Modern Malleables Ltd Auditors Report.

Independent Auditors

TO

THE MEMBERS OF

MODERN MALLEABLES LTD.

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Modern Malleables Limited, which comprises the Balance Sheet as at March 31, 2014, 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

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 notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13thSeptember, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. 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 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, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. 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 audit opinion.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, 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 of the Company for the year ended on that date; and

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. This report does not include a statement on the matters specified in paragraph 4 of the Companies (Auditors Report) Order, 2003issued by the Central Government of India in terms of Section 227(4A) of the Act;since in our opinion and according to the information and explanation given to us, the said order is not applicable to the company.

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, the 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, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act; read with the General Circular 15/2013 dated 13thSeptember, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

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

For B. R. KHAITAN & CO.

Chartered Accountants

P. KHAITAN

Proprietor

Membership No. 060367

Regn. No. 305012E

Place: Kolkata

Date: 13th May, 2014

ANNEXURE TO THE PART OF THE AUDITORS REPORT

(This is annexure referred to in our Report of even date)

In terms of 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 as under:

The company has maintained proper records showing full particulars including quantitative details and situation of its Fixed Assets. These Fixed Assets were physically verified by the management during the year. We have been informed that no material discrepancies were noticed on such verification.

None of the Fixed Assets have been revalued during the year.

The stock of the inventory (Raw materials, Components, Stores & Spare Parts, Work-in-process, Finished Goods etc.) have been physically verified by the management during the year at reasonable intervals except stock lying with third parties, it is stated to us that confirmation of such stocks lying with parties have been obtained by the company in most of the cases. In our opinion the procedure of physical verification of inventory followed by the Management is reasonable and adequate in relation to the size of the company and its nature of business. The company is maintaining proper records of inventory.

The discrepancies noticed on physical verification between physical stock and book records which were of not material value have been properly dealt with in the Books of account.

In our opinion there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods.

The Central Government has not prescribed the maintenance of Cost records by the company U/S 209(1)(d) of the Companies Act-1956 for any of its products.

In case of transaction of purchase of goods and materials and services and sale of goods and materials exceeding the vaiue of Rupees Five Lacs in the financial year in respect of any;

a) Transaction that to be entered into a register in pursuant of section 301 of the Act have been so entered;

b) In our opinion, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

The company has not accepted any deposits from the public. In our opinion the directive issued by the Reserve Bank of India and the provision of the section 58Aand 58AAof the Act and the rules framed thereunder, where applicable, have been complied with. National Company Law Tribunal or any other Court has not passed any order in this respect.

In our opinion reasonable records have been maintained by the Company for the sale and disposal of realisable scraps. The Company has no by-products.

The Company is depositing the Provident Fund and employees State Insurance dues with the appropriate authority.

According to the information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty were outstanding as at 31.03.2014 for a period of more than six months from the date they become payable (Except as mentioned in Notes on Accounts).

According to the information and explanations given to us, no personal expenses of Directors or employees have been charged to Profit & Loss Account, other than those payable under contractual obligations or in accordance with generally accepted business practice.

The Company has accumulated losses and incurred loss in the financial year to under review and has cash losses in the financial year immediately preceding the said financial year.

The Company has invested in shares as disclosed in respective schedule.

The Company has not given any guarantee for loans taken by others from banks or financial institutions.

The Company is a sick industrial unit within the meaning of clause (o) of sub Section (1) of Section 3 of the Sick Industrial Companies (Special Provision) Act, 1985. The Board for Industrial & Financial Reconstruction (BIFR) had also declared the Company as a sick industrial unit.

The Company is a recognized R&D Centre of the Govt, of India under its recognition letter of ministry science and technology.

In respect of trading items, according to the information and explanations given to us, there were no damaged goods during the year.

The Company is not a Chit Fund, Nidhi, or Mutual benefit fund/Society.

During the checks carried out by us, any fraud on or by the company has not been noticed or reported during the year under report.

For B. R. KHAITAN & CO.

Chartered Accountants

P. KHAITAN

Proprietor

Membership No. 060367

Regn. No. 305012E

Place: Kolkata

Date : 13th May, 2014

SECRETARIAL AUDIT REPORT

The Board of Directors,

Modern Malleables Limited

53B, Mirza Ghalib Street

Kolkata-700016

We have examined the registers, records and documents of Modern Malleables (*the Company) for the period commencing from 1st April, 2013 to March, 2014for compliance of provisions of :-

1. The Companies Act, 1956, applicable sections of the Companies Act, 2013 effective from 12th September, 2013 (*New Act) and the Rules and there under :

2. The Depositories Act, 1996 and the Regulations and Bye laws framed thereunder.

3. The following Resolutions and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act)

(a) Securities and Exchange Board of India (Substantial Acquisition of Shares and Take overs) Regulations, 2011.

