Uttam Galva Steel

1.  I have audited the attached Balance Sheet of UTTAM GALVA STEELS
 LIMITED as at 31st March, 2009 and the Profit and Loss Account for the
 year ended on that date annexed thereto. These financial statements are
 the responsibility of the Companys Management. My responsibility is to
 express an opinion on these financial statements based on my audit.
 
 2.  I have conducted my audit in accordance with auditing standards
 generally accepted in India. Those Standards require that I 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. I believe that my audit provides a reasonable
 basis for my opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (the
 Order) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, I enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  On the basis of written representations received from the
 Directors, as on 31st March, 2009, and taken on record by the Board of
 Directors, I report that none of the Directors is disqualified as on
 31st March, 2009 from being appointed as a Director in terms of clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
 
 5.  Further to my comments in the Annexure referred to in paragraph 3 &
 4 above, I report that:
 
 (i) I have obtained all the information and explanations, which to the
 best of my knowledge and belief were necessary for the purposes of my
 audit;
 
 (ii) In my 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;
 
 (iii) The Balance Sheet and the Profit and Loss Account and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) In my opinion, the Balance Sheet and the Profit and Loss Account
 and cash flow statement dealt with by this report comply with the
 applicable accounting standards referred to in sub-section (3C) of
 Section 211 of the Companies Act, 1956;
 
 (v) In my opinion and to the best of my information and according to
 the explanations given to me, the 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:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 (b) In the case of the Profit and Loss Account, of the profit for the
 year ended on that date.
 
 (c) In the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 This audit report takes into consideration approval received from
 respective high courts during August 2009, giving approval to merger
 (Scheme of Arrangement) of transfer of Power Division of Shree Uttam
 Steel and Power Limited (SUSPL) with Uttam Galva Steels Limited (UGSL).
 Hence, this audit report supercedes our earlier audit report dated 9th
 May, 2009.
 
 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of 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; site wise/plant wise. With consideration to significant
 additions from time to time such records are being updated
 periodically.
 
 (b) According to the information and explanations given to me, the
 Company is formulating/ upgrading a programme of verification by which
 all the assets of the Company shall be verified in a phased manner,
 which in my opinion, is reasonable having regard to the size of the
 Company and nature of its assets. According to the information and
 explanation given to me no material discrepancies were noticed on such
 verification. The Company is yet to formulate a verification programme
 on assets such as furniture, computers, etc.
 
 (c) During the year the Company has not disposed of any part of the
 plant and machinery, disposal of fixed assets does not constitute a
 substantial part of the Companys fixed assets.
 
 (ii) The inventory has been physically verified during the year by the
 management. In my opinion, the frequency of verification is reasonable.
 
 (iii) The procedures of physical verification and inventories followed
 by management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (iv) On the basis of my examination of the records of inventory, I am
 of the opinion that the Company is maintaining proper record of
 inventory. The discrepancies noticed on verification between physical
 stocks and book records were not material and the difference found
 between physical and book records are adjusted appropriately.
 
 (v) (a) In my opinion and according to the information and explanations
 given to me, the Company has not granted any inter-corporate deposits
 to companies covered in the register maintained under Section 301 of
 the Companies Act,1956.  b) In my opinion and according to the
 information and explanations given to me, the Company has not taken
 loans from any parties covered in the Register under Section 301 of the
 Companies Act, 1956.
 
 (vi) In my opinion and according to the information and explanations
 given to me, the internal control procedures commensurate with the size
 of the Company and the nature of its business with regard to purchases
 of inventories and fixed assets and with regard to the sale of goods
 and services are adequate
 
 (vii) To the best of my knowledge and belief and according to the
 information and explanations given to me, I am of the opinion that the
 contract, or arrangements, referred to in Section 301 of the Companies
 Act, 1956 are entered in the register required to be maintained under
 that section.
 
 (viii) In my opinion the rate of interest and other terms and
 conditions on which loans have been taken from the Companies, firms or
 other parties listed in the Register maintained under 301 are not prima
 facie prejudicial to the interest of the Company.
 
 (ix) The Company is regular in repaying the principal amount as
 stipulated and has been regular in the payment of interest.
 
 (x) There is no overdue amount of loans taken from or granted to
 companies, firms or other parties listed in the registers maintained
 under Section 301 of the Companies Act, 1956.
 
 (xi) In my opinion and according to the information and explanation
 given to me, the transactions made in pursuance of contracts or
 arrangements entered in the registers maintained under Section 301 and
 exceeding the value of five lakh rupees 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 prices.
 
