AML Steel Ltd Auditor Reports

TO THE MEMBERS OF

AML STEEL LIMITED

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of AML Steel Limited("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

The Companys Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Companys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2003("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge 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 the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

(e) On the basis of the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

For K P Jain & Co.,

Chartered Accountants

Sd/-

CA.Kishore Kumar P Jain

Sole Proprietor Membership No.027236

FRN: 001233S

Place: Chennai Date: May 30, 2014

ANNEXURE TO THE AUDITORS REPORT

[Referred to in paragraph (1) of our report of event date]

In the terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

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

(b) The Company has phased program of physical verification of its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Management has physically verified certain fixed assets during the year. Discrepancies noticed on such verification as compared to book records, which were not material have been properly adjusted in the books of account.

(c) During the period, the Company has not disposed off any major part of the plant or machinery affecting the going concern status of the Company.

2. (a) The inventory except material lying with third parties and in transit has been physically verified by the management during the year and we have relied on their certificate.

(b) The procedure for the physical verification of inventory followed by the management is in our opinion, reasonable and adequate in relation to the size of the company and nature of its business.

(c) In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the books of account.

3. (a) The Company has taken loans from companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(b) According to the information and explanation given to us, Interest free loans have been taken from companies/firms or other parties listed in the Register maintained under section 301 of the Companies Act 1956. The year ended balance of loan taken from such parties was 68.22 Crores

(c) In our opinion and according to explanation and information given to us the Company from whom the interest free loan is taken is repayable on demand. The Question of overdue doesnt arise.

(d) The company has granted loans secured or unsecured to companies, firms or other parties covered under section 301 of the Companies Act 1956, to the extent of 11.18 crs to subsidiary companies.

4. In our opinion and according to the information and explanations given to us, during the course of audit there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across nor have informed of any instance of major weakness in the aforesaid internal control procedures.

5. In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

a) The particulars of contracts or arrangements referred to section 301 that needed to be entered in the register required to be maintained under that section have been so entered.

b) The transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time except in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.

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

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

8. As explained to us the Company is not required to maintain books of accounts under section 209 (1) (d) of the Companies Act, 1956.

9. (a) According to the information given by the company that there are no statutory dues except Income Tax amounting to Rs. 124.62 Lacs. The Provident Fund, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and Other statutory dues have been regularly deposited with the appropriate authorities during the year.

Nature of dues	Amount of Demand	Period to which the amount relates	Forum where the dispute is pending
Income Tax	12,70,852/-	A.Y: 2006-2007	Income Tax Appellate Tribunal
	56,49,780/-	A.Y: 2007-2008	Income Tax Appellate Tribunal
	44,54,896/-	A.Y: 2008-2009	Income Tax Appellate Tribunal
	10,87,150/-	A.Y: 2010-2011	CIT Appeals

(b) According to the information given to us there are no dues of Income Tax, Custom Tax, Wealth Tax and Cess which have not been deposited on account of any dispute.

10. There are no accumulated losses of the company at the end of the financial year. There are no Cash losses during the financial and the immediately preceding financial year.

11. According to the information and explanations given to us, and as per the books and records examined by us, the company has not defaulted in repayment of dues to any financial institution or bank.

12. According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company does not fall within the Category of Chit Fund / Nidhi Mutual Benefit Fund / Society and hence related reporting requirements are not applicable.

14. According to the information and explanations given to us, Company is not dealing or trading in Share, Securities, Debentures and other investments and hence the related reporting requirements are not applicable.

15. The company has not given any guarantees against loans taken by others from banks or financial institutions except the guarantee given to its subsidiaries i.e.; Ankit Ispat (P) Ltd., AML steel & Power Limited and to Ashok Steel Industries Private Limited.

16. In our opinion and according to the information and explanations given to us on over all basis, the term loans have been applied for the purpose for which purpose they are obtained.

17. According to the information and explanation given to us and overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

18. The company has not made any preferential allotment of shares to parties or companies covered in the Registered maintained under section 301 of the Companies Act, 1956.

19. The company has not issued any debentures and therefore creation of securities on its issue does not arise.

20. The company has not raised any money by public issue during the year.

21. During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed and reported during the year, nor have we been informed of such case by the management.

For K P Jain & Co.,

Chartered Accountants

Sd/-

CA.Kishore Kumar P Jain

Sole Proprietor Membership No.027236

FRN No.001233S

Place: Chennai

Date: May 30, 2014