National Aluminium Company Ltd

To THE MEMBERS

NATIONAL ALUMINIUM COMPANY LIMITED,

1. We have audited the attached Balance Sheet of NATIONAL ALUMINIUM COMPANY LIMITED,as at 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement of theCompany for the year ended on that date, both annexed thereto. These financial statementsare the responsibility of the Company's Management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. 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 the significant estimates made by the Management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by theCentral Government in terms of Section 227(4 A) of the Companies Act, 1956, we give in theAnnexure 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 in paragraph (3) above, wereport that:

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 it appears from our examination of those books;

c. the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account,

d. in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 211(3c) of the Companies Act, 1956,

e. In terms of Government of India, Ministry of Finance, Department of Company Affairs,Notification No.GSR 829 (E) dated 21st October, 2003, Government Companies are exempt fromthe applicability of provisions of Section 274 (1) (g) of the Companies Act, 1956,

f. In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read with significant accounting policies and notes onaccounts appearing in Schedule X and Schedule Y respectively give the information requiredby the Companies Act, 1956, in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company asat31stMarch, 2010;

ii. in the case of the Profit & Loss Account, of the profit of the Company for theyear ended on that date; and

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

(REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE)

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

(b) The Company has a programme of conducting physical verification of non-movableassets at an interval of three years, which in our opinion is reasonable having regard tothe size of the company and nature of its assets. All the movable assets, were physicallyverified during the year. As informed to us, no material discrepancies were noticed onsuch verification wherever reconciliations have been carried out and the same have beenadjusted in the books.

(c) In our opinion and according to the information and explanations, the Company hasnot disposed off substantial part of fixed assets during the year.

2. (a) In respect of its inventories as explained to us, all inventories except stocksrelating to expansion project, stocks lying with third parties and stocks in-transit, havebeen physically verified by the management at reasonable intervals during the year.

(b) In our opinion and according to the information and explanations given to us, theprocedures for physical verification of inventories followed by the management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories. The discrepancies noticed onphysical stock and book records relating to shortages have been dealt with in the books ofaccount, while excesses have been ignored except in case of finished goods.

3. According to information and explanations given to us, the Company has neithergranted nor taken any loans, secured or unsecured, to/from Companies, firms or otherparties listed in the Register maintained under section 301 of the Companies Act, 1956.Consequently, clauses (iii)(a) to (g) of paragraph 4 of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business with regard to purchases of inventory and fixed assets and the saleof goods and services. During the course of our audit, we have not observed any majorweakness in the internal control system.

5. According to information and explanations given to us, the Company has not enteredinto any contracts or arrangements which require to be recorded in register maintainedunder section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposits from the public during the year.

7. In our opinion, the Company has an adequate internal audit system commensurate withthe size and nature of its business.

8. We have broadly reviewed the books of accounts maintained by the Company, pursuantto the rules made by the Central Government for the maintenance of cost records undersection 209(1) (d) of the Companies Act., 1956 in respect of manufacturing activities andare of the opinion that prima facie, the prescribed accounts and records have been madeand maintained. We have, however, not made a detailed examination of the records with aview to determining whether they are accurate and complete.

9. According to the information and explanations given to us and on the basis of ourexamination of the books of accounts, the Company is generally regular in depositingundisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise duty, Cess,Electricity duty with the appropriate authority.

According to the information and explanations given to us, no undisputed amounts arepayable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Exciseduty, Cess and other material statutory dues in arrears as at 31^st March, 2010for a period of more than six months from the date on which they become payable.

According to the information and explanations given to us, there are disputed statutorydues which have not been deposited are given herein below:

10. The Company does not have accumulated losses at the end of the financial year . TheCompany has not incurred cash losses during the financial year covered by the audit and inthe immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to financial institutions, banks anddebenture holders.

12. Based on our examination of the records and the information and explanations givento us, the Company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

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

14. The Company is not dealing or trading in shares, securities, debentures and otherinvestments. Therefore the provisions of clause 4(xiv) of the Order are not applicable tothe Company.

15. According to the information and explanations given to us, the Company has notgiven any guarantee for loans taken by others from banks or financial institutions.

16. Based on our examination of the records and the information and explanations givento us, the Company has not raised any term loan during the year under audit.

17. According to the information and explanations and on an overall examination of theBalance Sheet of the Company, we report that no funds raised on short-term basis have beenused for long-term investment of the company.

18. According to the information and explanations given to us, the Company has not madeany preferential allotment of shares to Companies, firms or other parties covered in theregister maintained under section 301 of the Companies Act, 1956.

19. Based on our examination of the records and the information and explanations givento us, the Company has not issued debenture during the year.

20. The Company has not raised any money by way of public issue during the year.

21. To the best of our knowledge and belief and according to the information andexplanations given to us, no fraud on or by the Company has been noticed or reportedduring the course of our audit.