1) We have audited the Balance Sheet of VIKASH METAL & POWER LIMITED as
 on 30th June, 201 2 and also the Profit & Loss Account and the Cash
 Flow Statement for the period from 01.04.2011 to 30.06.2012, annexed
 thereto. 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 have conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan
 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 but restricted to the following:-
 
 Since in the referred period, a major incident took place at the work
 site of the company. A robbery took place at the works site and major
 parts of plants has been reported lost and looted thus putting the
 question on the going concern concept of the company and moreover the
 company operation was suspended from October, 2011.
 
 The management of the company has explained to us that in the said
 robbery, many important papers were found missing and the company is
 trying to recreate all the missing papers.
 
 Further, the management has explained that during the said period the
 company has loss to tune of Rs.16,064.84 Lacs which has eroded the
 company capital and the net worth becomes negative and still the
 liabilities on the company are huge. The company is indebted to
 bankers; statutory liabilities are also here and not being paid up from
 more than six months and outstanding liabilities to many trade payables
 which is again a point of concern.
 
 3) As required by the Companies (Auditor''s Report) Order, 2003 (as
 amended) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 and on the
 basis of such checks as we considered appropriate, and according to the
 information and explanations given to us, we enclose in the Annexure a
 statement on the matters specified in paragraph 4and 5 of the said
 Order to the extent applicable to the Company.
 
 4) Further to our comments in the Annexure referred to in paragraph 3
 above, we report that:
 
 a) The management could not provide us all the information and
 documents due to papers destroyed in robbery as explained by the
 management.
 
 b) Limitation of Scope, In our opinion, proper books of account, are
 maintained as required by law, and kept by the Company so far as
 appears from our examination of those books kept at the company''s
 office, but we are unable to form any opinion on factory accounts as we
 were not in a position to examine the books kept at factory due to its
 destruction during robbery.
 
 c) The management has not ascertained the impairment loss, if any,
 required to be provided for in accordance with the requirement of
 mandatory Accounting standard-28 Impairment of Assets issued by The
 Institute of Chartered Accountants of India. In view of it involving
 judgment of the management, we are unable, to quantify the same;
 
 d) As explained by the management, no actuary valuation for gratuity
 has been made by the actuarial as no employees was there as on 30th
 June, 2012.
 
 e) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of accounts
 maintained.
 
 f) In our opinion, the Balance Sheet, Profit & Loss Account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies'' Act, 1956;
 
 g) On the basis of the written representations received from the
 directors and taken on record by the Board of Directors, none of the
 directors of the Company is disqualified as on 30th June, 2012 from
 being appointed as a director in terms of clause (g) of sub-section (1)
 of Section 274 of the Companies Act, 1956;
 
 h) In our opinion and to the best of our information and according to
 the explanation given to us, the said statement of accounts, read with
 the Accounting Policies & 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 principle generally
 accepted in India:
 
 1) in the case of the Balance Sheet, of the state of affairs as on 30th
 June, 2012,
 
 2) in the case of the Profit and Loss Account, of the Company for the
 period from 01.04.2011 to 30.06.2012, and
 
 3) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the period from 01.04.2011 to 30.06.2012.
 
 Annexure to the Auditors'' Report
 
 (Referred to in Paragraph 3 of our Report of even date to the members
 of Vikash Metal & Power Limited on the financial statements for the
 period ended 30th June, 2012).
 
 i.  (a) As explained by management, the Company use to maintained
 proper records to show full particulars, including quantitative details
 and situation of its fixed assets. However, this register has been
 maintained at factory which is missing after robbery and could not
 present to us for verification.
 
 (b) We are informed that fixed assets of significant value have been
 physically verified by the management at reasonable intervals, in a
 phased programme and no material discrepancies have been noticed in
 respect of the assets verified.
 
 (c) As explained by management, substantial part of the fixed assets
 has been lost during the period covered under audit due to robbery
 occurred on 12th April, 2012 amounting to Rs. 6,401.23 Lacs which has
 adversely affects the continuity of going concern assumption.
 
 ii.  (a) As explained to us, inventories have been physically verified
 by the management during the given audit period at reasonable
 intervals.
 
 (b) In our opinion, 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) There is loss of inventories due to robbery occurred on 12th April,
 2012 amounting to Rs. 2,628.05 Lacs, further as on balance sheet date
 inventories figure stood Nil.
 
 iii. (a) According to the information and explanation given to us, the
 company has not granted any loans, secured or unsecured, to companies,
 firms and other parties cover in the register maintained under Section
 301 of the Companies Act, 1956.Accordingly, paragraph 4(iii)(b),(c) and
 (d) of the order are not applicable.
 
