1.  We have audited the attached Balance Sheet of SURANA INDUSTRIES
 LIMITED, as at 31st March 2012, the Profit and Loss Account for the year
 ended on that date and the Cash Flow Statement for the year ended on
 11 date both annexed tinkered. 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 reason Cie assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence sup porting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the account principles used and significant estimates made
 by management, as well as evaluating the overall financial tenement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003
 issued by the Central Government of Indie in terms or sub-section (4A)
 of Section 227 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 to the extent applicable.
 
 4.  Further to for comments in the Annexure referred to in paragraph
 (3) above, we report that:
 
 (a) We had 0xtell the information and explanations, which the
 the best of our knowledge and belied were necessary for the purposes of
 our audit;
 
 (b) In our opinion, proper books of account as required by law have
 been kept fly the Company so for as appears from our examination of the
 books;
 
 (c) The Balance Sheet, the Profit and Loss Account and 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
 Cash Flow Statement dealt with by tennis report comply with the
 Accounting g Standards referred to in sub-section (3C) of Section 211
 of the Companies Act, 1956;
 
 (e) On the basis on written representations received from the
 directors, as on 31st March, 2012 and taken on record by the Board of
 Directors, we report that none of the directions is disqualified as on
 31st March, 2012 from booing appointed as a director in terms of clause
 (g) of7 sub-section (1) of Sedation 274 of the Companies Are 1056.
 
 (f) In our opinion, and to the best of our information and according to
 the explanations given to us, they 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, 2012;
 
 (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 the Cash Flow Statement, of the cast flews for the
 year ended on that date.
 
 M/s SURANA INDUSTRIES LIMITED
 
 [Referred to in paragraph (3) of our report of even date]
 
 The nature of the Company''s business/activities during the year is
 such that clauses (xii), (xiii) and (xiv) of paragraph 4 of the
 Companies (Auditor''s Project) Order, 2003 are not applicable to the
 Company
 
 (i) (a) The Company is maintaining proper records
 
 which is being 2pdated showing full particulars including) quantitative
 details and situation of fixed assets.
 
 (b) Fixed Assets have not been physically verified during the year by
 the Management. The management is and the process of preparing a
 programme for verification of all the fixed assets at reasonable
 intervals
 
 (c) During the Year, the company has not disposed consubstantial part of
 Plant and Machinery.
 
 (ii) (a) Accord to the information and explanations given to us, the
 company has conducted physical verification of inventories at
 reasonable intervals.  No material discrepancies have been noticed on
 such Physical verification.
 
 (b) In our opinion and according to the information anti explanations
 given to us, the procedures of ph mystical verification of inventories
 followed by the management were reasonable and adequate in relate to
 the size of the Company and the nature of7 its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained piper records of the its
 
 (iii) (a) The company has granted loans to his subsidiary''s Mts. 
 Surana Power Limited, M/s. Surana Green Power Limited, M/s. Suraoa
 Mines & Minerals Limited covered in the register maintained under
 section 301 of the Companies Act, 1956.  Tire maximum amount involved
 during the year balance of loans granted to such patties was
 
                                          (Amount in Rs) 
 
 1. Surana Power Ltd                        - 5,03,83,872
 
 2.  Surana Green Power Ltd.                - 4,58,68,937
 
 3.  Surana Mines & Minerals Ltd.           -   54,29,645
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not, prim a facie, prejudicial to the interest of the
 company.
 
 (c) The parties have repaid the principia amounts as stipulated and
 have also been retard in the payment of interest to the company.
 
 (d) There is no overdue amount in excess of Rs.  5,00,000 art in
 respect of loans granted to companies firms or other parties listed
 in the register maintained under section 301 of7 the Companies Act
 1956.
 
 (e) The company had taken loan from three companies covered in the
 register maintained under section 301 of the Companies Act, 1956. The 
 maximum amount involved during the year was Rs. 20 crores and  the
 year-end balance of loans taken from such parties was Rs. NIL.
 
 (f) in our opinion, the rate of interest and other terms and conditions
 on which loans have been taken from companies, firms or other parties
 listed in the register maintained under section 301 of the Companies
 Act, 1956 are not, prima facie, project.cia1 to the interest of the
 company.
 
 (g) The company is regular in repay the principal amounts as
 stipulated and has been regular in the payment of interest.
 
 (iv) In our opinion and according) to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventories and fixed assets and for the sale of goods
 and services and we have not observed any continuing faunae to correct
 major weaknesses in such internal contro1 system.
 
 (V) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of all contracts or
 arrangements that need to be entered into the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 (b) 6 our opinion arid 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 op
 the Companies /Act, 1956 and exceeding the value of rupees five lakhs
 in respect of any party during the year have been made at prices which
 are reasonable having regard to prevailing market prices at the
 relevant time.
 
 (vi) The Company has not accepted deposits from the Pubic.
 
 (vii) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account and records
 maintained by the Company relating to the manufacture or steel and
 electricity, 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 and are of7 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 whet ethyl are accurate or complete.
 
