Auditor Report of Frontline Corporation Ltd.

Mar 31, 2014

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

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 Stan- dards notified under the Companies Act, 1956(the Act) read with the General Circular 15/2013 dated 13th Septem- ber,2013 of 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 misstatement, 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 Stan- dards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assur- ance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 entity''s internal control. An audit also includes evaluating the appro- priateness of accounting policies used and the reasonableness of the accounting estimates made by 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 confor- mity 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 Loss for the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter:

We draw attention to

1. Note no. 10.2 regarding properties given as collateral security to UCO Bank to secure various credit facilities enjoyed by M/s Fairdeal Supplies Limited (Group Company) and these properties have been symbolically possessed by UCO Bank.

2. Note no. 10.3 regarding symbolic possession of leased property situated at Gandhinagar taken by Punjab and Sind Bank toward recovery of amount due.

3. Note No. 14.1 regarding physical possession of property situated at Kolkata taken by Punjab and Sind Bank and the bank in the process of auction of said property.

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 Accounting Standards notified under 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 March 31,2014, taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2014, from being appointed as a director in terms of Section 274(1)(g) of the Act.

Annexure to Independent Auditor''s Report

(Referred to in paragraph 1 Under the Heading of "Report on other Legal & Regulatory Requirements" of our report of even date)

(i) In respect of Fixed Assets:

(a) The Company is maintaining fixed assets register showing full particulars including quantitative details and situation of its fixed assets till 31st March 2014.

(b) Management of the company has carried physical verification of assets during the financial year 2013-14 and no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off major part of the fixed assets hence the question of affecting the going concern status of the Company does not arise.

(ii) In respect of Inventories:

(a) Inventories of Stock in trade have been physically verified during the year by the management. In our opinion, the frequency of such verification is reasonable. However the difference, if any, in actual receipts and issues, is accounted for suitably.

(b) The procedures of physical verification of inventories followed by the management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the records produced for our verification, there were no material discrepancies noticed on physical verification of stocks in terms of quantity referred to in Para (ii) (a) above as compared to book records The shortages and excesses noticed on physical verification as mentioned in Para (ii) (a) above are not abnormal and material except as stated according to the nature of the business of the company.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) The Company had taken loans from Three Party. The Maximum amount involved during the year was Rs. 82.03 Lacs and year-end balance of loans taken from such parties was Rs. 60.21 Lacs.

(b) In our opinion, the rate of interest where ever applicable and other terms and conditions, secured or unsecured on which loans have been taken / given from / to such parties are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans taken by the Company, the principal amounts are repayable on demand and the interest payments are regular. In respect of loan given there is no stipulation as to the repayment and the interest is received regularly where ever applicable.

(d) Since there is no stipulation as to repayment on loan given, the question of over-due amounts does not arise.

(iv) In respect of Internal Controls:

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 purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure in correcting major weakness in internal controls systems. However the company needs to strengthen internal controls over generation and disposal of scrap

(v) In respect of transactions covered under section 301 of the Companies Act, 1956:

(a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. Total income/expenses amounting to Rs. 777.35 Lac has been generated during the year from these parties.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanation provided to us during the year company has not accepted the public deposit within the meaning of Section 58A of The Indian Companies Act, 1956.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its busi- ness.

(viii) According to the information and explanation provided to us, the Central Government has not prescribed for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products of the company.

(ix) In respect of statutory dues:

(a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax, customs duty, excise duty, service tax, cess and other material statutory dues applicable to it though there was a slightly delay in case of Service Tax, Professional Tax and Tax Deducted at Source except service tax and tds were not deposited regularly. It is informed by the company that the ESI is not applicable to the Com- pany. The company has not provided and deposited vat on fixed assets sold during the year.

