Shree Metalloys Ltd

SHREE METALLOYS LIMITED

1. We have audited the attached Balance Sheet of SHREE METALLOYS LIMITED as atMarch 31, 2010, Profit and Loss Account and Cash Flow Statement for the year ended on thatdate annexed thereto. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statementsbased 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 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 the CompanyLaw Board in terms of sub section (4A) of Section 227 of the Companies Act, 1956 and interms of information and explanation given to us and also on the basis of such checks aswe considered appropriate, we enclose in the Annexure, a statement on the mattersspecified in paragraph 4 and 5 of the said order to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above, andparagraph 5 below 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 our audit;

ii) In our opinion, proper books of accounts, as required by Law, have been kept by theCompany, so far as appears from our examination of those books;

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

iv) In our opinion The Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the Accounting Standard referred to in subsection(3C) of Section 211 of the Companies Act, 1956;

v) On the basis of the written representations received by the Company from theDirectors as on 31^st March, 2010, and taken on record by the Board of Directorsof the Company, we report that none of the Directors is disqualified as on 31^stMarch, 2010 from being appointed as a director in terms of clause (g) of sub-section (1)of section 274 of the Companies Act, 1956.

vi) In our opinion, and to the best of our information and according to

the explanations given to us, the said accounts read together with the SignificantAccounting Policies and other notes thereon give the information required by the CompaniesAct,1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31^stMarch, 2010;

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

c) In case of the Cash Flow Statement, of the cash flows of the Company for the yearended on that date.

5. i) Non confirmation/non reconciliation of certain deposits as stated in Note(vii) in Schedule XVII.

ii) Valuation of investments at cost as stated in Notes (v) & (vi) in ScheduleXVII.

ANNEXURE OF THE AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date)

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

b) As explained to us, the fixed assets are being physically verified during the yearby the management in accordance with the program of verification, which in our opinion isreasonable having regard to the size of the company and the nature of its assets. Asinformed to us no material discrepancies have been noticed on such verification.

c) There was no disposal of a substantial part of fixed assets.

(ii) a) The inventory has been physically verified during the year by the management atreasonable intervals.

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 its inventories and no materialdiscrepancies were noticed on physical verification.

(iii) a) The Company has not granted loans, to companies, firms or other partiescovered in the register maintained under section 301 of the Companies Act, 1956. Thereforethe provisions of clause 4 (iii) of the Order are not applicable to the Company.

b) The Company has not taken any loans, secured or unsecured, from Companies, firms orother parties covered in the register maintained under section 301 of the Companies Act,1956. Therefore the provisions of clause 4 (iii) of the Order are not applicable to theCompany.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control procedures commensurate with the size of the companyand the nature of its business with regard to purchases of inventories and fixed assetsand with regard to the sale of goods. During the course of audit, we have not observed anymajor weaknesses in such internal controls.

(v) a) To the best of our knowledge and belief and according to the information andexplanations given to us, we are of the opinion that particulars of contracts orarrangements referred to in section 301 of the Companies Act, 1956 have been entered inthe register required to be maintained under that section; and

b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements aggregating during theyear to Rupees Five Lacs or more in respect of those parties have been made at priceswhich are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, thecompany has not accepted any deposits from the public during the year. Therefore theprovisions of sections 58A and 58AA of the Companies Act, 1956 and the Companies(Acceptance of Deposits) Rules, 1975 are not applicable.

(vii) In our opinion, and according to the information and explanations given to us,the Company has an internal audit system commensurate with the size and the nature of itsbusiness.

(viii) The Central Government has not prescribed maintenance of cost records underclause (d) of sub section (1) of Section 209 of the Companies Act, 1956 in respect ofactivities of the Company.

(ix) According to the information given to us and on the basis of examination of thebooks of accounts, the Company has been generally regular in depositing undisputedstatutory dues including Provident Fund, Investor Education and Protection Fund,Employees' State insurance Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customduty, Excise duty, Cess etc. and other material statutory dues with appropriateauthorities, as far as applicable to the Company.

According to the information given to us and on the basis of examination of the booksof accounts, no undisputed amount payable in respect of above referred tax/cess wereoutstanding, as at balance sheet date for a period of more than six months from the datethey became payable.

(x) The company does not have accumulated losses as at the Balance Sheet date and hasnot incurred cash losses during the financial year covered by our audit or in theimmediately preceding financial year.

(xi) On the basis of our examination and according to the information and explanationsgiven to us, the company does not have any loan from financial institutions or banks.

(xii) In our opinion and according to the information and explanations given to us, thecompany has not granted loans and advances on the basis of security by way of pledge ofshares, debentures or other securities.

(xiii) In our opinion and according to information and explanation given to us, thecompany is not a chit fund or nidhi or mutual benefit fund / society. Therefore, theprovisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are notapplicable to the company

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

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

(xvi) In our opinion and according to the information and explanation given to us, thecompany has not obtained any term loans.

(xvii) In our opinion and according to the information and explanation given to us andon the basis of our examination of books of accounts, we report that no fund raised onshort-term 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 period covered by ouraudit report.

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

(xx) During the year covered by our audit report the company has not raised any moneyby way of public issue.

(xxi) To the best of our knowledge and belief and accordingly to the information andexplanations given to us, no fraud on or by the company has been noticed or reportedduring the course of our audit.