(b) Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992. (c) Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999.

4. The Securities Contracts (Regulation) Act, 1956 (SCRA) and the Rules made thereunder, and

5. The Listing Agreement entered into with BSE Limited and National Stock Exchange of India Limited.

Based on our examination and verification of the registers, records and documents produced us and according to the information and explanations given to us by the Company. We report that the Company has, in our opinion, complied with the provisions of the Act/New Act and the Rules made thereunder and with the Memorandum and Articles of Association of the Company with regard to :

(a) Maintenance of various statutory registers and documents and making necessary entries therein.

(b) Closure of the Register of Member.

(c) Forms, Returns, documents and resolutions required to be filed with the Registrar of Companies and Central Government.

(d) Service of documents by the Company on its Members and the Registrar of Companies.

(e) Notice of meeting of the Board and Committees thereof.

(f) Minutes of the meetings of the Board and Committees thereof including passing of resolutions by circulation.

(g) Notice convening the 29th Annual General Meeting held on 26th September, 2013.

(h) Minutes of General Meetings.

(i) Approvals of the Members, the Board of Directors, the Committees of Directors and Government authorities, wherever required.

(j) Constitution of the Board of Directors/Committee(s) of Directors and appointment, retirement and reappointment of Directors including the Managing Director and Executive Directors.

(k) Payment of remuneration to the Directors including the Managing Director and Executive Directors.

(I) Appointment and remuneration of Statutory Auditors and Cost Auditors.

(m) Transfer and transmission of the Companys shares, issue and allotment of shares and issue and delivery of certificate of shares.

(n) Declaration and payment of dividends including interim dividend.

(o) Transfer of amounts as required under the Act to the Investor Education and Protection Fund.

(p) Satisfaction of charges, if any, registered with the Registrar of Companies.

(q) Form of Balance Sheet as prescribed under Part-1 of Schedule VI to the Act and requirement as to Profit & Loss Account as per Part-ll of the said Schedule.

(r) Contracts, common seal, registered office and publication of name of the Company ; and

(s) Generally all other applicable provisions of the Act/the New Act and the Rules made thereunder.

We further report that:

(a) The Directors have complied with the requirements as to disclosure of interests and concerns in contracts and arrangements, shareholdings/debentures holdings and arrangement, Shareholdings/debentures holdings and directorship in other companies and interest in other entries.

(b) The Directors have complied with the disclosure requirements in respect of their eligibility of appointment, their being independent and compliance with the Share Dealing Code and Code of Conduct of the Company.

(c) The Company has obtained all necessary approvals under the various provisions of the Act/New Act.

(d) There was no prosecution initiated against or show cause notice received by the Company and no fines or penalties were imposed on the Company during the year under review under the Companies Act, SEBI Act, SCRA, Depositories Act, Listing Agreement and Rules and Regulations and Guidelines framed under these Acts against the Company, its Directors and Officers.

We further report that the Company has complied with the provisions of the Depositors act, 1996 and the Bye-laws framed under the Act by the depositories with regard to dematerilisation/rematerilisation of securities and reconciliation of records of dematerialized securities with the securities with the securities issued by the Company.

We further report that

(a) The Company has complied with the requirements under the Listing Agreement entered int with the BSE

Limited and the National Stock Exchange of India Limited.

(b) The Company has complied with the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Take Overs Regulations,2011 including the provisions with regard to disclosures and maintenance of records required under the Regulations.

(c) The Company has complied with the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 including the provisions with regard to disclosures and maintenance of records required under the Regulations.

(d) The Company has complied with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999with regard to implementation of 2012.

Dhrub a Charan Sahoo
Practicing Company Secretary
Place : Kolkata C.P. No. 5508
Date : 13th May,2014

AUDITORS CERTIFICATE ON COMPLIANCES WITH THE CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT

TO THE MEMBERS

We have examined the compliance of the conditions of Corporate Governance by Modern Malleables Limited for the year ended on 31st March 2014as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchange.

The Compliance of the condition of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementations thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statement of the Company.

In our opinion and to the best of our information and according to the explanation given to us and the representation made by the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that such compliance is neither as assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For B. R. KHAITAN & CO.

Chartered Accountants

P. Khaitan

Proprietor

Membership No. 060367

Regn. No. 305012E

Place : Kolkata

Date : 13th May,2014