We have audited the accompanying financial statements of BENGAL STEEL INDUSTRIES LIMITED ("the company), which comprise the Balance Sheet as at March 31,2014, the Statement of Profit and Loss and the Cash Flow Statements for the year then ended, and a summary of the significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS :

The Company's 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 Section 211 (3C) of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 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 misstatements, 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 the disclosures in the financial statements. The procedures selected depend on the auditor's 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 Company's 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 Company's internal control. An audit aiso includes evaluating the appropriateness of the 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 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 the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Emphasis of Matter

Without qualifying our opinion, we draw attention to the following :

1. Charge of depreciation on the composite cost of Land & Building, the value of which are not segregated;

2. Non-recognition of impairment loss, if any, on discontinuation of operation and disposal of fixed assets of ingot plant in absence of adequate information;

3. Non-provision in diminution in value of investments, the amount of which could not be ascertained in absence of adequate information.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS :

1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Section 227(4A) 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, 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 the Accounting Standards referred to in Section 211 (3C) of the Act read with the General Circular 15/2013 dated 13th September, 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 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 Section 274(1)(g) of the Act.

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)

As required by Companies (Auditors' Report) Order, 2003 issued by the Central Govt. of India under Section 227(4-A) of the Companies Act, 1956,and on the basis of such checks of the books and records of the Company and according to the information and explanations given to us, we report further that:

1) The Company has not maintained proper records showing full particulars, including quantitative details and situation of Fixed Assets. The Fixed Assets do not appearto have been physically verified by the Management during the year under Audit and therefore, the question of discrepancy on physical verification could not be determined. During the year substantial part of fixed assets have not been disposed off.

2) We are informed that physical verification of inventory has been conducted at reasonable intervals by the Management. The procedure of physical verification of inventory followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of its inventory and no material discrepancy were noticed on physical verification.

3) There is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for sale of goods.

4) Transactions that need be entered into register mentioned under section 301 of the Companies Act, 1956, have been so entered and these transactions have been made at prices which are reasonable having regard to prevailing market price at the relevant time.

5) The Company does not have an internal audit system commensurate with its size and nature of its business.

6) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Record) Rules, 2011 prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. However, we have not made a detailed examination of cost records with a view to determine whether they are accurate or complete.

7) The Company is regular in depositing undisputed statutory dues with the appropriate authorities so far as applicable to the affairs of the Company during the year. There are no disputed dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty, Service Tax or Cess.

8) The Company does not have any accumulated loss or Cash loss in the current or immediately preceding financial year.

9) Proper records of transactions and contracts relating to dealing in shares, securities or other investments have been maintained so far as applicable to such transactions and timely entries have been made therein, and the shares, securities, debentures or other securities have been held in the Company's name.

10) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, short term funds have not been used for long term purposes.

11) We have not noticed nor have been reported any fraud on or by the Company during the year under audit.

12) Clauses (iii), (vi), (xi), (xii), (xiii), (xv), (xvi), (xviii), (xix), (xx) of paragraph 4 of the order are not applicable to the Company for this year.

                                               For J. N. Banerjee & Co.
                                               Chartered Accountants 
                                            (Registration No. 302063E)

                                            (G. BANDYOPADHYAY, F.C.A.)
Place: Kolkata                                         Partner
Date : 30th May, 2014                          Membership No. 050270