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 reasoriable 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.

As required, by the Companies (Auditors Report) Order, 2003 as amended, by the Companies. (Auditor.s Report) (Amendment) Order, 2004, issued by the Government of India in terms of section 227 (4A) of the Companies Act 1956, of India and on the basis of, such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure; a statement on the matters specified in paragraph 4 and- 5 of the said Order to the extent applicable.

Further to our comments in the Annexure referred to above, we report that:

i) We have obtained all the information and explanation, which to the best of our knowledge and belief were necessary for the proposes of our audit;

ii) 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 of the Company.

iii) In our opinion, the Balance Sheet and. the Profit & Loss A/c. dealt with by this, report comply with the Accounting Standards referred to sub-section (3C) of. section..211 .of the Companies Act, 1956;

iv) On the basis of information given to us none of the Directors, is, disqualified. frorn being appointed as director of the Company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

v) The Balance Sheet and Profit & Loss A/c. dealt with by this report are in agreement with the books of account of the Company.

vi) In our opinion and to the best of our information and according to the explanation, given to us the said accounts read with above Para,for which impact is as given in the notes itself and read with other notes appearing on Schedule 0 give 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

a. In the case of Balance Sheet of the state of affairs, of the Company, as,at 31st March2007.

b. In case of Profit and Loss Account of the profit for the year ended on that date"

ANNEXURE TO THE AUDITORS REPORT ANNEXURE REFERRED TO IN PARAGRAPHS (1) OF AUDITORS REPORT TO THE MEMBERS OF METALMAN INDUSTRIES LIMITED, ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2007.

On the basis of such checks as we considered appropriate and in terms of the information and explanation given to us, we state that:-

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

(b). All the assets have been physically verified by the management during the year and there is a regular programme of verification which,,in,our opinion; is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

2. (a) Inventory have been physically verified during the period by the management. In respect of inventories lying with third parties confirmations have been received. In our opinion, the frequency of verification is reasonable.

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

(c) The company has maintained proper records of inventory. The discrepancies noticed on verification between physical stocks and books stocks were not material having regard to the size of operation of the company and have been properly dealt with in the books of accounts.

3. The company has not taken loan from par ties, covered in the register maintained under section 301 of the Companies Act, 1956. The Company has not?.granted any loans, secured or unsecured to any person covered in the register maintained under,sectipn 301 of the Companies Act, 1956 except subrogation of loan of AVN Tubes Ltd. taken over in earlier years, from the banks, which are free of interest.

4. In our opinion and according to the information and explanations given to us the Company has an adequate internal control procedure commensurate witti the size and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of the audit we have not observed :any continuing failure to correct major weaknesses in internal controls.,

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions 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 explanations given to us, the transactions made in pursuance of contracts or arrangement entered: in. the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of a party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to; us,the Company has not accepted any deposit from public as governed by the provisions of section 58 A and 58 AA of the Companies Act, 4956 and the Companies. (Acceptance of Deposits) Rules, 1975.

7. In our opinion, the Company has an Internal Audit system commensurate with the size and nature of business.

8. According to the information and explanations given to us, we are of the opinion that cost records maintenance has been prescribed by the.Central Govt .under section 209 (l)(b).of- the Companies Act, 1956, and the company has maintained the same properly

9. (a) The company is regular in depositing with the appropriate"authdritiesundisputed statutory dues including Provident Fund, Employees State lnsurance,IncomeTax, Sales Tax ,Wealth Tax, Custom Duty, Excise Duty Cess and other. material statutorv dues applicable to it.

(b) In our opinion, and according to the Information and explanations given to us,;there are no undisputed amount payable in respect of Income. Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, and Cess were in arrears, as at 31.03.07 for a period of more than six months from the date they become payable.

(c) In our opinion and according to the information and explanations given to us there are no dues of Income Tax, Sales Tax, Wealth Tax; Custom Duty, Excise Duty, and Cess, which have not been, deposited on account of any "dispute.

10. In our opinion, the company has neither accumulated losses nor ;the companys has incurred any cash losses during the year covered by our audit and the immediately, preceding previous year.

11. The company has not defaulted repayment of loans from any Financial Institution and Banks and as on 31.03.07 there were no over due loans:

12. In our opinion and according to the information and explanations given to us the company has not granted loans & advances on the basis of security by way of pledge of share, debentures and other securities.

13. As the company is not a Nidhi/Mutual Benefit Fund/Society/Investment company, the reporting requirement under point no. (xiii) and (xiv) are not applicable to the company.

14. According to the information and explanation given to us, we are of the opinion that the company has not given any guarantee for loans taken by others from ;the banks and financial institutions.

15. According to the information and explanation given to us, the company has applied term loans raised from the banks during the year for the purpose for which the loans were obtained.

16. According to the information and explanation given to us and oh an overall examination of the Balance Sheet of the company, we report that no funds raised on short-term basis have been used for long term investment. No long-term funds have been used to finance short-term assets except permanent working capital.

17. According to the information and explanation given to us the company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act.

18. The company has not issued debentures to raise funds during the year.

19. The company has not raised any funds by Public Issue and also the company has not made any preferential allotment during the year.

20. In our opinion and according to the information and explanations given to us, there is no fraud on or by the company has been noticed or reported during the course of our audit.

                                        for S.S. SOLANKI & CO.
                                        Chartered Accountants
Place: Indore               
Date: 31.08.2007                                  
                                        (Shailendra Solanki)
                                             Proprietor
                                       Membership No. 075046