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Auditor Report of Shipping Corporation of India Ltd.

Mar 31, 2016

The Members of

THE SHIPPING CORPORATION OF INDIA LIMITED

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of THE SHIPPING CORPORATION OF INDIA LIMITED(“the Company”), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

2. Management’s Responsibility for the Financial Statements The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 (the ‘Act’) with respect to the preparation and presentation of these financial statements to give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of accounting records, 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.

3. Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We have conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. 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 financial control relevant to the Company’s preparation of the financial statements that give a true and fair view, 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 the Company’s Board of Directors, 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 on the standalone financial statements.

4. Basis for Qualified Opinion

a. The direct access of overseas foreign agents to fund collected on account of freight and other charges without adequate security and regular monitoring mechanism is prone to risk of non /short-payment, the consequential effect of which on the statement of profit and loss remains unascertainable.

b. One of the vessels acquired in the year 2012-13 was undercapitalized by 3.50 million USD and the provision for interest @ 2.5% pa on this amount has not been made in the accounts from the year 2012-13. This has resulted in understatement of fixed assets by Rs.20.28 crores, overstatement of profits by Rs,4.98 crores and understatement of liability of Rs,25.25 Cr.

5. Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the ‘Basis for Qualified Opinion’ paragraph above, 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, of the state of affairs of the Company as at 31 March 2016, its profit and its cash flows for the year ended on that date.

6. Emphasis of Matter

We draw attention of the management to the following observations without qualifying our opinion:

The adjustments required in the accounts not likely to be material in the opinion of management on confirmation and reconciliation of outstanding in respect of trade payables, trade receivables and loans & advances (Refer Note 42 to the financial statements)

7. Report on Other Legal and Regulatory Requirements:

a. As required by the Companies (Auditor’s Report) Order,

2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act 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 give in the Annexure-I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

As required under sub section (5) of Section 143 of the Act, in case of a Government company, we give in the Annexure-

II a statement on the matters specified in the directions and sub-directions issued by Office of the Comptroller and Auditor General of India.

b. As required by section143(3) of the Act, we report that:

i. We have sought and obtained all the information and

explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii. Except for the effects of the matter described in the “Basis for Qualified Opinion” paragraph above, In ouropinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. 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;

iv. In our opinion, the aforesaid financial statements comply with the accounting standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

v. The matter described in the “Basis for Qualified Opinion” paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

vi. On the basis of written representations received from the directors as on March 31, 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164(2) of the Act;

vii. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure-III.

c. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i) The Company has disclosed the impact of pending litigations on its financial position in Note-30 to the Financial Statements.

ii) The Company does not anticipate any material foreseeable losses on long- term contracts including derivative contracts.

iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Referred to in Paragraph 7(a)(i) of our Independent Auditors’ Report to the members of the company on the financial statements for the year ended 31st March, 2016

i. a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) The Fixed assets of the Company are being physically verified by the management once in three years. The physical verification of fixed Assets of the Company was not carried out during the year.

c) According to the information and explanations given to us, and on the basis of our examination of records of the company, the title deeds of immovable properties are held in the name of the Company.

ii. The physical verification of inventory has been conducted at reasonable intervals by the management during the year. No material discrepancies were noticed on such verification.

iii. The Company has granted loans to five bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013

a) The terms and conditions of the grant of such loans are prima facie not prejudicial to the company’s interest.

b) In the case of the loans granted, the terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand. Payment of interest has been stipulated, and the receipts thereof are regular.

c) There are no overdue amounts for more than ninety days in respect of the loans granted.

iv. The company has not given/made any loans, investments and guarantees and security, which may attract the provisions of section 185 and 186 of the Companies Act, 2013. Hence, the provisions of clause 3 (iv) of the said Order are not applicable to the Company.

v. In our opinion, and according to the information and explanations given to us, the company has not accepted any deposits during the year. Consequently, the directives issued by Reserve Bank of India and the provisions of Sections 73 to 76 and any other relevant provisions of the Companies Act, 2013 and the rules framed there under are not applicable.

vi We have been informed by the company that the maintenance of cost record under section 148 (1) of the Act has not been prescribed by the Central Government.

vii a) According to the information and explanations given to us and records of the company examined by us, in our opinion, the company is generally regular in depositing the undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities.

The arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they become payable are as under:

Name of the Statute

Nature of the Dues

Amount (Rs, in lacs)

Period to which the amount relates

Due Date

Date of Payment

Income Tax

TDS on Salary

59.32

2014-15

30.04.2015

29.04.2016

Income Tax

TDS on Salary

11.47

2014-15

30.04.2015

Not paid

b) The dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax which have not been deposited on account of disputes are as under:

Sr. No.