(b) According to the information and explanations given to us, no disputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty, service tax and cess were in arrears as at 31st March, 2014 for a period of more than six months from the date they become payable except for the dues details given below which was outstanding for a period of more than six months from the date they became due for payment as at the last day of Financial Year:-

Particulars Amount

Service Tax 2,88,039/-

(c) According to the information and explanations given to us, the dues of income tax and excise duty which have not been deposited on account of disputes and the forum where dispute is pending are as under:

Name of Nature of Amount Period to which Forum Where the Statute Dues (Rs.) Amount Relates dispute is pending

Income Tax Act, Income Tax 10,38,853 A.Y. 2006-2007 ITAT 1961

Income Tax Act, Income Tax 5,03,879 A.Y. 2008-2009 ITAT 1961

Income Tax Act, Income Tax 42,10,480 A.Y. 2010-2011 CIT (A) 1961 (Section 156)

Guj. Value Added Tax VAT / CST 1,12,186 F.Y. 2009-10 Commissioner 2003 of Commercial Tax

(x) The Company does not have accumulated losses and cash loss in the current financial year covered by our audit however the company has incurred cash loss of Rs. 1,97,63,119/- in immediately preceding financial year.

(xi) The Company has defaulted in repayment of principal amounting to Rs. 2939.85 Lacs and interest amounting to Rs 1054.06 Lacs in respect of various loans taken from banks and financial institu- tions. Particulars of amount and period of defaults are as under:

Lender Concerned Period of Default Amount of Default (Rs. In Lac)

Shri Ram Finance Ltd (Including Interest of) 48 Months 53.27 Rs 19.94 Lac

Punjab and Sind Bank towards Principal 24months 2906.52

Punjab and Sind Bank towards Interest 24Months 1034.12

Total 3993.91

(xii) During the year, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order 2003, are not applicable to the Company.

(xiv) According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments. However, the Company is holding certain investments in equity shares of companies as long term investments.

(xv) According to the information and explanation given to us, we are of the opinion that the terms and conditions of the guarantees given by the Company, during the year, for the loan taken by others from banks or financial institutions are, prima facie, prejudicial to the interest of the Company as the approval of Central government under section 295 of Companies Act, 1956 for Corporate Guarantee given to secure various credit facilities amounting to Rs. 318 Crore to M/s Fairdeal Supplies Limited Group Company not obtained.

(xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on 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 except loan given to Gateway Commodities Ltd. No long-term funds have been used to finance short-term assets.

(xviii) The Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) During the financial year, the Company did not issue any debentures. Hence, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003, regarding creation of security for debentures are not presently applicable to the Company.

(xx) The Company has not raised any money by way of public issues during the year. Accordingly, the provisions of Clause 4(xx) of the Companies (Auditor''s Report) Order, 2003, on the end use of money are not presently applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our Audit.

For, Paresh Thothawala & Co. Chartered Accountants FRN: 114777W

Paresh K. Thothawala Partner Ahmedabad, May 30, 2014 MembershipNo.48435

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Mar 31, 2013

To, The Members of Frontline Corporation Ltd.

We have audited the accompanying financial statements of Frontline Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31,2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility

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 sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility in- cludes 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 misstatement, whether due to fraud or error. .

Auditor''s 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 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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 tf the explanations given to us, the 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, 2013;

b) in the case of the Statement of Profit and Loss, of the profit/ loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter:

We draw attention to

1. Note no. 10.2 regarding properties given as collateral security to UCO Bank to secure various credit facilities enjoyed by M/s Fairdeal Supplies Limited (Group Company) and these properties have been symbolically possessed by UCO Bank.

2. Note no. 10.3 regarding symbolic possession of leased property situated at Gandhinagar taken by Punjab and Sind Bank toward recovery of amount due.

3. Note No. 14.1 regarding physical possession of property situated at Kolkata taken by Punjab and Sind Bank and the bank in the process of auction of said property.

4. Note No. 15.1 regarding inventory of Iron Ore worth& 2,55,89,520/- (7754.400 Mt) at Vizag Branch in Visakhapatnam has been sold off at 7,75,440/- due to inappropriate chemical composition as ap- proved by the technical test report of M/s Anatest & Maritime Consultants.

5. The company has incurred cash loss of IV 1,97,63,119/- covered by our audit and it has also incurred cash loss in immediately preceding financial year, however it has not affected the going concern status of the company.

Our opinion is not modified in respect of the matters stated above.

