1.  I have audited the attached Balance Sheet of UTTAM GALVA STEELS
 LIMITED as at 31st March, 2011 and the Profit and Loss Account and the
 Cash Flow Statement for the year ended on that date annexed thereto.
 These financial statements are the responsibility of the Company''s
 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 (Auditor''s 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, 2011, and taken on record by the Board of
 Directors, I report that none of the directors is disqualified as on
 31st March, 2011 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 read together with the
 significant accounting policies and notes thereon 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, 2011;
 
 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.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  In respect of its Fixed Assets :
 
 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 company''s fixed assets.
 
 2.  In respect of its inventories :
 
 a) The inventory has been physically verified during the year by the
 management. In my opinion, the frequency of verification is reasonable.
 
 b) In my opinion and according to the information and explanations
 given to me, the procedures of physical verification and 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 my examination of the records of inventory, I am of
 the opinion that the Company is maintaining proper records 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.
 
 3.  In respect of the loans, secured or unsecured, granted or taken by
 the Company to/from companies, firms or other parties covered in the
 Register maintained under Section 301 of the Companies Act, 1956:
 
 (a) The Company has given loans to a wholly owned subsidiary of the
 Company. In respect of the said loans, the maximum amount outstanding
 at any time during the year is Rs 9.43 crore and the year-end balance is
 Rs 1.94 crore.
 
 (b) In my opinion and according to the information and explanations
 given to me, the rate of interest, where applicable and other terms and
 conditions, are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The principal amounts are repayable on demand and there is no
 repayment schedule. The interest, where applicable, is payable on
 demand.
 
 (d) In respect of the said loans, the same are repayable on demand and
 therefore the question of overdue amounts does not arise. In respect of
 
 interest, where applicable, there are no overdue amounts.
 
 (e) The Company has not taken any loan during the year from companies,
 firms or other parties covered in the Register maintained under Section
 301 of the Companies Act, 1956. Consequently, the requirements of
 Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not
 applicable.
 
 4.  In my opinion and according to the information and explanations
 given to me, the Company''s internal control systems is 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.  During the course of my audit, I have not
 observed any continuing failure to correct major weakness in internal
 control system.
 
 5.  In respect of the contracts or arrangements referred to in Section
 301 of the Companies Act, 1956:
 
 a) In my opinion and according to the information and explanations
 given to me, the transactions made in pursuance of contracts or
 arrangements, that need to be entered in the Register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 b) In my opinion and according to the information and explanations
 given to me, the transactions made in pursuance of Contracts /
 arrangements entered in Register maintained under section 301 Companies
 Act, 1956 and exceeding Rs 5,00,000 in respect of each party during the
 year have been made at prices which appear reasonable having regard to
 the prevailing market price at the relevant time as per information
 available with the Company.
 
 6.  The Company has not accepted any deposits from the public to which
 the provisions of 58A, 58AA or any other relevant provision of the
 Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules,
 1975 apply. Therefore, the provisions of clause (vi) of the paragraph 4
 of the order are not applicable to the Company.
 
 7.  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.
 
 8.  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.
 
 9.  In respect of Statutory dues :
 
 a) According to the records of the Company, undisputed statutory dues
 including Provident Fund, Employees'' State Insurance, Income Tax, Sales
 Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any
 other statutory dues have been generally regularly deposited with the
 appropriate authorities. According to the information and explanations
 given to me, no undisputed amounts payable in respect of the aforesaid
 dues were outstanding as at March 31, 2011 for a period of more than
 six months from the date of becoming payable.
 
 b) The disputed statutory dues aggregating to Rs.  5.53 crore, that
 have not been deposited on account of disputed matters pending before
 appropriate authorities are referred in Annexure A.
 
 10. The Company does not have accumulated losses at the end of the
 financial year. The Company has not incurred any cash loss during the
 financial year covered by my audit and the preceding financial year.
 
 11.  Based on our audit procedures and according to the information and
 explanation given to me, the Company has not defaulted in the repayment
 of its dues to Financial Institutions, Banks and Debenture Holders.
 
 12. According to the information and explanations given to me, no loans
 and advances have been granted by the Company on the basis of security
 by way of shares, debentures and other securities.
 
 13. In my 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.
 
 14. 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.
 
 15. (a) The Company has given a corporate guarantee
 
 for loans taken by its wholly owned subsidiary Atlantis International
 Services Limited amounting to US $ 40 million to Standard Chartered
 Bank.  (b) The Company has given a corporate guarantee for loans taken
 by its step down subsidiary Ferro Zinc International FZE amounting to
 US $ 30 million to ICICI Bank.
 
 16. The Company has raised new term loans during the year. The term
 loans outstanding at the beginning of the year and those raised during
 the year have been applied for the purposes for which they were raised.
 
 17. According to the information and explanations given to me and on an
 overall examination of the Balance Sheet of the Company, we are of the
 opinion that there are no funds raised on short-term basis that have
 been used for long-term investment.
 
 18. 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 under Section 301 of
 the Companies Act, 1956.
 
 19. The Company has created securities / charges in respect of secured
 debentures issued.
 
 20. During the period covered by my audit report, the Company has not
 raised any money by public issues.
 
 21. 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 the Audit Report
 
 Sr.  Nature of     Amount        Period         Forum where dispute 
 No.  Duty           (Rs.)                       is pending
 
 1  Service Tax    1,74,118     November 06      Commissioner of
                                   to            Central Excise 
                                November 09      (Appeals)
 
 2  Service Tax   35,29,749      July 05 to      Central Excise and
                                 July 07         Service Tax Appellate
                                                 Tribunal
 
 3 Service Tax     1,61,751     April 06 to      Central Excise and
                                 October 06      Service Tax Appellate
                                                 Tribunal
 
 4 Excise Duty  2,86,57,168     December 06      Central Excise and
                                     to          Service Tax Appellate 
                                November 07      Tribunal
 
 5 Excise Duty  1,32,98,369     December 06      Central Excise and
                                     to          Service Tax Appellate
                                November 07      Tribunal
 
 6 Excise Duty    64,84,307     December 07      Central Excise and
                                     to          Service Tax Appellate 
                                    June 08      Tribunal
 
 7 Excise Duty    30,82,563     December 07      Central Excise and
                                     to 
                                    June 08      Service Tax Appellate 
                                                 Tribunal J
 
 Note :In case of rejection of an appeal at any stage, penalty may be
 leviable.
 
 
                                        For Prakkash Muni & Associates
 
                                                 Chartered Accountants
                                       Firm Registration No. : 111792W
 
 Place : Mumbai                                       Prakkash R. Muni
 Dated : 30th May, 2011.                                    Proprietor
                                                  Membership No. 30544