Name of the statute

Nature of the dues

Forum where dispute is pending

Finanacial Year to which amount relates

Amount (Rs, in lacs)

1

Income Tax Act, 1961

U/s 195

Bombay High Court

2003-04 to 2005-06

9820

2

Income Tax Act, 1961

Tax U/s 143(3)

Bombay High Court

2006-07

2901

3

Income Tax Act, 1961

Tax U/s 143(3)

Bombay High Court

2004-05 & 2005-06

801

4

Income Tax Act, 1961

Tax U/s 147

ITAT, Mumbai

2004-05 & 2005-06

2529

Sr. No.

Name of the statute

Nature of the dues

Forum where dispute is pending

Finanacial Year to which amount relates

Amount (Rs, in lacs)

5

Income Tax Act, 1961

Penalty u/s 271(1)

CIT(A) Mumbai

2004-05 & 2005-06

323

6

Income Tax Act, 1961

Tax U/s 143(3)

ITAT, Mumbai

2007-08

1013

7

Income Tax Act, 1961

Tax U/s 143(3)

CIT(A) Mumbai

2009-10

1180

8

Income Tax Act, 1961

Tax U/s 143(3)

CIT(A) Mumbai

2011-12

393

9

Income Tax Act, 1961

Tax U/s 143(3)

CIT(A) Mumbai

2012-13

300

10

Finance Act, 1994

Service tax

Commissioner (Appeals)

2002-03 to 2007-08

2

11

AP VAT Act, 2005

VAT

CTO

2011-12

10

12

High Court,Mumbai

VAT

Commissioner of Sales Tax

1994-95

14

13

High Court,Mumbai

VAT

Commissioner of Sales Tax

1993-94

22

Total

19308

viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank. Further, the Company has neither issued any debenture nor borrowed from Government.

ix. The Company has not raised any money by way of public issue/follow up offer (including debt instruments) during the year. In our opinion, the term loans were applied for the purpose for which those were raised.

x. We report that certain complaints were received by the Vigilance division of the company during the year for which the investigations were under progress. We have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees noticed or reported during the year nor have been informed of any such case by the management.

xi. The Company is a government company, and the provisions of section 197 is not applicable to it. Therefore clause (xi) of of the said Order is not applicable to the company.

xii. The Company is not a Nidhi Company, and hence the provisions of clause 3 (xii) of the said Order is not applicable to the company.

xiii. The Company does not have an audit committee and hence the approval of transactions with related parties by Audit Committee formed under section 177 of the Act is not applicable. The transactions with the related parties are in compliance with section 188 of the Act to the extent applicable and the details have been disclosed in the financial statements as required by the Accounting Standards.

xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of clause 3(xvi) of the Order are not applicable to the Company.

Referred to in Paragraph 7(b) (vii) of our Independent Auditors’

Report to the members of the company on the financial statements for the year ended 31st March, 2016

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Act.

1. We have audited the internal financial controls over financial reporting of THE SHIPPING CORPORATION OF INDIA LIMITED (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

2. The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing deemed to be prescribed under section 143 (10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

6. A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial

Reporting

7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

8. According to the information and explanation given to us and based on our audit, the following material weakness have been identified in the operating effectiveness of the Company’s internal financial control over financial reporting as at 31st March, 2016.

a) Freight & other charges collection done by certain overseas agents on behalf of the Company are getting credited to their bank accounts, instead of the bank account of the company, which in the absence of adequate security could potentially result in the non/ short receipt of such collections by the company in the event of either fraudulent intention of the agent, as was happened in the past or any dispute by either party.

b) The timely verification of claims of agents needs to be further strengthened.

c) The control on the timely reversal of stale cheque needs to be further strengthened.

d) The control on the booking of bunker consumption to the correct voyage of the vessels needs to be strengthened.

e) The control in the system to ensure that the bunker consumption in case of time charter is recovered from the charter instead of debiting to the consumption account needs to be further strengthened.

f) The system has to ensure that the tax is deducted at source on all the provision for expense made.

In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31, 2016 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India and except for the possible effects of the material weakness described above on the achievement of objectives of the control criteria, the internal financial controls over financial reporting of the company were operating effectively as at March 31, 2016.

We have considered the material weakness identified and reported above in determining the nature, timing and extent of audit tests applied in our audit of the financial statements of the company as of 31st March, 2016 and these material weakness do not affect our opinion on the Standalone Financial Statements of the Company.

For MKPS & Associates For GMJ & Co.

Chartered Accountants Chartered Accountants

Firm’s Regn. No. 302014E Firm’s Regn. No. 103429W

CA Nikhil Kumar Agrawalla CA Sanjeev Maheshwari

Partner Partner

M. No.157955 M. No.038755

Mumbai Mumbai

26th May, 2016 26th May, 2016


Mar 31, 2014

We have audited the accompanying Financial Statements of THE SHIPPING CORPORATION OF INDIA LIMITED, which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss Account and Cash Flow Statement for the year 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 in accordance with the Accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 (The Act). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that 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 but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. 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 qualified audit opinion.