Other Matters:

We did not audit the financial statements of Kolkata Branch, whose financial statements reflect total assets (net) of '' 441420324 as at March 31, 2013 and total revenues (net) of '' 60081832 for the year ended on that date. These financial statements have been audited by Branch auditors whose reports have been furnished to us and our opinion, is based solely on the reports of the Branch auditors. Our opinion is not qualified in respect of this matter.

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 sub-section (4A) of section 227 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure to Auditor''s Report

(Referred to in paragraph 1 of our Report of even date to the members of FRONTLINE CORPORATION LIMITED)

(i) In respect of Fixed Assets :

(a) The Company is maintaining fixed assets register showing full particulars including quantitative details and situation of its fixed assets till 31 * March 2013.

(b) Management of the company has carried physical verification of assets during the financial year2012-13 and no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off major part of the fixed assets hence the question of affecting the going concern status of the Company does not arise.

(ii) In respect of Inventories:

(a) Inventories of Stock in trade have been physically verified during the year by the management. In our opinion, the frequency of such verification is reasonable. However the difference, if any, in actual receipts and issues, is accounted for suitably.

(b) The procedures of physical verification of inventories followed by the management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the records produced for our verification, there were no material discrepancies noticed on physical verification of stocks in terms of quantity referred to in Para (ii) (a) above as compared to book records however the quality of stock in trade of iron ore amounting to Rs 255.89 Lac is contaminated with extraneous materials and the same has been sold atRs.7,75,440/ The shortages and excesses noticed on physical verification as mentioned in Para (ii) (a) above are not abnormal and material except as stated according to the nature of the business of the company.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) The Company had taken loans from Three Party. The Maximum amount involved during the year was '' 200.90 Lacs and year-end balance of loans taken from such parties was Rs. 69.67 Lacs.

(b) In our opinion, the rate of interest where ever applicable and other terms and conditions, secured or unsecured on which loans have been taken / given from / to such parties are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans taken by the Company, the principal amounts are repayable on demand and the interest payments are regular. In respect of loan given there is no stipulation as to the repayment and the interest is received regularly where ever applicable.

(d) Since there is no stipulation as to repayment on loan given, the question of over-due amounts does not arise.

(iv) In respect of Internal Controls:

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 purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure in correcting major weakness in internal controls systems. However the company needs to strengthen internal controls over generation and disposal of scrap

(v) In respect of transactions covered under section 301 of the Companies Act, 1956: -

(a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. Total income/expenses amounting to ''1010.33 Lac has been generated during the year from these parties.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanation provided to us during the year company has not accepted the public deposit within the meaning of Section 58A of The Indian Companies Act, 1956.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) According to the information and explanation provided to us, the Central Government has not prescribed for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products of the company.

(ix) In respect of statutory dues:

(a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax, customs duty, excise duty, service tax, cess and other material statutory dues applicable to it though there was a slightly delay in case of Service Tax, Professional Tax and Tax Deducted at Source except service tax and tds were not deposited regularly. It'' is informed by the company that the ESI is not applicable to the Company. The company has not provided and deposited vat on fixed assets sold during the year.

(b) According to the information and explanations given to us, no disputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty, service tax and cess were in arrears as at 31st March, 2013 for a period of more than six months from the date they become payable except for the dues details given below which was outstanding for a period of more than six months from the date they became due for payment as at the last day of Financial Year:-

Particulars Amount

Service Tax 2,05,870/-

Tax Deducted at Source 1,19,171/-

(c) According to the information and explanations given to us, the dues of income tax and excise duty which have not been deposited on account of disputes and the forum where dispute is pending are as under:

Name of Nature of Amount Period to which Forum Where the Statute Dues (Rs.) Amount Relates dispute is pending

Income Tax Act, 1961 Income Tax 35,72,862 A.Y. 2005-2006 CIT (A)

Income Tax Act, 1961 Income Tax 10,38,853 A.Y. 2006-2007 ITAT

Income Tax Act, 1961 Income Tax 5,03,879 A.Y. 2008-2009 ITAT

Income Tax Act, 1961 Income Tax 7,63,072 A.Y. 2006-2007 CIT (A) (Penalty u/s 271 C)

Income Tax Act, 1961 Income Tax 42,10,480 A.Y. 2010-2011 CIT (A) (Section 156)

Finance Act, 1994 Service Tax 26,34,837 F.Y. 2009-10 High Court Delhi and 2010-11

(x) The Company does not have accumulated losses and However the company has incurred cash losses of Rs.1,97,63,119 in the current financial year covered by our audit and the company has incurred cash loss in immediately preceding financial year.

