We have audited the attached Balance Sheet of Steel Tubes of India
 Limited as at 31 st March 2009 and also the Profit and Loss Account and
 the Cash Flow Statement of the Company 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.
 
 We report that:
 
 1.  As required by the Companies (Auditors Report) Order, 2003 as
 amended by Companies (Auditors Report) (Amendment) Order 2004
 (together the Order) issued by the Central Government in terms of
 Section 227(4A) of the Companies Act, 1956 (the Act), and on the
 basis of such checks as were considered appropriate and according to
 the information and explanations given to us we enclose in the annexure
 hereto a Statement on the matters specified in paragraphs 4 and 5 of
 the said Order.
 
 2.  Attention is drawn to the following:
 
 Note No. 3 regarding declaration of Company as sick under section
 3(l)(o) of SICA and preparation of financial statements on going
 concern basis and
 
 regarding disposal of manufacturing assets by SASF in the financial
 year 2006-2007, however the accounts are continued to be prepared on
 going concern basis
 
 3 Further to our comments in the Annexure referred to in paragraph 1
 above, we report that:
 
 i) 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;
 
 ii) 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 purposes of our audit
 have been received from the offices not visited by us;
 
 iii)The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 iv) The Company has defaulted in repayment of fixed deposits for more
 than three years. Written representation has been received from
 directors of the Company regarding disqualification under clause (g) of
 sub section (I) of section 2 74 of the Companies Act, 1956 as on 31st
 March, 2009.
 
 v) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 Accounting Policies and Notes thereon in Schedule 18 and subject to,
 (a) Note No. 4 regarding non implication of financial liability in
 various courts pending against the company (bj Note No. 5 regarding non
 provision of interest amounting to Rs. 315.79 lacs on unsecured loans
 resulting into understatement of loss and corresponding liability to
 the tune ofRs. 315.79 lacs, (c) Note No. 6 regarding non adherence
 ofrepayment schedule with few parties, liability, if any,
 unascertained. (d)NoteNo.  7 regarding default in repayment of public
 deposits (e) Note no. 9 regarding non remittance of balance due for
 transfer to Investor Education and Protection Fund (f) Note No 10
 regarding balances of Loans & Advances, Sundry Creditors, Deposits and
 Other Loans being subject to reconciliation and confirmation, (g) Note
 No. 11 (a) regarding non provision of interest arid penalty, if any on
 delay of payment of statutory due, amount not ascertainable, (h) Note
 No. 11(b) regarding deferred sales tax due for repayment (i) Note No.
 12 regarding non provision for diminution in value of investments in
 Global Stone India Ltd in spite of erosion of entire net worth, and (j)
 Note No. 16 regarding non provision in respect of impairment of Solar
 Power Plant in accordance with AS -28, give the information required by
 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.
 
 a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 st March, 2009; and
 
 b) In the case of the Profit and Loss Account, of the loss for the year
 ended on that date.
 
 c) In the case of cash flows statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (Referred to in paragraph 1 of our report of even date to the members
 of Steel Tubes of India Limited for the year ended 31st March, 2009)
 
 1.  a) The Company is maintaining proper records showing fall
 particulars including quantitative details and situation of fixed
 assets, except in respect of certain assets.
 
 b) The fixed assets have been physically verified by the management
 according to a phased programme designed to cover all the items over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets.  The
 Solar Power Plant of the company continues to remain installed at the
 erstwhile factory premises of the company and accordingly its physical
 existence becomes doubtful. (Refer Note 16 of Schedule 18)
 
 c) During the year, the company has not disposed of substantial part of
 fixed assets affecting its going concern basis.
 
 2.  During the year company has not carried out any production
 activities and there has been no inventory and accordingly, paragraph
 (ii) (a), (b) & (c) of the order are not applicable
 
 3.  a) 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.  
 
 b) The Company has not taken any loans, secured or unsecured, from
 Companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956.  Accordingly, paragraph
 (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of the Order are
 not applicable.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory and fixed assets and for processing Activities.
 Further, on the basis 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 nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 5 a) Based on the audit procedures applied by us and according to the
 information and explanations provided by the management, we are of the
 opinion that the particulars of contracts or arrangements referred to
 in section 301 of the Act have been entered in the register required to
 be maintained under that section.  
 
 b) In our opinion and according to the information and explanations
 given to us, there are no transactions made in pursuance of such
 contracts or arrangements entered in the register maintained under
 Section301 of the Companies Act, 1956.
 