Basis For Qualified - Opinion

In absence of sufficient documentary evidence to comply with clause 50 and 51 of AS 28 Impairment of Assets issued by ICAI in respect of the adjustments required to the Discount rate currently taken at 6% for the specific risks associated with the cash flows such as currency risk, price risk, country risk, cash flow risk etc. and estimation of expected rate of return on equity to arrive at the Weighted Average Cost of Capital, the effect of which on discount rate remains unascertainable on the Statement of Profit and Loss account, fixed assets and provision for impairment.

In the absence of positive confirmations required, in response of letters issued by the management, as per para 13 of SA 505 External confirmations issued by ICAI for trade receivables that may require adjustment to the statement of profit and loss account and their balances respectively, the consequential impact of the same on statement of profit and loss account and balance sheet remains unascertainable.

We draw attention toward the direct access of the Accounting Software provided to the Agents for accounting of the expenses relating to the port and 36% of the same are yet to be verified by the Company, due to which global netting is done without reconciliation towards the prefunding to agents and Vendor Reconciliation account, the consequential effect of the same on the Statement of Profit and Loss remains unascertainable.

Opinion

In our opinion and to the best of our information and according to explanation given to us, except in the Basis for Qualified- opinion paragraph, the financial statements 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:

(A) In case of Balance sheet, of the state of affairs of the company as at March 31, 2014;

(B) In case of Statement of Profit & Loss, of the loss for the year ended on that date.

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

Emphasis Of Matter

We draw attention to the delay in recording/reporting of transactions by the agents regarding income/expenses, as per the agreed terms, however the same has been provided for in the accounts of the company.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order 2003 (as Amended) issued by the Central Government in terms of sub-section (4a) of section 227 of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of audit, we set out in the annexure, a statement on the matters specified in paragraph 4 & 5 of the order.

2. As required by section 227(3) of the Companies Act, 1956, we report that:

A. We have obtained all the information and explanation, 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 appears from our examination of the books.

C. The Balance Sheet and Statement of Profit & Loss dealt with by this Report are in agreement with the books of accounts.

D. In our opinion, the Balance Sheet, Statement of Profit and Loss 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. Disclosure in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not required for Government Companies as per Notification No. GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs.

Annexure to the Auditors'' Report

(Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date) Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, we report that to the best of our knowledge and belief:

i) The Company has generally maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

The Fixed Assets of the Company, have been physically verified by the Management which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

Fixed assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

ii) In our opinion, physical verification of inventory has been conducted at reasonable intervals by the management.

In our opinion, the procedures of physical verification of inventory followed by the management are adequate in relation to the size of the Company and the nature of its business.

The Company has maintained proper records of inventory. No material discrepancies have been noticed on physical verification between physical stock and book records.

iii) The Company has not taken / granted any loans secured or unsecured from/to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us, special emphasis is required on the continued failure to correct major weakness in internal control systems as applicable to SAP and other sub systems in relation to the agents working, accounting and timely and proper verification by the Corporation. Emphasis also needs to be given on the implementation of the system audit report conducted by the organization in relation to the SAP - ERP and other critical business process, to establish checks on the complete and proper recording of the transaction relating to the expenses and revenue.

v) In our opinion and according to the information and explanations 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 exceeding the value of Rupees five lakhs in respect of any party during the year.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits as per the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

vii) In our opinion, the company does have an internal audit system commensurate with its size and the nature of its business. However due care needs to be given to the timely and proper recording of transactions and the inspection of agents needs to be conducted.

viii) The maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 is not applicable on the company.

ix) A) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

According to the records examined by us and information and explanations given to us, no undisputed dues payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty, investor education and protection fund and cess were in arrears, as at 31st March, 2014 for more than six months from the date they became payable. B) The details of dues of Sales Tax, Service Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess, which have not been deposited on account of any dispute, are given as under:

Sr. Name of Statute Nature of dues Forum where No. the dispute is pending

1. Income Tax Act, 1961 U/s. 195 ITAT Mumbai

2. Income Tax Act, 1961 Tax u/s.143(3) & 147 ITAT Mumbai

3. Income Tax Act, 1961 Tax u/s.143(3) ITAT Mumbai

4. Income Tax Act, 1961 Tax u/s.143(3) ITAT Mumbai

5. Finance Act, 1994 Service Tax CIT(A) Mumbai 6. Bombay Sales Tax Sales Tax

Total

Sr. Name of Statute Financial Year to Rs. In Lakhs No. which it pertains (Net of deposits)

1. Income Tax Act, 1961 2003-04 to 2005-06 9820

2. Income Tax Act, 1961 2004-05 to 2006-07 4417

3. Income Tax Act, 1961 2007-08 1013

4. Income Tax Act, 1961 2009-10 1180

5. Finance Act, 1994 2002-03 to 2007-08 237

6. Bombay Sales Tax 2000-01 to 2001-02 272

Total 16939

x) The Company has accumulated losses as on 31st March, 2014, however it has not incurred any cash loss during the financial year ended on that date or in 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) The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) The company is not a chit fund or a Nidhi/Mutual benefit fund/society.

xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments.

xv) In our opinion, in respect of the guarantee given by the company for the loans taken by others from a bank, the terms and conditions thereof are not, prima facie, prejudicial to the interest of the company.

xvi) On the basis of review of utilization of funds pertaining to term loans on overall basis and related information as made available to us, the term loans taken by the Company have been utilized for the purposes for which they are obtained.

xvii) On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the company, related information as made available to us and as represented to us by the management, funds raised on short-term basis have not been used for long-term investments.

xviii)The Company has not made any preferential allotment of shares during the year.

xix) The Company did not have any outstanding debentures during the year.

xx) The Company has not raised any money by way of public issue during the financial year.

xxi) We have been informed that one of the foreign agents of the company has manipulated the container movement report submitted from time to time and thus did not pay to the company its rightful dues. After the discovery of the same, the agent has deposited an amount of Rs. 13 crores on adhoc basis for last five years. The company has constituted a committee to further investigate the matter and to exactly quantify the actual amount. The report of the committee has not been submitted as yet. Except as mentioned in the forgoing lines, any other material fraud on or by the Company has not been noticed or reported during the year nor we have been informed of any such case by the management that causes the financial statements to be materially misstated.

For P.S.D. & Associates For SARDA & PAREEK Chartered Accountants Chartered Accountants FRN 004501C FRN 109262W

Thalendra Sharma Gaurav Sarda Partner Partner

Membership No. 079236 Membership No: 110208

Place: Mumbai Date: 27th May, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying Financial Statements of THE SHIPPING CORPORATION OF INDIA LIMITED, which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss Account and Cash Flow Statement for the year 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 in accordance with the Accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 (The Act). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that 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 qualified audit opinion.

Basis for Qualified - Opinion

The company has not complied with the requirements of AS 28 - Impairment of Assets, issued by ICAI the effect of which is unascertainable.

The Accuracy of Exchange Gain / Loss in respect of Customer reconciliation / Advance received from Customers / Trade Payable recognized on revaluation as per AS 11 - The Effects of Changes In Foreign Exchange Rates remains unverifiable and unascertainable.

The Company is unable to provide confirmation for accounts receivable, accounts of agents. In absence of the reasonable audit evidence, the effect of the same remains unascertainable / unverifiable on the Statement of Profit and Loss and Balance Sheet.

We draw attention toward the direct access of the Accounting Software provided to the Agents for accounting of the expenses relating to the port and 83% of the same are yet to be verified by the Company, the consequential effect of the same on the Statement of Profit and Loss remains unascertainable.

Opinion

In our opinion and to the best of our information and according to explanation given to us, except in the Basis for Qualified-opinion paragraph, the financial statements 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:

(a) In case of Balance sheet, of the state of affairs of the company as at March 31, 2013;

(b) In case of Statement of Profit & Loss, of the loss for the year ended on that date.

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

Emphasis of Matter

We draw attention to the non-adjustment of the debits and credit transactions related to the customers and vendors that might require adjustment to the Statement of Profit and Loss and Balance Sheet.

We draw attention to the failures to correct significant weaknesses in the internal control system built in the Softwares of the Corporation for timely recording of the transactions of income / expenses.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order 2003 (as Amended) issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of audit, we set out in the Annexure, a statement on the matters specified in paragraph 4 & 5 of the order.

2. As required by section 227(3) of the Companies Act, 1956, we report that:

a. We have obtained all the information and explanation, 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 appears from our examination of the books.

c. The Balance Sheet and Statement of Profit & Loss dealt with by this Report are in agreement with the books of accounts.

d. In our opinion, the Balance Sheet, Statement of Profit and Loss 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. Disclosure in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not required for Government Companies as per Notification No. GSR 829(E) dated October 21, 2003 issued by the Department Of Company Affairs.

Annexure to the Auditors'' Report

(Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date)

Based upon the information and explanations furnished to us and the books and records examined by us in the normal course of our audit, we report that to the best of our knowledge and belief:

i) The Company has generally maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

The Fixed Assets of the Company, have not been physically verified by the Management which, in our opinion, is not reasonable having regard to the size of the Company and the nature of its assets.

Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

ii) In our opinion, physical verification of inventory has been conducted at reasonable intervals by the management.

In our opinion, the procedures of physical verification of inventory followed by the management are adequate in relation to the size of the Company and the nature of its business.