(xi) The Company has defaulted in repayment of principal amounting to Rs. 3500.31 Lacs and interest amounting to Rs. 546.01 Lacs in respect of various loans taken from banks and financial institutions. Particulars of amount and period of defaults are as under:

Lender Concerned Period of Default Amount of Default (Rs. In Lac)

Shri Ram Finance Ltd (Including Interest of Rs 7.98 Lac) 36 Months 41.25

Punjab & Sindh Bank 12 Months 3467.04 Towards Principal

Punjab & Sindh Bank 12 Months 538.03 Towards Interest

TOTAL 4046.32

(xii) During the year, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order 2003, are not applicable to the Company.

(xiv) According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments. However, the Company is holding certain investments in equity shares of companies as long term investments.

(xv) According to the information and explanation given to us, we are of the opinion that the terms and conditions of the guarantees given by the Company, during the year, for the loan taken by others from banks or financial institutions are, prima facie, prejudicial to the interest of the Company as the approval of Central government under section 295 of Companies Act, 1956 for Corporate Guarantee given to secure various credit facilities amounting to Rs. 318 Crore to M/s Fairdeal Supplies Limited Group Company not obtained.

(xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on 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 except loan given to Gateway Commodities Ltd. No long-term funds have been used to finance short-term assets.

(xviii) The Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) During the financial year, the Company did not issue any debentures. Hence, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003, regarding creation of security for debentures are not presently applicable to the Company.

(xx) The Company has not raised any money by way of public issues during the year. Accordingly, the provisions of Clause 4(xx) of the Companies (Auditor''s Report) Order, 2003, on the end use of money are not presently applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our Audit.

For, Paresh Thothawala & Co.

Chartered Accountants

FRN: 114777W

Paresh K. Thothawala

Proprietor

Ahmadabad, May. 31st 2013 Membership No.48435

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Mar 31, 2011

We have audited the attached Balance Sheet of FRONTLINE CORPORATION LIMITED as on 31st March 2011, the Profit and Loss Account and also the Cash Flow Statement 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 the 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.

In accordance with the provisions of Section 227 of the Companies Act 1956, we report that:

1. As required by the Companies (Auditor's Report) Order, 2003 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 and 5 of the said Order.

2. Further to our comments in the annexure referred to 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 purposes 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Report of Branch Auditors of Kolkata Division has been forwarded to us and has been appropriately dealt with;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited reports from the Kolkata Division;

(d) The Balance Sheet, Profit and Loss Account and 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) On the basis of the written representations received from the Directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 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 together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give 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 31st March, 2011:

ii) In Case of Profit and Loss Account, of the profit for the year ended on that date: and

iii) In case of the Cash Flow Statement, of the cash flow for the year ended on that date.

Annexure to Auditor's Report

(Referred to in paragraph 1 of our Report of even date to the members of FRONTLINE CORPORATION LIMITED)

(i) In respect of Fixed Assets:

(a) The Company is maintaining fixed assets register showing full particulars including quantitative details and situation of its fixed assets till 31st March 2011.

(b) Management of the company has carried physical verification of assets during the financial year 2010-11 and no material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off major part of the fixed assets hence the question of affecting the going concern status of the Company does not arise.

(ii) In respect of Inventories:

(a) Inventories of finished goods, stock in trade, raw materials and stores spares have been physically verified during the year by the management. In our opinion, the frequency of such verification is reasonable. In case of stocks of items like Refractory Bricks, due to the nature of the stock and the manner of its storage, the actual quantities of stocks cannot be measured on physical verification with substantial accuracy. However the difference, if any, in actual receipts and issues, is accounted for suitably.

