Ensa Steel Industries Ltd

To the Members of

ENSA STEEL INDUSTRIES LIMITED

1. We have audited the attached Balance Sheet of ENSA STEEL INDUSTRIES LIMITEDas at 30th June, 2012 and also the Profit & Loss Account and the Cash Flow Statementfor the year ended on that date annexed thereto. These Financial Statements are theresponsibility of the Company’s Management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally acceptedin India. These standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, issued by theCentral Government of India in terms of sub Section (4A) of section 227 of the CompaniesAct 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we statethat:

a) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our Audit;

b) In our opinion, Proper books of account, as required by law, have been kept by theCompany, so far as appears from our examination of those books;

c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statementdealt with by this report comply with the Accounting Standards referred to in Sub-Section(3C) of Section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the Directors as on 30thJune, 2012 and taken on record by the Board of Directors, we report that none of theDirectors of the Company are disqualified as on 30th June, 2012 from being appointed as aDirector in terms of Clause (g) of the sub-section (1) of section 274 of the CompaniesAct, 1956.

f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read with the other notes thereon give, the informationrequired by the Companies Act, 1956 in the manner so required and give a true and fairview 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 30thJune, 2012;

ii) In the case of the Profit & Loss Account, of the Loss of the Company for theyear ended on that date; and

iii) In the case of Cash Flow Statement, of the cash flows for the year ended on thatdate.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF ENSASTEEL INDUSTRIES LIMITED ON THE ACCOUNTS AS AT AND FOR THE PERIOD ENDED 30TH JUNE 2012.

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

(b) Fixed assets have been physically verified by the management based on a phasedprogram of verification of all the assets during the year, which in our opinion isreasonable having regard to the size of the Company and the nature of its business. Nomaterial discrepancies were noticed on such verification.

(c) As per the information and explanations given to us, during the year, the Companyhas not disposed off any substantial part of fixed assets that would affect the goingconcern.

(ii) (a) As explained to us inventories have been physically verified by the managementat reasonable intervals during the year.

(b) In our opinion and according to information and explanations given to us, theprocedure of physical verification of inventories followed by the management is reasonableand adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examinations of records of inventories, we are of the opinionthat the Company is maintaining proper records of the inventory. As explained to us, nomaterial discrepancies have been noticed on physical verification of inventories ascompared to Books records.

(iii) The Company has not granted any unsecured loan to a Company covered in theregister maintained under section 301 of the companies Act, 1956. The Company has nottaken any loans, secured or unsecured, from companies, firms or other parties covered inthe register maintained under section 301 of the Companies Act, 1956.

(iv) According to information and explanations given to us, there are adequate internalcontrol procedures commensurate with the size of the Company and nature of its businessfor the purchase of inventory and fixed assets and sales of Goods and service. We have notobserved any continuing failure to correct major weakness in internal controls.

(v) (a) According to the information and explanations given to us, we are of theopinion that the particulars of contracts or arrangements that need to be entered in tothe register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, thereare no transactions of purchase of Goods and materials and sales of Goods, material &services made in pursuance of contracts or arrangements required to be entered in theregister maintained under section 301 of the Companies Act, 1956, aggregating during theyear to Rs.500,000/- or more in respect of each party.

(vi) The Company has not accepted any deposits from the public and hence directivesissued by the Reserve Bank of India and provisions of section 58A and 58AA or any otherrelevant provisions of the companies Act, 1956 and rules framed there under are notapplicable for the year under audit.

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

(viii) We have broadly reviewed the books of accounts maintained by the Companypursuant to the rules made by the Central Government for the maintenance of cost recordsunder section 209(1)(d) of the companies Act, 1956 and are of the opinion that primafacie, the prescribed accounts and records have been made and maintained .

(ix) (a) According to the records of the Company, the Company has been regular indepositing with appropriate authorities, Undisputed statutory dues including ProvidentFund, Income tax, Sales Tax/VAT, Wealth tax, Service Tax, Custom duty, Cess and otherstatutory dues.

(b) According to the information and explanations given to us, no undisputed amountspayable in respect of such statutory dues were outstanding as at the 30th June 2012 for aperiod of more than six months from the date they became payable .

(c) According to the information and explanations given to us, there are no suchstatutory dues which have not been deposited on account of any dispute.

(x) The Company has incurred cash losses during the financial year, in the immediatelypreceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given bythe management, we are of the opinion that the Company has not defaulted in the repaymentof the dues to financial institutions or banks.

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

(xiii) In our opinion, the Company is not a chit fund, a nidhi or a mutual benefit fundsociety. Therefore, the provisions of clause 4(xiii) of the companies (Auditor’sReport) Order, 2003 are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of thecompanies (Auditor’s Report ) Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us by the management, theCompany has not given any Guarantee for loan taken by other from banks or financialinstitutions.

(xvi) According to the information and explanations given to us by the management, thecompany has not taken any term loan.

(xvii) According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that no funds raised on shortterm basis have been used for long term investments. No long term funds have been used tofinance short term assets except permanent working capital.

(xviii) According to the information and explanations given to us, during the year theCompany has not made any preferential allotment of shares to the parties or companiescovered in the register maintained under section 301 of the companies Act, 1956.

(xix) The Company has not issued any debentures and hence clause 4(XIX) of thecompanies (Auditor’s Report) Order, 2003 is not applicable to the Company.

(xx) During the year covered by our report the Company has not raised any money by wayof public issue.

(xxi) According to the information and explanations given to us no frauds on or by theCompany has been noticed or reported during the year.