 6.  During the year the Company has not accepted any deposits from the
 Public within the meaning of section 58 A, 58 AA or any other relevant
 provisions of the Act and the rules framed thereunder. However, in
 respect of deposits accepted during earlier years, the Company has not
 maintained the liquid assets as prescribed by rule 3A(1) and further
 penal interest on overdue period in case of public deposit amounting to
 Rs. 155.66 lacs matured, but remaining unpaid has also not been
 provided /paid as prescribed by rule SA of the Companies (Acceptance of
 deposits) Rules, 1975. (Refer Note No. 7 of Schedule 18) According to
 information and explanations given to us no orders under the aforesaid
 section have been passed by Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any Court or any other Tribunal.
 
 7.  During the current year no activities have been carried on by the
 company and therefore the internal audit was also not carried on.
 
 8.  As per the information and explanations given to us the maintenance
 of cost records has been prescribed by the Central Government under
 section 209(l)(d) of the Companies Act, 1956. The application to exempt
 the Company from the requirement of maintaining cost records and cost
 audit for the financial year 2002-03 and 2003-04, since the Company has
 changed its activities from manufacturing to processing on behalf of
 other party, has been rejected by the Department of Company Affairs on
 the ground that the party for which the goods are processed has not
 been ordered for audit of cost records.  However, no such application
 has been filed by the Company for the financial year 2004-05, 2005-06,
 2006-07,2007-08 and 2008-09 The Company is stated to be in the process
 of submitting representation before the Department of Company affairs.
 
 9.  a) According to the records of the Company examined by us, in our
 opinion, the Company is not regular in depositing the 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 as applicable with the appropriate authorities
 in India. The amount of statutory dues outstanding and payable for a
 period exceeding six months as on the last day of financial year
 concerned are mentioned in Note No. 11 of Schedule 18.  
 
 b) According to the records of the Company, the dues of Income tax
 /sales tax/ wealth tax/service tax/custom duty/excise duty/cess, which
 have not been deposited on account of disputes and the forum where the
 dispute is pending are as given below:
 
 
 Name of the 
 Statute              Nature of the    Amount       Forum where
                                                     dispute
                      Dues            (Rs.in lacs)  ispending
  
 Central Excise 
 Act, 1994            Excise duty       60.00       DGFT, New Delhi
 
 Central Excise 
 Act, 1944            Excise duty       31.63       Central Excise &
                                                    Service
 
                                                    Tax Appellate 
                                                    Tribunal 
 
 Central Excise 
 Act, 1944            Excise Duty       1.14        Commissioner Central
 
                                                    Excise (Appeals) 
 
 Entrytax Act, 1976   Entry Tax        89.64        Board of Revenue,
                                                    M.P.
 
 M.P. Commercial 
 Tax Act, 1994        Sales Tax       110.06        M.P. High Court /
                                                    Supreme Court.  
 
 CFS Cases            Sales Tax       555.16        M.P.Fjigh Court / 
                                                    Supreme Court.
 
 
 
 
 10.  In our opinion, the accumulated losses of the Company are more
 than fifty percent of its net worth. The Company has incurred cash
 losses during the financial year covered by our audit and in the
 immediately preceding financial year.
 
 11.  Based on our audit procedures and on the information &
 explanations given by the Management, we are of the opinion that the
 default in repayment of principal dues to financial institution/Banks
 by the Company has been cleared in view of repayment/settlement of
 loans through disposal of fixed assets.
 
 12.  Based on our examination of the records and the information and
 explanations given to us, the Company has not granted any loans and/or
 advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund
 nidhi/mutual benefit fund/societies are not applicable to Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  According to the information and explanations given to us, the
 Company has not given guarantee for loans taken by others from banks
 and financial institutions.
 
 16.  The Company has not obtained any term loans during the current
 year.
 
 17.  According to the information and explanations given to us and on
 an , 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 by the Company.
 
 18.  The Company has not made any preferential allotment of shares to
 parties and Companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19.  No Debentures have been issued by the Company during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  During the course of our examination of the books and records of
 the Company, carried out in accordance with generally accepted auditing
 practices in India, we have neither come across any instance of fraud
 on or by the Company, noticed or reported during the year, nor have we
 been informed of such cases by the management.
 
 
                                             For Rastogi Narain & Co.
 
                                               Chartered Accountants
 
                                                     (SANJAY RASTOGI)
 
 Place : New Delhi                                           Partner
 
 Date  : 2nd September, 2009                             M. No.86962