Bhuwalka Steel Industries Ltd Auditor Reports

To The Members of

M/S. BHUWALKA STEEL INDUSTRIES LIMITED REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of BHUWALKA STEEL INDUSTRIES

LIMITED ("the Company"), which comprise the Balance

Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 STANDALONE FINANCIALSTATEMENTS

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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 the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies ( Accounts ) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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 standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 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 internal financial control relevant to the Companys preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, 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 on the standalone financial statements.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at 31 March, 2015, its Loss and its cash flows for the year ended on that date.

EMPHASIS OF MATTER

We draw attention to:

1. Note 23 Sl No.7 (i) Other disclosure in respect of Finance cost not recognized in the books by the company for Rs.42,24,11,280/- in view of representation by management that they have disputed on account of unilateral withdrawal of CDR Package by the Banks.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies ( Auditors Report) Order, 2015 ( "the Order") issued by the Central

Government in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and 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, 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 aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(e) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

a. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 23 serial number 01(iii) and serial number 07 to the financial statements;

b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

for ASR Associates

Chartered Accountants

(CA A. S. Rafiq )

Proprietor

Membership No.204646

FRN No. 8877S

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)

(i) In respect of its fixed assets:

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

(b) Some of the fixed assets were physically verified during the year by the Management in accordance with a programme of verification, which in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. Based on information, explanation and necessary documents pertaining to inventory like Excise Inventory registers, Physical verification report conducted by management and other supporting documents provided to us, we report that the management has conducted physical verification of Inventory at reasonable intervals.

(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 were 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 has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system 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 and services, and during the course of our audit, we have not observed any major weakness in such internal control system.

(v ) According to the information and explanations given to us, the Company has not accepted any deposit during the year.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii)According to the information and explanations given to us, in respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, except as mentioned in table below including Provident Fund, Employees State Insurance, Income-tax, Sales Tax, Service

Tax, Wealth Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities.

Sl.No	Particulars	Amount ( Rs.)
1	EPF	4138183
2	ESI	1216929
3	TDS
	a) TDS CONTRACT	1049217
	b) TDS ON SALARY	368090
	c ) TDS ON RENT	541374
	d) TDS ON PROF. & CONST.	1651896
	e) TDS ON INTEREST	3194553
	f) TDS ON Commission or Brokarage	15395
	g) TCS ON Scrap	44243
4	SERVICE TAX Payable on GTA and Others	3001582
5	VAT	8930825
6	Profession Tax	358500
	Total Rs.	24510787

(a) There were undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at 31 March 2015 for a period of more than six months.

Nature of dues	Period pertaining to	Amount Rs.	Due date	Date of payment	Nos. of days delayed
TDS	Apr-13	28415	5/7/2013	Pending	693
TDS	May-13	58797	6/7/2013	Pending	662
TDS	Jun-13	89936	7/7/2013	Pending	632
TDS	Jul-13	86793	8/7/2013	Pending	601
TDS	Aug-13	60224	9/7/2013	Pending	570
TDS	Sep-13	71231	10/7/2013	Pending	540
TDS	Oct-13	72516	11/7/2013	Pending	509
TDS	Nov-13	144073	12/7/2013	Pending	479
TDS	Dec-13	1082579	1/7/2014	Pending	448
TDS	Jan-14	159679	2/7/2014	Pending	417
TDS	Feb-14	77649	3/7/2014	Pending	389
TDS	Mar-14	634670	4/7/2014	Pending	358
TDS	Apr-14	101399	5/7/2014	Pending	328
TDS	May-14	117374	6/7/2014	Pending	297
TDS	Jun-14	175676	7/7/2014	Pending	267
TDS	Jul-14	151057	8/7/2014	Pending	236
TDS	Aug-14	230919	9/7/2014	Pending	205
Service Tax	Mar-14	625158	4/5/2014	Pending	360
Service Tax	Apr-14	6251	5/5/2014	Pending	330
Service Tax	May-14	130049	6/5/2014	Pending	299
Service Tax	Jun-14	150798	7/5/2014	Pending	269
Service Tax	Jul-14	134817	8/5/2014	Pending	238
Service Tax	Aug-14	161851	9/5/2014	Pending	207
EPF	Sep-13	129291	10/15/2013	Pending	532
EPF	Oct-13	129926	11/15/2013	Pending	501
EPF	Nov-13	130368	12/15/2013	Pending	471
EPF	Dec-13	331074	1/15/2014	Pending	440
EPF	Jan-14	260505	2/15/2014	Pending	409
EPF	Feb-14	258877	3/15/2014	Pending	381
EPF	Mar-14	244953	4/15/2014	Pending	350
EPF	Apr-14	228728	5/15/2014	Pending	320
EPF	May-14	232330	6/15/2014	Pending	289
EPF	Jun-14	111297	7/15/2014	Pending	259
EPF	Jul-14	210863	8/15/2014	Pending	228
EPF	Aug-14	204566	9/15/2014	Pending	197
ESI	Oct-13	80407	11/20/2013	Pending	496
ESI	Nov-13	82339	12/20/2013	Pending	466
ESI	Dec-13	75253	1/20/2014	Pending	435
ESI	Jan-14	78675	2/20/2014	Pending	404
ESI	Feb-14	81000	3/20/2014	Pending	376
ESI	Mar-14	80000	4/20/2014	Pending	345
ESI	Apr-14	80530	5/20/2014	Pending	315
ESI	May-14	82117	6/20/2014	Pending	284
ESI	Jun-14	83118	7/20/2014	Pending	254
ESI	Jul-14	84036	8/20/2014	Pending	223
ESI	Aug-14	84036	9/20/2014	Pending	192
Profession Tax	Mar-14	120475	4/20/2014	Pending	345
Profession Tax	Apr-14	23425	5/20/2014	Pending	315
Profession Tax	May-14	22400	6/20/2014	Pending	284
Profession Tax	Jun-14	20300	7/20/2014	Pending	254
Profession Tax	Jul-14	18575	8/20/2014	Pending	223
Profession Tax	Aug-14	17575	9/20/2014	Pending	192
KVAT	Mar-14	148551	5/20/2014	Pending	315
	Total Rs.	8287501

(c ) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Cess which have not been deposited as on 31 March 2015 on account of disputes are given below :-

Sr. No.	Name of the Statute	Nature of Dues	Forum where dispute is pending	Amount (Rs.in lakhs)
1	Central Excise Act, 1944	Excise Duty and service tax	Commissioner of Central Excise ( Appeals) CESTAT, High Court, Supreme Court	885.12
2	Income Tax Act, 1961	Income Tax	Commissioner of Income Tax ( Appeals), ITAT	116.70

(d) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder within time.

(viii) The Company have accumulated losses at the end of the financial year is Rs 1004.29Lakhs and the Company has incurred cash losses of Rs 76.69Lakhs during the financial year covered by our audit and in the immediately preceding financial year for Rs. 2221.26Lacs.

Due to losses the Net Worth of the company has eroded by more than 50% (without giving effect to the observation in Note 23 (7)(i)). The company has already filed Form C with BIFR.

(ix) In our opinion and according to the information and explanations given to us, the Company has defaulted in the repayment of dues to financial institutions, banks as mentioned in Note 23 (7)(ii).

(x ) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

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

	for ASR Associates
	Chartered Accountants
Place : Bangalore	(CA A. S. Rafiq )
Date : 11th July, 2015	Proprietor
	Membership No.204646
	FRN No. 8877S