Visa Steel Ltd

to the Members of

VISA Steel Limited

1. We have audited the attached Balance Sheet of VISA Steel Limited (the"Company") as at 31st March 2011, and the related Profit and Loss Account andCash Flow Statement for the year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are the responsibility of theCompany’s Management. Our responsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with the 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 (Auditor’s Report) Order, 2003, as amended by theCompanies (Auditor’s Report) (Amendment) Order, 2004 (together the"Order"), issued by the Central Government of India in terms of sub-section (4A)of Section 227 of ‘The Companies Act, 1956 of India (the ‘Act’) and on thebasis of such checks of the books and records of the Company as we considered appropriateand according to the information and explanations given to us, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.

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

As indicated in Note-7 in Schedule 16, approval of the Shareholders is awaited formanagerial remuneration paid to the Chairman amounting to Rs.11.29 millions.

5. Subject to our remarks in paragraph 4 above and further to our comments in theAnnexure referred to in paragraph 3 above, we report 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 appears from our examination of those books;

(c) The Balance Sheet, Profit and 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 and 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 Act;

(e) On the basis of written representations received from the directors, as on 31stMarch 2011 and taken on record by the Board of Directors, none of the directors isdisqualified as on 31st March 2011 from being appointed as a director in terms of clause(g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto give, in the prescribed manner, the information required by the Act, and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:

(i) in the case of the Balance Sheet, of the state of affairs of the company as at 31stMarch 2011;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended onthat date; and

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

[Referred to in paragraph 3 of the Auditors’ Report of even date to the members ofVISA Steel Limited on the financial statements for the year ended 31 March 2011]

1. (a) The Company is maintaining proper records showing full particulars, includingquantitative details and situation, of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which, in ouropinion, is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme, a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies between the bookrecords and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verifiedby the Management during the year. In respect of inventory lying with third parties, thesehave substantially been confirmed by them. In our opinion, the frequency of verificationis reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe Management are reasonable and adequate in relation to the size of the Company and thenature 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 book records were not material.

3 (a) The Company has granted unsecured loans, to one company covered in the registermaintained under Section 301 of the Act. The maximum amount involved during the year andthe year-end balance of such loans aggregates to Rs.2.5 Millions.

(b) In our opinion, the rate of interest and other terms and conditions of such loansare not prima facie prejudicial to the interest of the Company. (d) In respect of theaforesaid loans, the parties are repaying the principal amounts as stipulated and are alsoregular in payment of interest, where applicable.

(d) In respect of the aforesaid loans, there is no overdue amount more than Rupees OneLakh.

(e) 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 Act.

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 for the purchase of inventory, fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records ofthe Company, and according to the information and explanations given to us, we haveneither come across nor have been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us,the particulars of contracts or arrangements referred to in Section 301 of the Act havebeen entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements and exceeding the valueof Rupees Five Lakhs in respect of any party during the year have been made at priceswhich are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the rules framed there under.

7. In our opinion, the Company has an internal audit system commensurate with its sizeand nature of its business.

8. We have broadly reviewed the books of account maintained by the Company in respectof products where, pursuant to the Rules made by the Central Government of India, themaintenance of cost records has been prescribed under clause (d) of sub-section (1) ofSection 209 of the Act, and are of the opinion that prima facie, the prescribed accountsand records have been made and maintained. We have not, however, made a detailedexamination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of theCompany examined by us, in our opinion, the Company is generally regular in depositing theundisputed statutory dues including provident fund, investor education and protectionfund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax,customs duty, excise duty, cess and other material statutory dues as applicable with theappropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us, the particulars of dues of income-tax, sales-tax and entry-tax asat 31st March 2011 which have not been deposited on account of a dispute, are as follows:

10. The Company has no accumulated losses as at 31st March 2011 and it has not incurredany cash losses in the financial year ended on that date or in the immediately precedingfinancial year.

11. 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 anyfinancial institution or bank or debenture holders as at the balance sheet date.

12. The Company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund / nidhi / mutualbenefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities,debentures and other investments.

15. In our opinion and according to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the year.

16. In our opinion, and according to the information and explanations given to us, onan overall basis, the term loans have been applied for the purposes for which they wereobtained.

17. 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, fundsaggregating Rs.1813.78 Million raised on a short term basis have been used for the purposeof long-term investment in Fixed Assets.

18. The Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debenture during the period and accordingly thequestion of creation of security or charge does not arise.

20. The Company has not raised any money by public issues during the year.

21. 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.