The Company has maintained proper records of inventory. No material discrepancies have been noticed on physical verification between physical stock and book records.

iii) The Company has not taken / granted any loans secured or unsecured from / to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us there are failures to correct weaknesses in the internal control systems. Further no system audit was carried out for interface from functional subsystems to SAP-ERP and other critical business process, to establish checks on the complete and proper recording of the transaction relating to the expenses and revenue.

v) In our opinion and according to the information and explanations 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 exceeding the value of Rupees five lakhs in respect of any party during the year.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits as per the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

vii) In our opinion, the company does not have an internal audit system commensurate with its size and the nature of its business.

viii) The maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 is not applicable on the company.

ix) A) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

According to the records examined by us and information and explanations given to us, no undisputed dues payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty, investor education and protection fund and cess were in arrears, as at 31st March, 2013 for more than six months from the date they became payable.

B) The details of dues of Sales Tax, Service Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess, which have not been deposited on account of any dispute, are given as under:

Sr. Name of Statute Nature Forum where the No. of dues dispute is pending

1. Income Tax Act,1961 U/s. 195 ITAT Mumbai

2. Income Tax Act,1961 Tax u/s.143(3) ITAT Mumbai & 147

3. Income Tax Act,1961 Tax u/s.143(3) ITAT Mumbai

4. Income Tax Act,1961 Tax u/s.143(3) ITAT Mumbai

5. Finance Act,1994 Service Tax CIT(A) Mumbai

Name of Statute Financial Year Rs. In Lakhs to which it pertains (Net of deposits)

Income Tax Act 1961 2003 - 04 to 2005 - 06 417

Income Tax Act 1961 2005 - 06 to 2006 - 07 2500

Income Tax Act 1961 2007 - 08 717

Income Tax Act 1961 2008 - 09 521

Finance Act 1994 2002 - 03 to 2007 - 08 5539

Total 9694

x) The Company neither has any accumulated losses as on 31st March, 2013, nor it has incurred any cash loss during the financial year ended on that date or in 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) The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) The company is not a chit fund or a Nidhi / Mutual benefit fund / society.

xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments.

xv) In our opinion, in respect of the guarantee given by the company for the loans taken by others from a bank, the terms and conditions thereof are not, prima facie, prejudicial to the interest of the company.

xvi) On the basis of review of utilization of funds pertaining to term loans on overall basis and related information as made available to us, the term loans taken by the Company have been utilized for the purposes for which they are obtained.

xvii) On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the company, related information as made available to us and as represented to us by the management, funds raised on short-term basis have not been used for long-term investments.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) The company did not have any outstanding debentures during the year.

xx) The Company has not raised any money by way of public issue during the financial year.

xxi) As represented to us by the management and based on our examination of the books and records of the company in accordance with the generally accepted auditing practices in India, we have neither come across any material fraud on or by the Company noticed or reported during the year nor we have been informed of any such case by the management that causes the financial statements to be materially misstated.

For P.S.D & Associates For SARDA & PAREEK

Chartered Accountants Chartered Accountants

FRN 004501C FRN 109262W

Durga Dutt Dadhich Gaurav Sarda

Partner Partner

Membership No. 071909 Membership No. 110208

Place : Mumbai


Mar 31, 2012

1. We have audited the attached Balance Sheet of The Shipping Corporation of India Limited as at 31st March, 2012, and the Statement of Profit and Loss Account and 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.

2. 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.

3. As required by the Companies (Auditors' Report) Order, 2003 (As amended) issued by the Government of India in terms of Section 227 sub-section (4A) of the Companies Act, 1956, we annex here to a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in annexure referred to in para 3 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;

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 Sub section (3C) of Section 211 of the Companies Act, 1956;

e) Being a Government company, pursuant to the Notification no. GSR 829(E) dated October 21st 2003 issued by Government of India, provisions of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, are not applicable to the Company;

f ) We further report that:

Refer Note No. 35 (i) accompanying to the Financial Statement deals with Netting of certain Balances with trade receivables and payables pending adjustment of likely transaction, verification of physical documents and its authorisation and Note No. 35 (ii) in respect of accounting of the effects of changes in foreign exchanges rates of monetary items and consequential accounting of the exchange gain / losses of which impact on the financial statement is not ascertainable in respect of loss for the year and trade receivables and payables.

In our opinion and to the best of our information and according to the explanations given to us, subject to our comments in Para 4 (f) above, of which effects on the accounts is not ascertainable, the said accounts read together with Note No. 35 (iii) and the Significant Accounting Policies and accompanying Notes on the financial statement, 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 2012;

ii) in the case of the Statement of Profit and Loss, of the Loss of the Company 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 THE AUDITORS' REPORT Statement referred to in paragraph (3) of our report of even date to the members of The Shipping Corporation of India Ltd. on the accounts for the year ended 31st March 2012

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The assets have not been physically verified by the management during the year but 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.

(c) Substantial part of the fixed assets has not been disposed off during the year.

(ii) (a) The stock of Fuel oil, bonded item on board has been physically verified by the management at reasonable intervals.