(b) The procedures of physical verification of inventories followed by the management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the records produced for our verification, there were no material discrepancies noticed on physical verification of stocks referred to in Para (ii) (a) above as compared to book records and the same have been properly dealt with in the books of account. The shortages and excesses noticed on physical verification as mentioned in Para (ii) (a) above are not abnormal and material according to the nature of the business of the company.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) The Company had taken loans from One Party. The outstanding at year end was 22,11,907/- and Maximum amount outstanding during the year was 2,09,71,357. The Company has not granted any advance in the nature of loan to any party during the year.

(b) In our opinion, the rate of interest and other terms and conditions on which loans have been taken / given from / to such parties are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans taken by the Company, the principal amounts are repayable on demand and the interest payments are regular. In respect of loan given there is no stipulation as to the repayment and the interest is received regularly.

(d) Since there is no stipulation as to repayment on loan given, the question of over-due amounts does not arise.

(iv) In respect of Internal Controls:

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 purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure in correcting major weakness in internal controls systems. However the company needs to strengthen internal controls over generation and disposal of scrap and accounting for fixed assets.

(v) In respect of transactions covered under section 301 of the Companies Act, 1956:

(a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. Total income amounting to Rs. 10,88,04,251/- has been generated during the year from these parties.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. According to the information and explanations given to us, in respect of transaction aggregating to Rs. 10,38,99,507/- with related parties approval of appropriate authority is pending as required u/s 297 of the Companies Act, 1956. However the approval for the same is awaited.

(vi) During the year company has not accepted the public deposit within the meaning of Section 58A of The Indian Companies Act, 1956.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, and are of opinion that prima-facie, the prescribed accounts and records have been made and maintained.

(ix) In respect of statutory dues:

(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax, customs duty, excise duty, service tax, cess and other material statutory dues applicable to it though there was a slightly delay in case of Service Tax, Professional Tax and Tax Deducted at Source. However, the company has not deducted and paid the applicable ESI other than at Haldia Branch.

(b) According to the information and explanations given to us, no disputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty, service tax and cuss were in arrears as at 31st March, 2011 for a period of more than six months from the date they become payable except for professional Tax as under:

(v) In respect of transactions covered under section 301 of the Companies Act, 1956:

(a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. Total Income amounting to Rs.26,89,429/- from Fairdale Supplies Ltd. and Rs.4,89,19,714/- from Falgun Export Limited, Income amounting to Rs.17,95,112/- from Centre for Advance Studies in Engineering, Income amounting to Rs.1,48,895/- from Neha Trade & Finance Private Limited, Income amounting to Rs.6,92,20,778/- from M/s. Fairdeal and Income amounting to Rs.1,34,83,246/- from Scientific Weighbridge & Auto Parts has been received during the year.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. According to the information and explanations given to us, in respect of transaction aggregating to Rs. 13,16,23,738/- with three parties approval of appropriate authority is pending as required u/s 297 for the Companies Act, 1956. The company has already applied for approval of the same.

(vi) During the year the company has not accepted the public deposit within the meaning of section 58A of The Indian Companies Act, 1956. However the company has taken an interest free advances from one party shown under the head Deposits and Trade Advances in the Schedule 'D' Unsecured Loan, from a partnership firm against supply of material and outstanding balance at the year end of Rs. 5,59,09,504/-.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the central government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) In respect of statutory dues:

(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax, customs duty, excise duty, service tax, cess and other material statutory dues applicable to it though there was a slight delay in case of Service Tax, Professional Tax and Tax Deducted at source. However, the company has not deducted and paid the applicable ESI other than at Haldia Branch in respect of Kolkata Division.

(b) According to the information and explanations given to us, no disputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty, service tax and cess were in arrears as at 31st March, 2010 for a period of more than six months from the date they become payable except for service tax, professional tax and Value Added Tax as under:

Nature of Tax Amount Period to Due Date of (Rs.) which the Dates Payment amount Relates

Professional Tax 6038/- April 10 to 15th of - August 10 Next Month

(c) According to the information and explanations given to us, the dues of income tax and excise duty which have not been deposited on account of disputes and the forum where dispute is pending are as under:

name of Nature of Amount Period to which Forum where dispute the Statute Dues (Rs.) mount relates is pending

Income Tax Act, 1961 Income Tax 35,72,862 A.Y. 2005-2006 CIT (A)

Income Tax Act, 1961 Income Tax 10,38,853 A.Y. 2006-2007 ITAT

Income Tax Act, 1961 Income Tax 5,03,879 A.Y. 2008-2009 ITAT

(x) The Company does not have accumulated losses and has not incurred cash losses in the current financial year covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) During the year, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order 2003, are not applicable to the Company.

