We have conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material mis-statements. 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 (Auditor's Report) (Amendment) Order 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 we enclose in the Annexure a statement on the matters specified in paragraphs 4&5 of the said Order.

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

(i) 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.

(ii) In our opinion, proper books of accounts as required by the law have been kept by the company, so far as it appears from our examination of the books.

(iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

(iv) In our opinion, the Balance Sheet and Profit & Loss Account dealt with by this report comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of the power conferred under sub-section (1) (a) of section 642 of Companies Act 1956, to the extent applicable except accounting of deferred taxes as per AS-22, which is neither quantified nor disclosed. (Refer note no.28)

(v) On the basis of the written representations received from the Directors as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a Director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

(vi) a. Confirmation/reconciliation of certain balances are pending, resulting in the balances being as per books of accounts only. (Refer to note no.24)

b. The company's ship repairing operations remained suspended since June 1998. The company has suffered continued losses including in the current year and erosion of equity due to many pending litigation with Govt. /Autonomous bodies & financial institutions and there is substantial doubt that the company will be able to continue as a going concern. However in the absence of adequate necessary data for compilation on an alternative basis, the accounts are continued to be prepared on a going concern basis.

In view of:(i) Non -confirmation /reconciliation of certain debit & credit balances (refer to para a), which on final confirmation / reconciliation may effect our disclosures, (ii) Non-adjustment in the compilation of accounts consequent to company no longer remaining a going concern (refer para b), and their consequent impact on the financial statement for the year ended 31.03.12, the necessary particulars in respect of the remaining items have been disclosed by the company as required by the Companies Act, 1956 in the manner so required and are 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 31st march, 2012 and

(ii) in the case of Profit & Loss Account of the Loss for the year ended on that date and

(iii) in the case of Cash Flow Statement, of the Cash Flows for the year ended on that date.

          
ANNEXURE TO AUDITOR'S REPORT

(b) The company has a programme of physical verification of its fixed asset which, in our opinion, is reasonable having regard to the size of the company and nature of its assets.

(c) In our opinion substantial part of fixed assets has not been disposed off by the company during the year however A substantial part of Fixed Asset have been disposed off during the prior years due to which the company no longer remains a going concern.

2. The company does not have any inventory and therefore the clause of the said order in its entirety is not applicable.

3. The Company has not accepted/granted any unsecured loan from/to company , firms or other parties covered in the register maintained under section 301 of the Companies Act.,1956. Therefore no comments are being offered as to the rate of interest, terms & conditions, repayment, overdue etc.

4. In our opinion, and according to the information and explanations given to us during the course of audit, there are adequate internal control procedures for the purchase of stores, including component, plant and machinery , equipments and material and other assets commensurate with the size of the Company and nature of its business.

5. (a) In our opinion, and according to the information and explanation given to us, there are no transactions that are required to be entered in the register maintained under section 301 of the Companies Act, 1956.

(b) In our opinion, and according to the information and explanation given to us, there are no transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year Rs. 5 lakhs or more have been made at prices which are reasonable having regard to prevailing market price, where such market prices are available. However, no such transaction takes place during the year.

6. The Company has not accepted any deposits from public to within the meaning of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules , 1975.

7. In view of suspended operations, no internal audit was conducted during the year.

8. The Company is not required to maintain the cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956.

9. (a) In our opinion ,the Company is regular in

depositing, statutory dues including Provident Fund and other statutory dues with the appropriate authorities. There is no undisputed amount of income tax, Custom Duty and Excise Duty outstanding as at the last day of financial year of more than six months except amount payable to Madras Port Trust Rs. 23,360,045-

(b) According to the information and explanations given to us there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, excise duty and Cess that have not been deposited on account of any dispute.

10. The accumulated losses of the Company are more than fifty percent of its net worth. The company has incurred cash losses during the current financial year. Cash loss was incurred in the immediately preceding the financial year.

11. In our opinion, and according to the information and explanations given to us and as per the company has disputed the repayment of dues to the Financial Institution (refer point no.1 to 6 of note 4). Pending disputes with financial institutions the period & amount of default could not be ascertained. The company has no debentures.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, and other securities.

13. The Company does not fall within the category of Chit Fund/ Nidhi/ Mutual Fund/ Society and hence the related reporting requirements are not applicable.

14. In respect of dealing or trading in shares, securities and other investments in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares securities and other investments have been held by the Company in its own name.

15. According to the information and explanations given to us the Company has not given any guarantee of any type of loans taken by others.

16. The company has not raised any term loan during the financial year, hence the related reporting requirement are not applicable. However the loan raised in earlier years have been utilized for the purposes for which they were obtained.

17. According to the information and explanations given to us the funds raised in the previous year by the company on short term basis has not been used for long term investment.

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

19. The Company has not issued debentures of any type during the financial year.

20. The Company has not raised any money by public issue during the financial year.

21. Based on our examination of the books and records of the Company and according to the information and explanations given to us, no fraud on or by the Company has been noticed.

                                            for DOOGAR & ASSOCIATES
                                              CHARTERED ACCOUNTANTS
                                              Firm Reg. No.-000561N

                                                       MUKESH GOYAL
                                                        MG. PARTNER   
                                                       M.No. 081810