 (xii) In my opinion and according to the information and explanations
 given to me, the Company has not accepted deposits from the public
 during the year covered by my audit report.
 
 (xiii) In my opinion and according to information and explanation given
 to me, the Company has an internal audit system commensurate with the
 size and nature of its business.
 
 (xiv) To the best of my knowledge and according to the information and
 explanations given to me, the Central Government has not prescribed the
 maintenance of cost records under Section 209 (1) (d) of the Companies
 Act, 1956, for any of the products of the Company.
 
 (xv) (a) According to the information and explanations provided to me,
 the Company is generally regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 employees state insurance fund, income tax, sales tax, custom duty,
 excise duty, and other material statutory dues, applicable to it.  (b)
 According to the information and explanation given to me, the details
 of disputed sales tax, wealth tax, service tax, custom duty, excise
 duty, cess which have not been deposited as at March 31, 2009 on
 account of any dispute are referred to in Annexure A.
 
 (c) According to the information and explanation given to me, no
 undisputed amount payable in respect of income tax, customs duty,
 excise duty and cess were in arrears, as at 31st March, 2009 for a
 period of more than six months from the date they became payable.
 
 (d) According to the information and explanation given to me, there
 were no statutory dues which were deposited on account of disputes.
 
 (xvi) The Company has not incurred any cash losses during the financial
 year covered by my audit and the preceding financial year.
 
 (xvii) In our opinion and according to the information and explanation
 given to me, the Company has not defaulted in the repayment of its dues
 to a bank.
 
 (xviii) According to the information and explanations given to me, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.  Accordingly,
 the provisions of clause 4(xii) of the order are not applicable to the
 Company.
 
 (xix) In our opinion and according to the information and explanations
 given to me, the Company is not a chit fund or a nidhi/mutual benefit
 fund/society.  Accordingly, the provisions of clause 4(xiii) of the
 Order are not applicable to the Company.
 
 (xx) According to the information and explanations given to me, the
 Company is not dealing in shares, securities, debentures and other
 investments.  Accordingly, the provisions of clause 4(xiv) of the Order
 are not applicable to the Company.
 
 (xxi) The Company has given corporate guarantee to commissioner of
 customs for making an export obligation by its associate Company Uttam
 Galva Metalics Ltd. to the tune of 70 crore.
 
 (xxii) According to the information and explanations given to me, the
 term loans have been applied for the purposes for which they have been
 raised.
 
 (xxiii) Based on my examination of the Balance Sheet of the Company as
 at 31st March, 2009, I find that the Company as on that date had long
 term sources of funds amounting to Rs. 2,499.12 crores. The long term
 application of fund was Rs. 2,688.12 crores.  During the accounting
 period covered by my report the Company has generated Rs. 483.09 crores
 and applied Rs. 691.37 crores towards long term applications, hence
 short term funds to the tune of Rs. 208.28 Crores were utilized for
 long term applications.
 
 (xxiv) According to the information and explanations given to me, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the register maintained u/s 301 of the
 Companies Act, 1956.
 
 (xxv) According to the information and explanations given to me, the
 Company has not issued any secured debentures during the period covered
 by our report. Accordingly, the provisions of clause 4(xix) of the
 Order are not applicable to the Company.
 
 (xxvi) During the period covered by my audit report, the Company has
 not raised any money by public issues.
 
 (xxvii) To the best of my knowledge and belief and according to the
 information and explanations given to me, no material fraud on or by
 the Company has been noticed or reported during the year.
 
 
 Annexure A of Audit Report
 
 Sr.     Nature of          Amount     Period      Forum where dispute
 No.     Duty                (Rs.)                     is pending
 
 1.      Excise Duty      5,52,473    2003-04      High Court
 2.      Service Tax     95,67,013    2004-05      Central Excise and
                                                   Service Tax Appellate
                                                   Tribunal
 3.      Excise Duty     40,00,000    2005-06      Asst. Commissioner of
                                                   Central Excise
 4.      Excise Duty     22,07,417    2005-06      Commissioner-Appeals
 5.      Excise &        10,05,475    2005-06      Central Excise and
         Service Tax                               Service Tax Appellate
                                                   Tribunal
 6.      Excise Duty     17,51,750    2005-06      Revision Application
                                                   Unit
 7.      Service Tax     28,90,855    2005-06      Central Excise and
                                                   Service Tax Appellate
                                                   Tribunal
 
 
                                        For Prakkash Muni & Associates
                                                 Chartered Accountants
 
 Place : Mumbai                                       Prakkash R. Muni
 Dated : 27th August, 2009                                  Proprietor
                                                  Membership No. 30544