(b) 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.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventories, were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

(iii)(a) The Company has not granted any loans secured or unsecured to any Company, firm or other parties covered in register maintained under section 301 of the Companies Act, 1956. In view of clause (iii)(a) above, the clauses (iii)(b), (iii)(c) and (iii)(d) are not applicable.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in register maintained under section 301 of the Companies Act, 1956. In view of (iii) (e) above, the clauses (iii) (f) and (iii) (g) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for purchase of inventory and fixed assets and for rendering of services.

During the course of our audit, failure to correct weaknesses in internal control systems is observed in accounting of transactions, interface of transactions amongst the subsystems and SAP-ERP. Further, no system audit is carried out for interface of the data from functional subsystems to SAP-ERP and other critical business process, to establish checks on the complete and proper recording of the transaction relating to the expenses and revenue, post implementation of functional and accounting software - SAP.

(v) (a) According to the information and explanations given to us, during the year under audit there have been no contracts or arrangements which need to be entered in the register maintained under section 301 of the Companies Act, 1956. In view of clause (v) (a) above, the clause (v) (b) is not applicable.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public within the meaning of Section 58A, 58AA, or any other relevant provisions of the Companies Act, 1956 and the rules framed there under. No order has been passed by the Company Law Board, or National Company Law Tribunal, or Reserve Bank of India, or any Court, or any other Tribunal.

(vii) The Company has an internal audit system; however the same is not commensurate with the size and nature of its business. In view of implementation of ERP and other functional package it requires further strengthening.

(viii) As per the information and explanation given to us, maintenance of the cost records has not been prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, income tax, value added tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues have generally been regularly deposited with the appropriate authorities within a period of six months from the date they became payable which has since been deposited with the appropriate authorities.

(b) The disputed statutory dues aggregating to Rs. 11323 lakh that have not been deposited on account of matters pending before appropriate authorities are detailed below:

S. Name of Statute Nature of dues Forum where the Financial Year Rs.in lakh No. dispute is pending to which pertains (Net of Deposit)

1 Income Tax Act 1961 U/s 195 ITAT Mumbai 2003-04 to 2005-06 417

2 Income Tax Act 1961 Tax U/s 143(3) ITAT Mumbai 2005-06 2701 & 147

3 Income Tax Act 1961 Tax u/s 143(3) CIT (A) Mumbai 2008-09 1687

4 Finance Act,1994 Service Tax CIT (A) Mumbai 2002-03 to 2007-08 6518

Total 11323

(x) The Company has no accumulated losses and has not incurred cash losses during the 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 financial institutions, banks or debenture holders.

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

(xiii) 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) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors' Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion and information and explanation given to us the Company has given the guarantees for loans taken by others from banks or financial institutions, the terms and conditions whereof are not prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Corporation, we are of the opinion that no funds raised on short-term basis have been used for long-term investment.

(xviii) According to the information and explanations given to us, the Company has not made preferential allotment of shares during the year.

(xix) The Company has not issued any debenture/bonds during the year.

(xx) According to the information and explanations given to us, the Company has not raised any money by public issue during the year.

(xxi) On the basis of the information and explanations given to us by the management, we report that no material fraud on or by the Company has been noticed or reported during the year.

For P.S.D. & ASSOCIATES For SARDA & PAREEK

Chartered Accountants Chartered Accountants

Firm Registration No : 004501C Firm Registration No : 109262W

Manish Agarwal Gaurav Sarda

Partner Partner

(Membership No. 406996) (Membership No. 110208)

Place : Mumbai Date : May 29th 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of The Shipping Corporation of India Ltd. as at 31st March, 2011, and the Profit and Loss Account and 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.

2. 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.

3. As required by the Companies (Auditors' Report) Order, 2003 issued by the Government of India in terms of sub-section (4A) of the Section 227 of the Companies Act, 1956, we annex here to a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4) Further to our comments in the annexure referred to in Para 3 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;

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;

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

e) Being a Government company, pursuant to the Notification no.GSR 829(E) dated 21.10.2003 issued by Government of India, provisions of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, are not applicable to the Company;

f) Attention is invited on:

Note. No. 1, Schedule-25 Notes on Accounts, regarding various errors and omissions have been made by the Company during the process of migration / uploading of data post migration in the new accounting software ERP-SAP, in respect of accounting of the income and expenses, assets and liabilities for which necessary rectification has been carried out by the Company.

Further there remain certain items where the company is unable to make appropriate adjustment and the effects of errors and adjustments, if any, as might have been determined to be necessary in the data migrated / uploaded in the accounting software post migration.

It has been further noticed that the Company has:

i) Not accounted the income and expenditure in respect of unfinished voyages as per accounting policy No. 2(c), having no impact on the profit for the year.

ii) Non accounting of foreign currency transactions at the rates as stipulated in Accounting Policy No. 8 (a) for the months of January 2011 and February 2011 instead the same have been accounted at the exchange rates applicable for the month of March 2011.

g) Note No. 17 of Schedule-25 "Notes to the Accounts" in respect of balances of Sundry Creditors, Debtors, Loans & Advances and Deposit which are subject to confirmation.

