service Tax, and Cess were in
 arrears as at 31st March, 2011 for a period of more than six months
 from the date they became payable.
 
 (c) According to the records of the Company and on the basis of
 information and explanations given to us, there are no dues of
 Sales-tax, Income-tax, Customs Duty, Wealth tax, Excise Duty, Service
 Tax, Cess which have not been deposited on account of any dispute.
 
 (x) The Company has no accumulated losses and as at the end of the
 financial year and has not incurred cash losses during the financial
 year covered by our audit and in the immediately preceding financial
 year.
 
 (xi) The Company has not defaulted in repayment of dues to the
 Financial Institutions or Banks or Debenture holders.
 
 (xii) The Company has not granted any loans or advance on the basis of
 security by the way of pledge of shares, debentures or other
 securities.
 
 (xiii) 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 Order are not applicable.
 
 (xiv) 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. Accordingly, the
 provisions of clause 4 (xiv) of the Order are not applicable to the
 Company.
 
 (xv) The Company has not given any guarantee for loans taken by others
 from Banks or Financial Institutions.
 
 (xvi) In our opinion, term loans were applied for the purpose for which
 the said loans were obtained.
 
 (xvii) The funds raised on short-term basis have not been used for
 long-term Investment and whereas part of long-term funds were used for
 working capital requirement of the Company.
 
 (xviii) The Company has not made, during the year, any preferential
 allotment of shares to parties and companies covered in the Register
 maintained under section 301 of the Companies Act, 1956.
 
 (xix) The Company has not issued any debentures and hence creation of
 Securities for debentures does not arise.
 
 (xx) As per the checks carried out by us, no fraud on or by the Company
 has been noticed or reported during the year under report.
 
                                           For J.B.REDDY & CO., 
 
                                           Chartered Accountants
 
                                                A.V.REDDY
 
                                                 Partner.
 
                                            Membership No. 23983
 
                                          Firm Regn. No. 003256S