(xiv) According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments. However, the Company is holding certain investments in equity shares of companies as long term investments.

(xv) According to the information and explanation given to us, we are of the opinion that the terms and conditions of the guarantees given by the Company, during the year, for the loan taken by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the Company.

(xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvii)According to the information and explanations given to us and on 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.

(xviii)The Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) During the financial year, the Company did not issue any debentures. Hence, the provisions of clause 4(xix) of the Companies (Auditor's Report) Order, 2003, regarding creation of security for debentures are not presently applicable to the Company.

(xx) The Company has not raised any money by way of public issues during the year. Accordingly, the provisions of Clause 4(xx) of the Companies (Auditor's Report) Order, 2003, on the end use of money are not presently applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our Audit.

For, Paresh Thothawala & Co. Chartered Accountants FRN: 114777W

Paresh K. Thothawala

Proprietor

Ahmedabad, September 3, 2011 MembershipNo.48435

---

Mar 31, 2010

We have audited the attached Balance Sheet of FRONTLINE CORPORATION LIMITED as on 31st March 2010, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the 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.

In accordance with the provisions of Section 227 of the Companies Act 1956, we report that:

1. As required by the Companies (Auditors Report) Order, 2003 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 and 5 of the said Order.

2. Further to our comments in the annexure referred to 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 purposes 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Report of Branch Auditors of Kolkata Division has been forwarded to us and has been appropriately dealt with;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the Kolkata Division;

(d) The Balance Sheet, Profit and Loss Account and 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) On the basis of the written representations received from the Directors, as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 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 together with the notes thereon 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 the Balance Sheet, of the state of affairs of the company as at 31st March, 2010; ii. In the case of the Profit and Loss Account, of the profit for the year ended on that date; and iii. In the case of the Cash Flow Statement, of the cash flow for the year ended on that date.

Annexure to Auditors Report (Referred to in paragraph 1 of our Report of even date to the members of FRONTLINE CORPORATION LIMITED)

(i) In respect of Fixed Assets:

(a) The Company has not prepared Fixed Asset Register and instead has compiled only item wise lists of its Fixed Assets. However, these item wise lists have not been updated and the values shown by these lists have not been reconciled with the financial books and records.

(b) We are informed by the management that most of the Fixed Assets have been physically verified by the management during the year, however, no records have been produced for our verification in respect of the same. We are also informed that assets such as Furniture and Fixtures, and Office Equipments have not been physically verified by the management during the year.

(c) During the year, the Company has not disposed off major part of the fL jd assets hence the question of affecting the going concern status of the Company does not arise.

(ii) In respect of Inventories:

(a) Inventories of finished goods, stock in trade, raw materials and stores spares have been physically verified during the year by the management. In our opinion, the frequency of such verification is reasonable. Incase of stocks of items like Refractory Bricks, due to the nature of the stock and the manner of its ., storage, the actual quantities of stocks cannot be measured on physical verification with substantial accuracy. However the difference, if any, in actual receipts and issues, is accoutned for sutiably.

(b) The procedures of physical verification of inventories followed by the management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the records produced for our verification, there were no material discrepancies noticed on physical verification of stocks referred to in Para (ii) (a) above as compared to book records and the same have been properly dealt with in the books of account. The shortages and excesses noticed on physical verification as mentioned in Para (ii) (a) above are not abnormal and material according to the nature of the business of the company.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

(a) The Company had taken loans from two parties. The maximum amount and outstanding at year end was Rs.2,24,29,582/-. The company has also granted and advance in the nature of loan to Two Parties. The maxmimum amount during the year was Rs.30,21,17,116/- and the oustanding as on 31.03.2010 was Rs.30,21,17,116/-.

(b) In our opinion, the rate of interest and other terms and conditions on which loans have been taken / given from / to such parties are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans taken by the Company, the principal amounts are repayable on demand and the interest payments are regular. In respect of loan given there is no stipulation as to the repayment and the interest is received regularly.