In our opinion and to the best of our information and according to the explanations given to us, subject to our comments in para 4 (f) above, the said accounts read together with the Significant Accounting Policies stated in Schedule 24 and Notes on the Accounts in Schedule 25, 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, 2011;

ii) in the case of the Profit and Loss Account, of the Profit of the Company 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 the Auditors'' Report

Statement referred to in Paragraph (3) of our report of even date to the members of The Shipping Corporation of India, on the accounts for the year ended 31st March 2011:

i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The assets have been physically verified by the management during the year 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.

(c) Substantial part of the fixed assets has not been disposed off during the year.

ii) (a) The stock of Fuel oil and stores has been physically verified by the management at reasonable intervals.

(b) 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.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification of inventories, were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

iii) (a) The Company has not granted any loans secured or unsecured to the Company, firms or other parties covered in register maintained under Section 301 of the Companies Act, 1956. In view of clause (iii)(a) above, the clause (iii)(b), and (iii)(c) and (iii)(d) are not applicable.

(b) The Company has not taken any loans, secured or unsecured from companies, firm or other parties covered in register maintained under section 301 of the Companies Act, 1956. In view of (iii)(e) above, the clause (iii)(f) and (iii)(g) are not applicable.

iv) In our opinion and according to the information and explanation given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for purchase of inventory, fixed assets and rendering of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems. However weakness in design of internal control in respect of migration of the data / uploading of the data have been observed in the process of implementation of ERP-SAP, although as at the balance sheet date, the material errors and omission effecting the results as observed during the course of our audit has been rectified by the management.

v) (a) According to the information and explanations given to us, during the year under audit there has been no contracts or arrangement which need to be entered in the register maintained under Section 301 of the Companies Act, 1956. In view of clause (v)(a) above, the clause (v)(b) is not applicable.

vi) In our opinion and according to the information and explanations given to us, the Corporation has not accepted any deposit from the public within the meaning of the Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed under there. No order has been passed by the Company Law Board, or National Company Law Tribunal, or Reserve Bank of India, or any Court, or any other Tribunal.

vii) The Company has an internal audit system commensurate with its size and nature of business till December 2010. Post implementation of the ERP-Sap, the internal auditor expressed inability to cover many areas and report thereon including accounting of income and expenses on finished and unfinished voyages etc.

viii) As per the information and explanations given to us, maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956.

ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, income tax, wealth tax, value added tax Service Tax, custom duty, excise duty, cess and other statutory dues have generally been regularly deposited with the appropriate authorities within a period of six months from the date they become payable which has since been deposited with the appropriate authorities.

(c) The disputed statutory dues aggregating to Rs. 8813 lac that have not been deposited on account of matters pending before appropriate authorities are detailed below :

Sr. Name of the Nature of Dues Forum where Rs. / lac No Statute dispute is pending

1 Income Tax Act, 1961 u/s 195 ITAT 417

2 Income Tax Act, 1961 Tax u/s 143 (3) & 147 CIT (A) Mumbai 4939

3 Income Tax Act, 1961 Tax u/s 154 & 143(3) CIT (A) Mumbai 1861

4 Income Tax Act, 1961 Tax u/s 143 (3) ITAT 1569

5 Income Tax Act, 1961 Tax u/s 154 & 115 WE (3) CIT (A) Mumbai 27

Total 8813

x) The Company has no accumulated losses and has not incurred cash losses during the 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, banks or debenture holders.

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

xiii) 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) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

xv) In our opinion and information and explanations given to us the Company has not given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

xvi) According to the information given to us, the term loans have been applied for the purposes for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that no funds raised on short-term basis have been used for long-term investment.

xviii) According to the information and explanations given to us, the Company has not made preferential allotment of shares during the year.

xix) The Company has not issued any debentures/ bonds during the year.

xx) According to the information and explanations given to us, the Company has raised money by public issue during the year and same have been applied for the purpose for which they were obtained.

xxi) On the basis of information and explanations given to us by the management, we report that no material fraud on or by the Company has been noticed or reported during the year.

For P.S.D. & ASSOCIATES For SARDA & PAREEK

Chartered Accountants Chartered Accountants

Firm Registration No.: 004501C Firm Registration No.: 109262W

Manish Agarwal Sitaram Pareek

Partner Partner

(Membership No. 406996) (Membership No. 016617)

Place : Mumbai

Date : 30th May 2011.


Mar 31, 2010

1) We have audited the attached Balance Sheet of The Shipping Corporation of India Ltd. as at 31st March, 2010, and the Profit and Loss Account and 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.

2) 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.

3) As required by the Companies (Auditors Report) Order, 2003 and the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and as per the information and explanations given to us, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order as are applicable to the Corporation.

