Precision Pipes & Profiles Company Ltd

To the Members of

PRECISION PIPES & PROFILES COMPANY LTD.

1. We have audited the attached Balance Sheet of PRECISION PIPES & PROFILESCOMPANY LTD. as at 31st March 2011 and also the Profit & Loss Account andCash Flow Statement of the Company for the year ended on that date annexed thereto. Thesefinancial statements are the responsibility of the Company’s management. Ourresponsibility 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 acceptedin India. Those 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 (Auditors’ report) Order, 2003 issued by theCentral Government of India in terms of Section 227 (4A) of the Companies Act, 1956 ofIndia (the ‘Act’) and on the basis of such checks as considered appropriate andaccording to the information and explanations given to us during the course of audit, weenclosed in the Annexure hereto a statement on the matters specified in paragraphs 4 and 5of the said order to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above we reportthat:

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

b) In our opinion proper books of accounts as required by the Law have been kept by theCompany so far as it 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, these accounts have been prepared in compliance with the applicableaccounting standards referred to in sub-section (3C) of section 211 of the Companies Act,1956;

e) On the basis of written representations received from the Directors as on March 31,2011 and taken on record by the Board of Directors, we report that none of the directorsis disqualified as on March 31, 2011 from being appointed as a director in term of clause( g ) of sub-section (1) of section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to explanationsgiven to us, the said accounts together with notes thereto and Statement on SignificantAccounting Policies given in the prescribed manner the information required by theCompanies Act, 1956, and also give, a true and fair view in conformity with the accountingprinciples generally accepted in India:-

(i) In the case of Balance Sheet, of the state of affairs of the Company as on 31stMarch, 2011 ; and

(ii) In the case of Profit & Loss Account, of the Profit for the year ended on thatdate.

(iii) In the case of the Cash Flow Statement, of the cash flow for the year ended onthat date.

ANNEXURE TO THE AUDITORS’ REPORT

Referred to in paragraph (3) of our report of even date on accounts of M/s. PrecisionPipes & Profiles Company Ltd, for the year ended on 31st March 2011

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

(b) The Fixed Assets are physically verified by the management at reasonable intervalsduring the year, which in our opinion, is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies between the book recordsand the physical inventory have been noticed.

(c) In our opinion and according to the information and explanation given to us, theCompany has not disposed of a substantial part of fixed assets during the year.

(ii) (a) The inventory of finished goods, stores, spare parts and raw materials havebeen physically verified by the management at reasonable intervals and also at the end ofthe financial year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of the inventory followedby the management were found reasonable and adequate in relation to the size of theCompany and nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, thecompany is maintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to the book records were not material.

(iii) (a) The Company has not granted any loans or advances, secured or unsecured, tocompanies, firms or other parties listed in the register maintained under Section 301 ofthe Companies Act, 1956, except in the ordinary course of business.

(b) The Company has taken unsecured loans from the parties listed in the registermaintained under Section 301 of the Companies Act, 1956. The maximum amount involvedduring the year and the year – end balance of such loans aggregates to Rs.385.04 Lacsand NIL respectively.

(c) In our opinion, the terms and conditions of loan taken are not, prima facie,prejudicial to the interests of the company.

(iv) In our opinion and according to the information and explanation given to us, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business with regard to purchase of inventory, fixed assets and for the saleof goods and services. Further, on the basis of our examination of the books and recordsof the Company, and according to the information and explanations given to us, we haveneither come across nor have been informed of any instance of major weaknesses in theaforesaid internal control procedures.

(v) (a) In our opinion and according to the information and explanations given to us,the transactions that need to be entered into the Register maintained under Section 301 ofthe Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered into the register inpursuance of Section 301 of the Act, and exceeding the value of Rs. Five lakhs in respectof any party during the year have been made at prices which are reasonable having regardto the market prices prevailing at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning ofSection 58A and 58AA of the Companies Act, 1956 and rules framed there under.

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

(viii) We have reviewed the books of account maintained by the Company in respect ofproducts where, pursuant to the rules made by the Central Government of India, themaintenance of cost records has been prescribed under Section 209(1)(d) of the CompaniesAct, 1956. We are of the opinion that prima facie the prescribed accounts and records havebeen maintained and are being made up. We have not, however, made a details examination ofthe records with a view to determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and according to thebooks and records as produced and examined by us, in our opinion, the undisputed statutorydues in respect of Provident Fund, E.S.I. income tax, sales tax, wealth tax, service tax,customs duty, excise duty, cess and others as applicable have been regularly deposited bythe Company during the year with the appropriate authorities.

(b) According to the information and explanations given to us and records of thecompany examined by us there is no undisputed dues of Provident Fund, E.S.I., income tax,wealth tax, sales tax, service tax, customs duty, excise duty, cess as at 31st March 2011.

(c) According to the information and explanations given to us and record of the companyexamined by us, details of dues of income tax, sales tax, wealth tax, service tax, customduty, excise duty and cess which have not been deposited on account of any dispute aregiven below:

(x) The Company has neither accumulated losses as at 31st March 2011 nor it hasincurred any cash losses during the financial year ended on that date or in theimmediately preceding financial year.

(xi) According to the records of the company examined by us and the information andexplanation given to us, the company has not defaulted in repayment of dues to financialinstitutions, banks etc.

(xii) The Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures, and other securities.

(xiii) The provision of any special statute applicable to chit fund / nidhi / mutualbenafit fund / societies are not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us, theCompany is not a dealer or trader in securities.

(xv) In our opinion and according to the information and explanation given to us, theCompany has not given any guarantees for loans taken by others from banks or financialinstitutions.

(xvi) The Company has obtained term loans from ICICI Bank Ltd.

(xvii) On the basis of an overall examination of the balance sheet of the Company, inour opinion and according to the information and explanations given to us, there are nofunds raised on a short-term basis, which have been used for long-term investment, viceversa.

(xviii)The Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under Section 301 of the Companies Act, 1956during the year.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not received money by public issue during the year

(xxi) During the course of our examination of the books and records of the Company,carried out in accordance with the generally accepted auditing practices in India, andaccording to the information and explanations given to us, we have neither come across anyinstance of fraud on or by the Company, noticed or reported during the year, nor have webeen informed of such case by the management.