(d) Since there is no stipulation as to repayment on loan given, the question of overdue amounts does not arise.

(iv) In respect of Internal Controls:

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 purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure in correcting major weakness in internal controls systems. However the company needs to strengthen internal controls over generation and disposal of scrap and accounting for fixed assets.

(v) In respect of transactions covered under section 301 of the Companies Act, 1956:

(a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. Total Income amounting to Rs.26,89,429/- from Fairdeal Supplies Ltd. and Rs.4,89,19,714/-from Falgun Export Limited, Income amounting to Rs. 17,95,1121- from Centre for Advance Studies in Engineering, Income amounting to Rs.1,48,895/- from Neha Trade & Finance Private Limited, Income amounting to Rs.6,92,20,778/- from M/s. Fairdeal and Income amounting to Rs.1,34,83,246/- from Scientific Weightbridge & Auto Parts has been received during the year.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. According to the information and explanations given to us, in respect of transaction aggregating to Rs. 13,16,23,738/- with three parties approval of appropriate authority is pending as required u/s 297 for the Companies Act, 1956. The company has already applied for approval of the same.

(vi) During the year the company has not accepted the public deposit within the meaning of section 58A of The Indian Companies Act, 1956. However the company has taken an interest free advances from one party shown under the head Deposits and Trade Advances in the Schedule D Unsecured Loan, from a partnership firm against supply of material and outstanding balance at the year end of Rs. 5,59,09,504/-.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the central government for the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) In respect of statutory dues:

(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax, customs duty, excise duty, service tax, cess and other material statutory dues applicable to it though there was a slight delay in case of Service Tax, Professional Tax and Tax Deducted at source. However, the company has not deducted and paid the applicable ESI other than at Haldia Branch in respect of Kolkata Division. (b) According to the information and explanations given to us, no disputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty, service tax and cess were in arrears as at 31st March, 2010 for a period of more than six months from the date they become payable except for service tax, professional tax and Value Added Tax as under:

Nature of Tax Amount Period to (Rs.) which the amount Relates

Service tax 9,373/- Jan09 to Feb09

Professional tax 480/- 2008-09 2080/- 2009-10



Nature of Tax Due Date of Dates Payment

Service tax 5th of Next -- Month

Professional tax 15th of Next -- Month

(c) According to the information and explanations given to us, the dues of income tax and excise duty which have been not been deposited on account of disputed and the forum where dispute is pending are as under:

Name of Nature of Amount Period to Forum where the Statute Dues (Rs.) which dispute is amount relates pending

Income Tax Act, 1961 Income Tax 11,04,183 A.Y. 2003-2004 ITAT

Income Tax Act, 1961 Income Tax 7,72,658 A.Y. 2004-2005 ITAT

Income Tax Act, 1961 Income Tax 35,72,862 A.Y. 2005-2006 CIT(A)

Income Tax Act, 1961 Income Tax 32,98,187 A.Y. 2006-2007 CIT(A)

(x) The Company does not have accumulated losses and has not incurred cash losses in the current financial year covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) During the year, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order 2003, are not applicable to the Company.

(xiv) According to the information and explanations given by the management, the Company is not dealing in or trading in shares, securities, debentures and other investments. However, the Company is holding certain investments in equity shares of companies as long term investments.

(xv) According to the information and explanation given to us, we are of the opinion that the terms and conditions of the guarantees given by the Company, during the year, for the loan taken by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the Company.

(xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on 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.

(xviii) The Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) During the financial year, the Company did not issue any debentures. Hence, the provisions of clause 4(xix) of the Companies (Auditors Report) Order, 2003, regarding creation of security for debentures are not presently applicable to the Company.

(xx) The Company has not raised any money by way of public issues during the year. Accordingly, the provisions of Clause 4(xx) of the Companies (Auditors Report) Order, 2003, on the end use of money are not presently applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our Audit.

For Paresh Thothawala & Co.

Chartered Accountants

FRN:114777W

Paresh K. Thothawala

Date: September 3, 2010 Proprietor

Place: Ahmedabad Membership No. 48435