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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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 accounts as required by the law have been kept by the company so far as it appear from our examination of those books;

c) The balance sheet & Profit & Loss Account of the company dealt with by this report are in agreement with the books of account.

d) In our opinion the said Profit & Loss Account balance sheet dealt with by this report comply with the accounting standards referred to sub section (3C) of section 211 of the Companies Act 1956.

e) On the basis of written representation received from the directors for the period of 31st March, 2002 and taken on record by the Board of Directors, we report that none of the directors is dis qualified for the period of 31st March, 2002 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon give the information required by the Companies Act 1956 and present a true and fair view:

i) In the case of Balance Sheet of the state of affairs of the Company as at 31st March, 2002.

ii) In the case of profit & loss account of the profit of the company for the year ended on that date.

g) As required by the Manufacturing and other Companies (Auditors Report) order, 1988, issued by the Company Law Board in terms of section 227(4A) of the companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

Annexure to the Auditors Report to the Share Holders of Alang Marine Limited

i) The company has maintained proper records showing the full particulars, including the quantitative details and situation of its fixed assets. The fixed assets have been physically verified by the management at reasonable intervals during the year and we are informed by the management that no material discrepancies were noticed on such verification.

ii) None of the fixed assets has been revalued during the year.

iii) Management has conducted the physical verification at reasonable intervals in respects of finished goods, stores, spare parts and raw materials.

iv) The procedure of physical verification of stock followed by the management is as per our opinion reasonable and adequate in realtion to the size of company and nature of business of the company.

v) As explained to us, no material discrepancies have been noticed on physical verification of stock as compared to books/records maintained by the company.

vi) The valuation of stock is fair and proper and is in accordance with normally accepted accounting principles and is on the same basis as in the previous year.

vii) During the year company has taken secured/unsecured loans from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 and/or from the companies under the same management as defined under the sub section 1B of section 370 of the Companies Act, 1956. Company has not paid interest on such loans however other terms and conditions of the loans are not predefined.

viii) During the year company has granted secured/unsecured loans to the companies, firms or other parties listed in the register maintained under section 301 of companies Act, 1956 and/or to the companies under the same management as defined under section 1B of section 370 of companies act/1956. Company has not charged any interest however other terms and conditions of such loans are not predefined.

ix) On the examination of the books and records of the company, we have noticed that the amount of loans and advances in the nature of loans given by the company to parties are repaying the principal amount as per mutual understanding.

x) In our opinion there is adequate internal control procedure commensurate with the size of the company and the nature of its business for the purchase of stores, raw materials including componenet, plant and machineries equipments and other assets and for sale of the goods.

xi) In our opinion and according to the information and explanations given to us the transactions of purchase and sale of goods and materials in pursuance of contract or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000/- or more in respect of each party have been made at prices which are reasonable having regard to the prevailing market prices for such goods, materials at which transaction of similar goods and materials have been made with other parties.

xii) As explained to us the company has a regular procedure for determination of unserviceable or damaged stores, raw materials and finished goods. Adequate provision has been made in the accounts.

xiii) In our opinion and according to the information and explanation given to us the Company has complied with the provisions of section 58A of the Companies Act, 1956 and the company (acceptance of deposit) Rules.

xiv) In our opinion reasonable records have been maintained by the company for the sale and disposal and realisation of by products and scraps.

xv) In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business.

xvi) The provision of section 209(1) (d) of the Companies Act, 1956 (10 of 1956) as to maintenance of cost records is not applicable to the company.

xvii) As we are informed by the management that Provident Fund and E. S. I, dues have been paid at regular intervals.

xviii) According to the information & explanations given to us that there are no undisputed amount payable in respect of Income-Tax, Sales Tax, Custom and Central Excise duty which are out standing as on 31st March, 2002 for a period of more than 6 (six) months from the date they become payable.

xix) As explained to us no personal expenses have been debited to revenue account except those paid by virtue of contractual obligation under the agreement of employment.

xx) Company is not a sick company within the meaning of clause (O) of Sub Section (1) of Section (3) of the Sick Industrial Companies (Special Provisions) Act/1985.

Place: Bhavnagar                       For, S. V. Pandya & Associates.,
Date: 30-10-2002                                  Chartered Accountants

                                                         (S. V. Pandya)
                                                             PROPRIETOR