4) Further to our comments in the Annexure referred to in Paragraph (3) 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 Corporation so far as appears from our examination of those books;

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;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement 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 of the Corporation are disqualified as on 31st March 2010 from being appointed as directors in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the said date;

f) We draw attention to;

Note No. 15 of Schedule 25 to the accounts regarding balances of Sundry Creditors, Debtors, Loans & Advances and Deposits which are subject to confirmation and reconciliation.

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 the Significant Accounting Policies stated in Schedule 24 and Notes on the Accounts in Schedule 25, 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 Corporation as at 31st March, 2010;

ii) in the case of the Profit and Loss Account, of the Profit of the Corporation 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 THE AUDITORS REPORT

Referred to in Paragraph 3 of our report of even date on the accounts of The Shipping Corporation of India Limited for the year ended March 31, 2010:

i) (a) The physical verification of the fixed assets was conducted by the Management at reasonable intervals. In our opinion, the frequency of the verification is reasonable and commensurate with the size and operations of the Corporation and the nature of its assets. We are also informed that no material discrepancies were noticed on such verification as compared to book records.

(b) The Corporation generally maintains proper records showing full particulars including quantitative details and situation of fixed assets.

(c) The Corporation has not disposed off a substantial part of its fixed assets during the year, so as to affect the going concern status of the Corporation.

ii) (a) We are informed that the Management has conducted physical verification of fuel oil and bonded items on board at reasonable intervals during the year and of stores and spares lying in godowns at the year end.

(b) In our opinion, the procedures followed by the Management for such physical verification are reasonable and adequate in relation to the size of the Corporation and nature of its business.

(c) The Corporation is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and the book records were not material in relation to the operations of the Corporation and the same have been properly dealt with in the books of account.

iii) Based on the records examined by us and according to the information and explanations given to us, there are no loans granted/taken to/from companies, firms or other parties required to be listed in the register maintained under Section 301 of the Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Corporation and the nature of its business for the purchase of inventory and fixed assets and rendering of services. The Corporation does not have any sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems of the Corporation.

v) Based on the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that there are no transactions during the year that need to be entered into the register maintained under Section 301 of the Companies Act, 1956.

vi) In our opinion and according to the information and explanations given to us, the Corporation has not accepted any deposits attracting provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 or any other relevant provision of the Act.

vii) The Corporation has an internal audit system commensurate with its size and nature of its business. The audit is carried out by an independent firm of Chartered Accountants.

viii) As per the information and explanations given to us, maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956.

ix) (a) We have been informed that the provisions of the Employees State Insurance Act are not applicable to the Corporation. The Corporation is generally regular in depositing dues payable in respect of Provident Fund, Investor Education and Protection Fund, Income Tax, Service Tax, Wealth Tax, Value Added Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it with the appropriate authorities except for dues relating to service tax where there have been delays in few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess were in arrears as at 31st March 2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are disputed statutory dues which have not been deposited as given herein below :

Sr. Name of the Statute Nature of Dues Amount Period to which Forum where

No (Rs. In lakhs) the amount relates dispute is pending

1 Income Tax Act, 1961 Tax u/s 195 195 2003-04 ITAT, Mumbai

2 Income Tax Act, 1961 Tax u/s 195 41 2004-05 ITAT, Mumbai

3 Income Tax Act, 1961 Tax u/s 195 87 2005-06 ITAT, Mumbai

4 Income Tax Act, 1961 Tax u/s 154 read 3051 2006-07 CIT Appeals,

with Sec.143 (3) LTU, Mumbai

5 Income Tax Act, 1961 Tax u/s 154 read- 10 2006-07 CIT Appeals,

with Sec.115 LTU, Mumbai

WE (3)

x) The Corporation has no accumulated losses at the end of the financial year and it has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

xi) According to the information and explanations given to us and records examined by us, the Corporation has not defaulted in repayment of dues to a financial institution or bank.

xii) Based on our examination of documents and records and according to the information and explanations given to us, the Corporation has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the nature of the activities of the Corporation does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.

xiv) In our opinion, the Corporation is not dealing in and trading in shares, securities, debentures and other investments.

xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Corporation has given guarantees for loans taken by others from banks are not prejudicial to the interest of the Corporation.

xvi) On the basis of the records examined by us, we have to state that, the Corporation has, prima facie, applied the term loans for the purposes for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the financial statements of the Corporation, we are of the opinion that, prima facie the Corporation has not utilised the funds raised on short term basis for long term investments.

xviii) The Corporation has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act.

xix) The Corporation has not issued any debentures.

xx) The Corporation has not raised any money through a public issue during the year.

xxi) On the basis of information and explanations given to us by the Management, we report that no material fraud on or by the Corporation has been noticed or reported during the year.



For S. BHANDARI & CO., For KHANDELWAL JAIN & CO.,

Chartered Accountants Chartered Accountants

Firm Registration No.: 000560C Firm Registration No.: 105049W



(S. S. BHANDARI) (NARENDRA JAIN)

Partner Partner

Membership No. 11332 Membership No. 48725



Mumbai, Dated the 29th May 2010

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