AUDITOR'S REPORT TO THE SHAREHOLDERS

We have audited the attached Balance Sheet of MANGANESE ORE (INDIA)

LIMITED, NAGPUR, as at 31st March 2010 and also the Profit & Loss Account and
the Cash Flow Statement of the Company for the year ended on that date annexed
thereto. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 as amended by the

Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central
Government in terms of section 227 (4A) of the Companies Act 1956, we enclose in
Annexure –A, a statement on the matters specified in paragraph 4 & 5 of the said
order.

2. Further to our comments in the Annexure referred to in Para 1 above; 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, Profit & Loss Account & Cash Flow Statement dealt with by
this report are in agreement with the books of account of the Company.
d) In our opinion, the Balance Sheet, Profit and Loss Account & Cash Flow
Statement dealt with by this report comply with the Accounting Standards referred to
in sub section (3C) of section 211 of the Companies Act, 1956.

e) The Company has informed that, in terms of Notification No. GSR 829 (E) dated
21/10/2003 issued by the Department of Company Affairs, the provisions of Section
274(1)(g) of Companies Act, 1956 are not applicable to Government Companies.

f) The company has neither paid nor provided for the cess payable under Section
441(A) of Companies Act, 1956, pending notification from Government specifying
the manner of payment.

g) In our opinion and to the best of our information and according to the explanations
given to us, the said accounts, read together with notes thereon and Statement of
Accounting Policies, give the information required by the Companies Act, 1956, in
the manner so required, and give a true and fair view in conformity with the
accounting principles generally accepted in India.

i) In the case of Balance Sheet, of the state of affairs of the Company as at 31 st March,
2010:

ii) In the case of Profit and Loss Account, of the Profit of the Company for the year
ended on that date; and

iii) In the case of the Cash Flow statement, of the Cash Flows of the Company for the
year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT

REFERRED TO IN PARA 1 OF OUR REPORT OF EVEN
DATE ON THE
ACCOUNTS OF MANGANESE ORE (INDIA) LIMITED
FOR THE YEAR 2009-10.
1. The Company has maintained proper records showing full particulars including
quantitative details and situation of fixed assets. The Management has physically
verified fixed assets during the year and no material discrepancies were noticed on
such verification. In our opinion verification of fixed assets at the yearend is
reasonable having regard to the size of the Company and the nature of Assets.
Disposal of fixed assets made during the year does not affect going concern status of
the company.

2. As explained to us, the stocks of Manganese Ore, Ferro Manganese, E.M.D.,

Stores and Spares were physically verified by the Management at reasonable
intervals, during the year. 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. In our opinion and according to the
information and explanations given to us, the Company has maintained proper
records of its inventories and the discrepancies noticed on such physical verification
between physical stock and book records were not material and have been adequately
dealt with in the books of account.

3. According to the information and explanations given to us, the Company has
neither granted nor taken any loans, secured or unsecured to or from Companies,
firms or other parties covered in the register maintained under section 301 of the
Companies Act, 1956

4. In our opinion and according to the information and explanations given to us, there
are adequate internal control procedures commensurate with the size of the Company
and the nature of its business with regard to purchases of inventory, fixed assets and
for the sale of goods. During the course of our audit, no major weakness has been
noticed in internal control system in respect of these areas.

5. According to the information and explanations given to us there are no transactions

that need to be entered in the register required to be maintained under section 301 of
the Companies Act, 1956

6. The company has not accepted any deposits from the Public and consequently the
directives issued by the Reserve Bank of India, the provisions of Section 58-A and
58- AA of the Companies Act, 1956 and the rules framed thereunder are not
applicable.

7. The Company is having Internal Audit system. However, in our opinion

Company’s Internal Audit system needs to be strengthened to make it commensurate
with its size and nature of its business.

8. The Central Government has not prescribed maintenance of cost records under
Section 209 (1)(d) of the Companies Act, 1956.
9. According to the information and explanations given to us, and on the basis of our
examination of the books of account, the company has generally been regular in
depositing with appropriate authorities the undisputed statutory dues including
Provident Fund, Income-tax, Sales-Tax, Excise duty, Cess and other statutory dues
applicable to it during the year. Further, since Central Government has till date not
prescribed the amount of cess payable under section 441A of the Companies Act,
1956, we are not in a position to comment upon the regularity or otherwise of the
company in depositing the same. There are no dues outstanding of Income Tax, Sales
Tax, Wealth Tax, Service Tax, Customs Duty, Excise duty and cess on account of
any dispute.

10. The Company does not have any accumulated losses at the end of the financial
year and has not incurred cash losses in the financial year and in the financial year
immediately preceding such financial year.

11. The Company has neither taken any loans from a financial institution and a bank
nor issued any debentures.

12. 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 is not a chit fund, nidhi, mutual benefit fund or a society.
Accordingly clause 4(xiii) of the order is not applicable.

14. According to the information and explanations given to us, the Company is not
dealing or trading in shares, securities, debentures and other investments.
Accordingly, clause 4(xiv) of the order is not applicable.

15. According to the information and explanations given to us, the Company has not
given any guarantee for loans taken by others from banks or financial institutions.

16. According to the information and explanations given to us, the Company has not
taken any term loans during the year.

17. According to the information and explanations given to us, the Company has not
raised any funds on short-terms basis. All assets have been funded by shareholder’s
funds.

18. The Company has not made any preferential allotment of shares during the year
to parties and Companies covered in the register maintained under section 301 of the
Companies Act, 1956.

19. The company has not issued any debentures during the year.
20. The Company has not raised any money by public issues during the year.

21. According to the information and explanations given to us, no fraud on or by the
Company has been noticed or reported during the year.