 (e) The Company has taken interest free unsecured loans from three
 parties covered in the register maintained under Section 301 of the
 Companies Act, 1956. The maximum amount involved during the period and
 the year-end balance of such loans are Rs. 30,464.96 Lacs (previous
 year Rs. 25,239.31) and Rs. 29,590.56 Lacs (previous year Rs.
 16,965.62) respectively.
 
 (f) The terms and conditions of loans taken as aforesaid are prima
 facie not prejudicial to the interest of the Company.
 
 (g) In respect of aforesaid loans taken by the Company, there are no
 stipulations as to repayment thereof.
 
 iv.  In our opinion and according to the information and explanations
 given to us, there were adequate internal control procedures
 commensurate with the size of the Company and nature of its business,
 for the purchase of inventories and fixed assets and for the sale of
 the goods.  Since the operation was suspended from October, 2011
 onwards, company has not given much attention towards internal control.
 
 v.  (a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of the 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 our opinion, the transactions made in pursuance of such
 contracts or arrangements and exceeding the value of five lakh rupees
 in respect of any party during the period have been made at prices
 which are reasonable having regard to prevailing market prices at the
 relevant time.
 
 vi.  According to the information and explanation given to us, the
 Company has not accepted any deposit during the period from the public
 within the meaning of the provisions of the Sections 58A and 58AA of
 the Companies Act, 1956 and the rules framed there under.
 
 vii. During the period of our audit, the Company has no internal audit
 system commensurate with the size and nature of its business.
 
 viii.  We could not review the books of account and records maintained
 by the Company pursuant to the Order made by the Central Government for
 maintenance of cost records under Section 209(1) (d) of Companies Act,
 1956 as due to destruction of records as explained to us by the
 management.
 
 ix.  (a) According to the books and records examined by us, the Company
 could not pay undisputed statutory dues Service Tax, Custom Duty, Sales
 Tax, Provident Fund, Professional Tax, Excise Duty and Cess.
 
 (b) According to the information and explanation given to us there are
 undisputed outstanding statutory dues as at 30th June, 2012 for a
 period of more than six months from the date they became payable are
 as: VAT - Rs. 2,73,28,607, Excise Duty- Rs. 7,31,34,041, Income Tax-
 Rs. 3,42,65,477, Professional Tax - Rs.  3.430, Tax Deducted at source
 - Rs 8,14,821 and Provident Fund- Rs 4,37,816.
 
 (c) According to the records of the company and the information and
 explanations given to us and upon our enquiries in this regard, details
 of statutory dues which have not been deposited on account of any
 dispute are stated in Notes 27 to the accounts.
 
 x.  The Company has accumulated losses of Rs. 7,888.92 Lacs at the end
 of the audit period ended after adjusting with all the free reserves
 which the company has at the start of the financial year. It incurred
 cash losses of Rs.10,499.98 Lacs in the financial year under report as
 the company is more than 5 years old company and more than 50% of the
 capital is eroded. The company falls under the sick unit category and
 subsequent reporting from now onwards has to be made by the company.
 
 xi.  Based on our audit procedures and as per the information and
 explanations given to us, the Company has failed to repay of its loans
 and interest thereon to the banks and to the financial institutions
 from October, 2011. The term loan installments and interest due as on
 30th June, 2012 for Rs. 2068 Lacs (previous year Rs. 1087.30 Lacs) has
 not been paid.
 
 xii. As explained to us, the Company has not granted any loans and
 advances on the basis of security by way of pledge of shares,
 debentures or other securities.
 
 xiii.  Clause (xiii) of the Order is not applicable, as the Company is
 not a Chit Fund company or Nidhi/Mutual benefit Fund / Society.
 
 xiv. The Company has maintained proper records of the transactions in
 respect of investment made during the audit period and timely entries
 have been made therein.  All investments are held by the Company in its
 own name.
 
 xv.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 xvi. The Company has not raised any new term loan during the period.
 There was term loans outstanding at the beginning of the year were
 applied for the purpose for which they were taken.
 
 xvii.  In our opinion and according to the information and explanations
 given to us, the funds raised on short-term basis have not been used
 for long-term investment.
 
 xviii.  The Company has not made fresh allotment of shares during the
 period to parties and Companies covered in the Register maintained
 under Section 301 of the Companies Act, 1956.
 
 xix. No debentures have been issued by the Company and hence the
 question of creating security or charge in respect thereof does not
 arise.
 
 xx.  The Company has raised money by way of issue of GDR amounting to
 Rs. 3,607.20 Lacs during the audit period but the same has not been
 utilized and kept in the EURAM Bank overseas as the purpose for which
 it was raised has not been taken up yet by the company.
 
 xxi. According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 period.
 
                                          FOR RAKESH SINGH & CO.
 
                                          Chartered Accountants 
 
                                 (Firm Registration No. 326072E)
 
                                               CA. Rakesh Singh
 
 Place: Kolkata                                         Partner
 
 Date: 27.11.2012                                    MRN 067493