Mideast Integrated Steels Ltd

Mideast Integrated Steels Limited

1. We have audited the attached Balance Sheet of MIDEAST INTEGRATED STEELS LIMITED("the Company") as at 31st March 2012, the Statement of Profit and Loss and theCash Flow of the company for the year ended on that date, annexed thereto. These financialstatements are the responsibility of the Company's management. Our responsibility is ibexpress ah opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standardsgenerally accepted in India, these Standard require that we plan and perform the audit toobtain reasonable assurance about Whether the financial statements are free of materialmisstatement. An audit Includes examining", on a test basis, evidence supporting theamounts and disclosures in the financial Statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 (CARO) issued by theCentral Government of India in terms of Section 227(4A) of the Companies Act, 1956, weenclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of thesaid 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 ourknowledge and belief were necessary for the purposes of bur audit;

ii) in our opinion, proper books of account as equinity by law have been kept by theCompany so far as appears from our examination of these books;

iii) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the CashFlow 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 CashFlow Statement dealt with by this report comply with the accounting standards referred toin sub-section (3C) of section 211 of the Companies Act, 1956;

v) on the basis of written representations received from the directors and taken onrecord by the Board of Directors, we report that none of the directors is disqualified ason 31st March 2012 from being appointed as a director in terms of clause (g) of subsection(1) of section 274 of the Companies Act, 1956;

vi) in our opinion and to the best of our information and according to the explanationsgiven 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 accountingprinciples generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch 2012;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company forthe year ended on that date;

and

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

Annexure to Auditor's Report

Referred to in paragraph 3 of the Report of even date

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

b. Physical verification of fixed assets is carried out in a phased manner asdetermined by management, whereby assets held at the Company's factories have beenverified during the year. The programme of verification is reasonable considering thenature of assets and size of the Company and no material discrepancies were noticed onsuch verification.

c. No substantial part of the fixed assets of the Company has been disposed off duringthe year.

(ii) a. The inventories have been physically verified during the year by theManagement. In our opinion, the frequency of verification is reasonable.

b. The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

c. The Company is maintaining proper records of inventory and no material discrepancieswere noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured to Companies, firmsor other parties covered in the register maintained under Section 301 of the CompaniesAct, 1956. Consequently, clauses (iii) (a) to (iii)(g) of paragraph 4 of CARO are notapplicable.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control systems commensurate with the size of the Company andthe nature of its business for the purchases of inventory, fixed assets and for the saleof goods and services.

(v) a. According to the information and explanations given to us, we are of the opinionthat the particulars of contracts or arrangements referred to in section 301 of theCompanies Act, 1956 that needed to be entered have been so entered; and

b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 of the Companies Act, 1956, where each of such transaction isin excess of Rs. 5 lakhs, have been made at prices which are prima facie reasonable havingregard to prevailing market prices at the relevant time.

(vi) According to the information and explanations given to us, we are of the opinionthat the company has not accepted any deposits from the public. Therefore provisions ofclause (vi) of paragraph 4 of CARO are not applicable.

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

(viii) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Governmentunder Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that primafacie the prescribed cost records have been maintained. We have, however, not made adetailed examination of the records with a view to determining whether they are accurateor complete.

(ix) a. According to the records of the company, the Company has generally been regularin depositing with appropriate authorities undisputed statutory dues, including ProvidentFund, Investor Education and protection Fund, Employee's State Insurance, Income-tax,Sales-tax, Wealth Tax, Service tax, Customs Duty, Excise Duty, Cess and other materialstatutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts inrespect of Income-tax, Sales-tax, Wealth Tax, Service tax, Customs Duty, Excise Duty andCess were in arrears as at 31st March, 2012 for a period more than six months from thedate they became payable.

c. Details of dues of Sales tax, Excise Duty and Cess which have not been deposited onaccount of any dispute as on 31st March, 2012 on account of disputes are given below:

(x) The company does not have accumulated losses at the end of the financial year,however in immediately preceding year accumulated losses were Rs 67.95 crores. The companyhas not incurred cash losses during the financial year covered by the audit and in theimmediately preceding financial year.

(xi) As per information and explanations given to us, we are of the opinion that thecompany has not defaulted in repayment of dues to financial institutions, banks anddebenture holders.

(xii) In our opinion and according to the explanations given to us and based on theinformation available, no loans and advances have been granted by the company on the basisof security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefitfund/society. Therefore, the provisions of paragraph (xiii) of are not applicable to theCompany.

(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) are notapplicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, theCompany has not during the year given any guarantee for loan taken by others from banks orfinancial institutions. In respect of a guarantee issued by the Company in an earlier yearand remaining enforceable, the terms and conditions of the guarantee for a loan taken by aCompany from a bank, are not prima facie prejudicial to the interests of the Company.

(xvi) According to the information and explanations given to us, term loans availed bythe Company was applied for the purpose for which these loans were raised.

(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 investment.

(xviii) According to the information and explanations given to us, the Company has notmade preferential allotment of shares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956 during the year.

(xix) According to the information and explanation given to us the company had notissued debentures during the year.

(xx) The Company has not raised money by way of public issues during the year.

(xxi) To the best of our knowledge and belief and according to the information andexplanations given to us, no fraud on or by the Company was noticed or reported during theyear.