 (ix) (a) According to the information and explanations given to us, the
 Company is generally regular in depositing undisputed statutory dues
 including Provident Fund Investor Education and Protection Fund,
 Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise
 Duty, Cess and other material statutory dues with the appropriate
 authorities snaring the year. We are informed that the Company is not
 covered under operation of the Employees'' State Insurance Act at
 Richer location.
 
 (b) According to the information and explanations given to us, nr
 undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
 Tax, Custom Duty, Excise Duty, Cess and other material statutory
 dues, were in arrears, as at 31st March, 2012 for a period of more than
 six months from the date they became payable.
 
 (c) According to the information and explanations given to us, details
 of dues or sales tax, wealth tax, service tax, customs duty. excise
 duty and cess which have not been deposited as on 31st March, 2012 on
 account any disputer
 
                        period to
 
 Name of the Statute 
 (Nature of the         which the   Forum where matter is    Amount
 Dues)                  amount      pending
                        relates 
 
 Excise Department
 
 Compounded levy 
 demanded by the
 Dept., from Sept.97 
 to Mar ''00 under       1997                                Rs.93,88,727
                                                            (Paid
 
                                    Hon''ble High Court, 
 Rule 5 of Hot 
 Re-rolling 
 Steel Mills 
                        2000        Chennai                 Rs.33,48,742
                                                            as deposit in
 annual capacity 
 Determination                                              the year 
                                                            2004- 2005
 (amendment 
 rule 1997)
 
                        1999-      Hon''ble High Court, 
 Rebate Claim                                               Rs.28,68,511/- 
                        2000       Chennai
 
                                   Commissioner of Central  Rs.88,32,710 
                                                            (Paid
 
 Shortage of Material   2005       Excise, Commissioners 
                                   II,                      Rs.88,32,710 
                                                            in the year
                                   Chennai                  2007 - 2008)
 
                                   Commissioner of Central
 
 Supply to SEZ 
 Developers             2010       Excise, Commissioners 
                                   II,
                                                            Rs.5,03,
                                                            59,737/-
 
                                   Chennai
 
                                   Commissioner of Central
 
 Detention of 
 Material               2010       Excise, Commissioners 
                                   I,                        Rs.1,50,
                                                             00,000/-
 
                                   Chennai
 
 Reversal of Cenvat 
 Credit                 2011       CESTAT Bangalore          Rs.11,76,
                                                             32,904/-_
 
 Customs Department
 
                        2000 -     Hon''ble High Court, 
 
 Penalty levied by 
 DRI Intelligence       2003       Chennai ''                 Rs.1,00,
                                                             00,000/-
 
 Misclassification
 of material            2005-      Hon''ble Supreme Court
                        2006                                 Rs.1,38,
                                                             29,000/-
 
 Income Tax 
 Department             1995 -     Won the case before       Rs.66,50.
                                                             190 (Peid
 
 Disallowances of 
 lease rental paid to   1996 to    ITAT, pending before the
                                                             Rs.32,31,967 
                                                             during the
 
 NBFCs                  1997 -     assessing officer for     year 2006 - 
                                                             2007)
                        1998       revision order
 
 Sales Tax Department
                                  Writ is being filed 
 before
 Reversal of Input 
 VAT credit on sales    2010-11   Hon''ble Madras High        Rs. 4,03,
                                                             12,000
 made to SEZ 
 developers .                     court
 
 (x) The company does not have any accumulated losses and not incurred
 cash loss during the financial year covered by our audit and in the
 immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in copayment of dues to
 financial institutions, banks or debenture holders.
 
 (xii) In our opinion and according to information and explosions
 given to us, the terms and conditions of the guarantees given by the
 Company for loans tauten by others from banks or financial institutions.
 
 (xiii) To the best of our knowledge and operand according to the
 information and explanations given to us, in our opinion, terns loans
 availed by the Company were, prima facie, applied  the Company doing
 the year for the purposes for which the loans were obtained.
 
 (xiv) According 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.
 
 (xv) No preferential allotment of shares was made during the current
 year to the Parries / Companies covered under the register maintained
 301 the Companies act.
 
 (xvi) According to the information and explanations given to us and the
 records examined by us, the Company has not issued any Debentures
 during the year.
 
 (xvii)During the period covered by our audit report, the Company has
 not raised any money by public issue.
 
 (xviii) To the best our knowledge and belief and according to the
 information and explanations given to use no fraud on or by the Company
 was noticed or reported during the year.
 
 For R. SUBRAMANIAN & COMPANY
 
 Chartered Accountants,         for C.S.P JAIN & CO
 
                                Chartered Accountants
 
 A. S. RAMANATHAN
 
 Partner
 
 Membership No.: 11072          C.S.PRTHVRAJ JAN
 
 Firm No : 004137S              Proprietor
 
                                Membership No. 11529
 
 Place : Chennai                Firm No. 001227S
 
 Dated : 28th May, 2012