Adhunik Metaliks Ltd.

1. We have audited the attached Balance Sheet of Adhunik Metaliks Limited ('the Company') as at 30th June 2012 and also the Statement of Profit and Loss and the cash flow statement for the fifteen months period ended on that date, 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 conducted our audit in accordance with the 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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, we enclose in the Annexure 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 above, we report that :

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

ii. In our 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, the statement of profit and loss and the cash flow statement dealt with by this report are in agreement with the books of account.

iv. In our opinion, the balance sheet, the statement of profit and loss and the 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.

v. On the basis of the written representations received from the directors, as on 30th June 2012, and taken on record by the Board of Directors, we report that none of the directors 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 Company's Act, 1956.

vi. Attention is drawn to claims receivable of Rs. 2450.00 lacs accounted for by the Company towards supply of inferior quality of raw material by vendors. Pending acceptance of the above claims by the respective vendors, we are unable to opine on the quantification and recoverability of these claims and thus its consequential impact, if any, on the Company's financial statements.

vii. Except for the possible effect of the observation in para (vi) above, in our opinion and to the best of our information and according to the explanations given to us, 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 ndia;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th June 2012;

b) in the case of the Statement of profit and loss, of the loss for the period ended on that date; an

c) in the case of the Cash Flow Statement, of the cash flows for the period ended on that date.

(Referred to in our report of even date to the members of Adhunik Metaliks Limited as at and for the fifteen months period ended 30th June, 2012)

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) All fixed assets have not been physically verified by the management during the period but there is a regular programme of verification in a phased manner to cover all the items of fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) There was no substantial disposal of fixed assets during the period.

ii) a) The management has conducted physical verification of inventory at reasonable intervals during the period.

b) As the Company's inventory of raw materials and finished goods mostly includes bulk materials which require technical expertise for establishing the quantity thereof, the Company has hired independent agencies for physical verification of such stocks. Relying on the above verification by independent expert agencies and according to the information and explanations furnished to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification of inventories.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon.

b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clauses 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposit from the public within the purview of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company 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 for the steel products manufactured by the Company, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

ix) a) Undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been deposited with delays with the appropriate authorities. As explained, there is no amount due for deposit with Investor Education & Protection Fund.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues were outstanding, as on the Balance Sheet date for a period of more than six months from the date they became payable except in following cases which have since been paid:

Name of the Nature of dues Amount Period to which statute (Rs.in lacs) the amount relates

Income tax Act, 1961 Corporate dividend tax 8.52 September 2011

Maharashtra Value Value Added Tax and Central 164.60 October and November 2011 Added Tax and Central Sales Tax on sale of goods Sales Tax

c) According to the records of the Company, there are no dues outstanding of income tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute except as mentioned below :

Name of the Nature of dues Amount statute (Rs.in lacs)

Orissa Entry Tax Entry tax on machinery & 63.97 spares & Capital Goods

Central Sales Tax (Orissa) Demand against transfer of stock to 123.40 Rules 57 branches and consignment agents

Central Sales Tax Demand against discrepancies 20.05 identified during investigation

Central Sales Tax Disallowance of sale against Form-C, 839.39 Form-H and transfer of stock to branches

Orissa Value Added Tax Dispute on account of disallowance 140.16 of Input Tax credit

Orissa Sales Tax Dispute on gross turnover vis-a-vis 6.65 taxable turnover

Orissa Sales Tax Demand against discrepancies 12.06 identified during investigation

Central Excise and Dispute towards Cenvat credit on structural 2,175.97 Service Tax steel used for construction of capital goods, input, classification, excise duty on job work, transaction value for stock transfer etc.

Name of the Period to which Forum where dispute Statute the amount relates is pending

Orissa Entry Tax 2002-08 Orissa Sales Tax Tribunal / Additional Commissioner of Sales Tax. Cuttack

Central Sales Tax (Orissa) Rules 57 2003-04 Orissa Sales Tax Tribunal, Cuttack

Central Sales Tax 2003-04 Deputy Commissioner of Sales Tax, Rourkela

Central Sales Tax 2004-12 Orissa Sales Tax Tribunal, Cuttack, Deputy Commissioner of Sales Tax, Rourkela, Additional Commissioner of Sales Tax, Cuttack

Orissa Value Added Tax 2005-07 Orissa Sales Tax Tribunal & High Court, Orissa, Cuttack

Orissa Sales Tax 2003-05 Orissa Sales Tax Tribunal, Cuttack, Deputy Commissioner of Sales Tax, Rourkela

Orissa Sales Tax 2003-04 Deputy Commissioner of Sales Tax, Rourkela

Central Excise and Service Tax 2003-09 CESTAT (Kolkata), Additional Commissioner (Adjudication) Bhubaneswar, Commissioner (Appeal), Bhubaneswar

x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to banks except for a delay in repayment of dues to the banks to the extent of Rs. 33,154.65 lacs (the delay in such repayment for less than 30 days is Rs. 22,157.25 lacs and for the period between 30 to 90 days is Rs. 10,997.40 lacs in each individual case), of which Rs. 6,960.70 lacs was in arrears as on the balance sheet date. Further, as informed, there were no outstanding dues to the debenture holders and financial institutions.

xii) According to the information and explanations given to us and based on the documents and records produced before us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable.

xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

xv) According to the information and explanations given to us, the Company has pledged a part of its investments for loan taken by its wholly owned subsidiary company from bank, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these loans were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

xviii) The Company has not made any preferential allotment of shares during the period to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) The Company did not have any outstanding debentures during the period.

xx) The Company has not raised any money through a public issue during the period.

xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the period.

For S. R. Batliboi & Co.

Firm registration number: 301003E

Chartered Accountants

per R. K. Agrawal

Place Kolkata Partner

Date : 29th August, 2012 Membership No. 16667