Anil Special Steel Industries Ltd Auditor Reports

TO THE MEMBERS OF

THE ANIL SPECIAL STEEL INDUSTRIES LIMITED

Report on the Financial Statements

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

Managements Responsibility for the Financial Statements

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 Principles generally accepted in India including Accounting Standards referred to in sub-section (3C) of section 211of 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 cur audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with 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 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 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 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 qualified audit opinion.

Basis for Qualified Opinion

a) The Company is accounting the bonus & leave pay on cash basis. The accounting policy not being in consonance with accrual method of accounting. Accordingly bonus accrued for the year Rs.1,59,038/- and leave pay accrued up to 31st March2014 Rs.49,25,602/- as per actuarial valuation, remain un-provided for. (Refer Note No. 1(J) and 1(1)).

b) Nonpayment/provision of contribution to Gratuity fund with Life Insurance Corporation of India (up to 31st March,2014) Rs.2,66,,21,346/-. (Refer Note No. 1(1)).

c) Non ascertainment of diminution in value of unquoted investment of Rs.34,70,000 and provision required to be made. (Refer Note No.12.1).

d) The addition to Deferred TaxAsset for the year Rs. 37,67,0171- and Cumulative Rs. 1,17,78,996/- up to 31st March2014. (Refer Note No. 13.2) e) The company has changed its depreciation method [ Refer Note No.1.(b).(iii) & (iv) ] during the financial year 2013-14.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid 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 March 31, 2014;

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

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

Emphasis of Matter

We draw attention to Note no. 5.1 that company is relocating its industrial undertaking from Kanakpura, Jaipur and has entered into sale agreement for sale of land & building and has taken advance amount of Rs. 1,84,73,9207-. Our opinion is not qualified in respect of this matter.

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 purpose of our audit;

b. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

d. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and 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 written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

For Bansal R. Kumar & Associates

Chartered Accountants

FRN-08186N

Sd/-

(SanjayAgrawal)

Partner

Membership No. 089796

Place: Jaipur

Date : 14th June, 2014

Annexure to the Auditors Report

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

Referred to in paragraph under the heading of "Report on other Legal & Regulatory Requirements" of our report of even date to the Members of ANIL SPECIAL STEEL INDUSTRIES LIMITED:

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

b) A major portion of the assets has been physically verified by the Management in accordance with a phased programme of verification adopted by the Company. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. To the best of our knowledge, no material discrepancies have been noticed on such verification.

c) There was substantial disposal of fixed assets during the year (refer. Note No.11.3 The company is relocating its running industrial undertaking (Unit-1 mfg. Flat Rolled Products division) from Kanakpura, Jaipur and entered into sale agreement and has received an advance of Rs.1,84,73,9207- for sale of land & building.

(ii) a) The inventory of finished goods and work in progress and raw materials at works have been physically verified during the year by the Management at reasonable intervals. In respect of stores and spare parts and stocks at branches, the Company has a programme of verification of stocks at the end of year.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the Books of Accounts.

(iii) (a) In our opinion and according to information and explanation given to us, the Company has not granted any loan secured or unsecured to the Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 during the year, hence, clause (b),(c),(d) of the order is not applicable to the company.

(e) In our opinion and according to information and explanations given to us, the Company has taken unsecured loans from one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs.3,15,49,768/- and year ended balance is Rs. nil.

(f) The terms on which such loan is taken, are not prima facie prejudicial to the interest of the Company as these are interest free.

(g) The repayment of principal is being done as per stipulation.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for purchases of inventory, fixed assets and sale of goods and services. During the course of our audit, we have not observed major weakness in internal control system.

(v) a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the contract or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanation given to us, there were no transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the year.

(vi) As per explanation given to us, the company has availed temporary interest free unsecured loans from the related parties, bodies corporate and others to maintain margins required bythe bankers/ Financial Institutions.

In our opinion the company is yet to comply with the provisions of section 58 A of the Companies Act, 1956 and Rules made there under.

(vii) In our opinion, the Company is having internal audit system; however same need to be strengthened so as to be commensurate with the size and nature of its business.

(viii) As per information given to us, the company has maintained cost records, as prescribed under section 209(1)(d) of the Companies Act, 1956, as prescribed by the Central Government. However we have not made detailed examination of such records.

(ix) a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty and other statutory dues with the appropriate authorities to the extent applicable, except the amount towards Provident Fund of Rs. 38,58,731/- which is outstanding for more than 6 months as at the end of financial year.

b) According to the records of the Company, there are no dues of Income Tax, Wealth Tax, Custom Duty, Excise Duty, Sales Tax and Service Tax which have not been deposited on account of any dispute, other than the following.

Name of the Statute	Nature of the dues	Amount	Forum where dispute is pending
The Central Sales Tax Act, 1956	Sales tax & penalty 1985-86	6,13,340V-	Pending with Tax Board
The Central Sales Tax Act, 1956	Sales tax & penalty 1986-87	4,38,845/-	Pending with Tax Board
The Central Excise Act, 1944	Export Benefits claim 2005-06	12.21.097/-	Pending with CESTAT, Delhi
The Central Excise Act, 1944	Duty demand on insurance claim of Gear Box 2001-02	89.600/-	Pending with CESTAT, Delhi
The Central Excise Act, 1944	Excise Duty on stock 2012-13	30,08,388/-	Pending with Excise Deptt.

However, the company has paid Rs.10,52,185/- against the demand of Central Sales Tax and Rs. 30,08,388/-against excise duty on stock till 31st March 2014.

(x) The Company has no accumulated losses as on 31st March 2014. The Company has not incurred any cash losses during the financial year and in the immediately preceding financial year,

(xi) In our opinion and according to the information and explanations given to us, the Company hasnot defaulted in repayment of dues to Banks as on 31st March 2014.

(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company,

(xiii) In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company,

(xiv) The Company has maintained proper records of the transactions and contracts in respect of dealing in mutual funds and timely entries have been made there in. All the investments have been held by the company in its own name. As informed to us the Company is not dealing/trading in shares, debentures and other investments.

(xv) In our opinion, the Company has not given guarantees for loans taken by others,

(xvi) As per explanation given to us the Company has not raised new term loans during the year,

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, considering the effect of current maturities of long term borrowings we report that no funds raised on short-term basis have been used for long-term assets,

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares during the year.

(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 money by public issues,

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For Bansal R. Kumar & Associates

Chartered Accountants

FRN-08186N

Sd/-

(Sanjay Agrawal)

Partner

Membership No. 089796

Place: Jaipur

Date: 14th June, 2014