1) We have audited the Balance Sheet of M/s Stelco Strips Limited as at
 31st March, 2012 and Profit and Loss Account and also the Cash Flow
 Statement for the year ended on that date annexed thereto. These
 financial statements are the responsibility of Company''s management.
 Our responsibility is to express an opinion on these financial
 statements based on our audit.
 
 2) We have 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 a reasonable
 basis for our opinion.
 
 3) As required by the Companies (Auditors'' Report) Order, 2003 issued
 by the Department of Company Affairs Government of India in terms of
 Section 227 (4A) of the Companies Act,1956,and on the basis of that
 checks as we considered appropriate and according to information and
 explanations given to us, we annexure hereto 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 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;
 
 (b) In our opinion, proper books of accounts, as required by law, have
 been kept by the Company, so far as appears from our examinations of
 the books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 as referred to in this report are in agreement with the books of
 account produced before us;
 
 (d) In our opinion, the Balance Sheet, Profit and Loss Account & Cash
 Flow Statement of the Company dealt with by this report comply with the
 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
 and taken on record by the Board of Directors, we report that none of
 the directors is disqualified as on 31.03.2012 from being appointed as
 a director in terms of clause (g) of sub-section (1) of Section 274 of
 the Companies Act, 1956.
 
 (f) In our opinion and to the best of our information and according to
 explanations given to us ,the said accounts read together with Notes to
 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, 2012;
 
 (ii) In the case of Profit & Loss Account, of the Loss for the year
 ended on that date;
 
 (iii)In the case of Cash Flow Statement, of the Cash flows for the year
 ended on that date.
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.(a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets.
 
 (b) The Company has a phased programme of physical verification of its
 fixed assets 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 explanation
 given to us, no substantial part of fixed assets has been disposed off
 by the Company during the year, and therefore it does not effect the
 going concern assumption.
 
 2.(a) The inventories have been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventories 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 the records of inventory, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of stocks as compared to
 the book records were not material.
 
 3.  The Company has not granted or taken any loans, secured or
 unsecured to and from Companies, firms or other parties as covered in
 the register maintained under Section 301 of the Companies Act,1956.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal procedures commensurate with
 the size of the company and the nature of its business for the purchase
 of the inventory, fixed assets and for sale goods. Further on the basis
 of our examination of the books & records of the Company & according to
 information & explanations given to us, we have neither come across nor
 have been informed of any continuing failure to correct major weakness
 in the aforesaid internal control procedures.
 
 5.  We are informed that there are no transactions made in pursuance of
 contracts or arrangements entered in the register maintained under
 section 301 of the Companies Act,1956 & aggregating during the year to
 Rs. 500000/- or more in respect of any party.
 
 6.  According the records of the company & the information &
 explanations given to us, the Company has not accepted deposits within
 the meaning of the provisions of Section 58-A and 58AA of the Companies
 Act,1956 and the rules made hereunder.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  The Central Govt. has prescribed for the maintenance of cost
 records under Section 209 (1) (d) of the Companies Act, 1956 for the
 products manufactured by the company to which The Companies (Cost
 Accounting Record), Rules 2011 are applicable. The Company maintains
 the same, we have however not made a detailed examination of records
 with a view to determine whether they are accurate or complete.
 
 9.(a)According to the records of the Company and the information and
 explanations given to us, in our opinion , the Company is generally
 regular in depositing with appropriate authorities undisputed statutory
 dues including sales Tax , wealth Tax, custom Duty, excise duty , cess
 and other statutory dues applicable to it except the following payment
 of dues /demands outstanding for a period of more than 6(six) months
 from the date they became payable :
 
 Name of Statute /Authority    Nature of dues               Amount (Rs)
 
 The Employees Provident Fund  Provident Fund               13,99,133/-
 & Misc. Provisions Act ,1952  dues/contributions
 
 Employees State Insurance     Employees state               1,54,362/-
 Act,1948                      Insurance dues/contributions 
 
 Punjab Labour Welfare
 Act ,1948                     Welfare fund                     4,155/-
                               contributions
 
 (b) According to the records of the Company and the information and
 explanations given to us, the details of disputed statutory dues that
 have not been deposited on account of matters pending before the
 appellate authorities in respect of income tax ,excise tax, service tax
 are as follows:
 
 Nature of dues/name of        Disputed Amount   Forum where dispute 
 the statute                       (in Rs.)      is pending
 
 Income Tax Act ,1961             2,81,10,200/-  Income Tax 
                                                 Commissioner (Appeals)
                                                 ,Ludhiana
 
 Central Excise Act , 1944           2,65,867/-  Deputy Commissioner
                                                (Excise), Ludhiana
 
 Central Excise Act , 1944          35,75,264/-  Central Excise &
                                                 Service Tax Appellant 
                                                 Tribunal, Delhi
 
 Central Excise Act , 1944           2,03,175/-  Commissioner (Appeals)
                                                 Central Excise,
                                                 Chandigar 
 
 10.  The Company has accumulated losses as at 31st March, 2012
 amounting to Rs.4540.19 Lacs i.e., more than its net worth and has
 incurred cash losses amounting to Rs.259.72 Lacs during the financial
 year ended on that date and also incurred cash losses in the previous
 year.
 
 11.  According to the records of the Company and the information and
 explanations given by the management, the Company has defaulted in
 repayment of dues to a financial institution, banks (State Bank of
 Patiala, The Saraswat Cooperative Bank Ltd and IDBI Bank ) as at the
 Balance Sheet date.
 
 12.  According to information & 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.
 
 13.  The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 14.  According to the records & the information & explanations given to
 us, the Company is not a dealer or trader in shares, securities,
 debentures, and other investments.
 
 15.  According to the information & explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16.  According to the records of the Company & the information &
 explanations given to us, no term loans/Working Capital Term Loans were
 raised during the year.
 
 17.  According to information and explanations given to us and as per
 the books and records of the Company, as on the date of balance sheet,
 the funds raised by the Company on short term basis have not been
 applied for long term investments.
 
 18.  According to the records & the information & 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.
 
 19.  According to records of the Company & the information &
 explanations given to us, no debentures have been issued by the
 Company.
 
 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 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
 fraud on or by the company noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                               For M.P. Goyal & Co.  
 
                                             Chartered Accountants
 
 Place: Ludhiana                              (Rajnish Goyal,F.C.A)
 
 Date : 05.09.2012                                         Partner
 
                                                       (M.NO.93622)