Auditor Report of Varun Shipping Company Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of VARUN SHIPPING COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the period of 18 months then ended, and a summary of the 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 Standards notified under the Companies Act, 1956 ('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. 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 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 the 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 Company's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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

Attention is invited to the following:

I. Note No. 31 regarding Long Term strategic investments made by the Company which are carried at cost and also other exposures of the Company in its various subsidiaries and associates in which there has been a significant erosion in the net worth on account of temporary reduction in revenues due to lack of working capital that has affected operations of the vessels. The management is in the process of raising resources to streamline the operations of the vessels in the future. The Company regards the diminution in the value of its investments and the recoverability of the receivables from its subsidiaries and associates to be temporary in nature considering the Company's strategic and long term commitment to these investments. The Company has made a provision of Rs. 14,000 Lacs as on 31st March 2014 against the Receivables from Varun Cyprus Ltd. Consequently Management is of the view that the outstandings are good and recoverable and that no further provision is required for the reasons stated in the note.

We are unable to express an opinion on the recoverability / realizability of the above mentioned items and the impact of the same on the Loss for the year.

II. Note No. 40 regarding non payment of Dividend of Rs. 750.03 Lacs and Dividend Distribution Tax of Rs. 121.67 Lacs for the period ended 30th September 2012.

Qualified 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, the aforesaid 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 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the period ended on that date; and

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

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 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.

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. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion proper books of account as required by law have been kept by the Company so far as it 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. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 ('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. As the Company has failed to pay the Dividend for the period ended 30th September, 2012 which had been approved by the Shareholders of the Company at the Annual General Meeting held on 4th February, 2013, and such failure has continued for a period of over one year, all the directors are disqualified as on March 31, 2014 from being appointed as directors in any other public company, under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. Refer Note No. 40.

Annexure to the Auditor's Report

Annexure referred to in Para 1 of our report of even date to the members of Varun Shipping Company Limited

a) The Company is maintaining proper records of its fixed assets except Furniture and Fixtures.

b) The fixed assets have been physically verified by the Management during the period under review at reasonable intervals and no material discrepancies were noticed.

c) According to the information and explanations given to us, the Company has not disposed off substantial part of its fixed assets during the period under review.

ii The Company owns and operates ships and hence a comment on inventory does not apply in this case. The Company does purchase stores and spare parts for its ships, which are directly treated as consumed as and when supplied to its ships. Stocks of bunkers have been physically verified by the Management.

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 has granted unsecured loans to 2 companies covered in the register maintained under Section 301 of the Companies Act, 1956. In respect of the said loans, the maximum balance outstanding at any time during the period under review is Rs. 6396.39 Lacs and the year end balance is also Rs. 6396.39 Lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of such loans, are not, prima facie, prejudicial to the interest of the company.

c. In respect of the said loans no amounts on account of interest or principal have been received from the borrowers. The interest accrued on these Loans is Rs. 4,289.06 Lacs as on 31st March 2014. The terms of arrangement do not stipulate any repayment schedule on account of principal and the loans are repayable on demand.

d. There is no overdue amount of more than Rupees one lakh in respect of the loans granted to companies listed in the register maintained under Section 301 of the Companies Act, 1956 as the terms of arrangement do not stipulate any repayment schedule and the same are repayable on demand.

e. The Company has taken an interest free unsecured loan from a party covered in the register maintained under Section 301 of the Companies Act, 1956. In respect of the said loan, the maximum balance outstanding at any time during the period under review is Rs. 352.00 Lacs and the year end balance is also Rs. 352.00 Lacs.

f. In our opinion and according to the information and explanations given to us, the loan is interest free and the other terms and conditions of the loan are not, prima facie, prejudicial to the interest of the company.

g. The terms of arrangement do not stipulate any repayment schedule on account of principal and the loan is repayable on demand.

iv. 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 purchases of stores, spare parts and fixed assets. During the course of our audit, we have not observed any major weaknesses in internal control system of the Company. However, attention is invited to the matters stated in Note No. 42

v

a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

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

vi According to the information and explanations given to us, the Company has not accepted fixed deposits from public and hence, provisions of sections 58A and 58AA and 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 are not applicable.

vii In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

viii Maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub section (i) of section 209 of the Companies Act, 1956.

ix

a. According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other statutory dues have not generally been regularly deposited with the appropriate authorities. The following are the outstanding statutory dues as at the last date of the financial year which were outstanding for a period of more than six months from the date they became payable:

Name of the Statute Nature of the Amount Period to Dues in Lacs) which the amount relates

Income tax Act, 1961 Income Tax 1,597.93 July 2012 to August 2013

Finance Act, 1994 Service Tax 1,228.10 May 2008 to August 2013

Employees Provident Fund Employees 424.23 November 2012 to August 2013 Act, 1952 Provident Fund

Companies Act, 1956 Payment of 750.04 February 2013 Dividend

Companies Act, 1956 Dividend 121.68 February 2013 Distribution Tax

a. According to the records of the Company as at 31st March 2014, the following are the particulars of disputed dues on account of various matters which have not been deposited:

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

Tamil Nadu Commercial 832.84 2007-2008 Madras High General Sales Tax Court Tax Act, 1959

x In our opinion, the accumulated losses at the end of the financial year are more than fifty percent of its net worth.

The Company has incurred cash losses in the current period under review; however the Company has not incurred cash loss in the immediately preceding financial year.

xi The Company is in arrears in the repayment of its dues to various Banks/Financial Institutions. An amount of Rs. 6,818.89 Lacs on account of Principal and Rs. 5,550.74 Lacs on account of Interest aggregating to Rs. 12,369.63 Lacs are overdue to various Banks/Financial Institutions as on 31st March 2014. Subsequent to the date of the Balance Sheet, the Company has paid an aggregate amount of Rs. 1,166.63 Lacs.

xii In our opinion and according to the information and explanations given by the Management, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or any 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 Order are not applicable.

xiv In our opinion, the Company is not dealing in or trading in shares, securities, debentures and any other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable.

xv In our opinion and according to the information and explanations given to us, the terms and conditions on which guarantees have been given by the Company for loans taken by others from banks / financial institutions are not prima facie prejudicial to the interest of the Company.

xvi On the basis of the records examined by us and relying on the information compiled by the Company for co-relating the funds raised to the end-use of term loans, we state that the Company has, primo facie, applied the term loans 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 financial statements and after placing reliance on the reasonable assumptions made by the Company for classification of Short-term and Long-term usage of the funds, we are of the opinion that, prima facie, no funds raised on short-term basis have been utilized for long-term investment.

xviii According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly paragraph 4(xviii) of the Order is not applicable.

xix According to the information and explanations given to us, the Company has not issued any debentures during the period under review. Accordingly paragraph 4(xix) of the Order is not applicable.

xx The Company has not raised any money by public issues during the period under review. Accordingly paragraph 4(xx) of the Order is not applicable.

xxi Based upon the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the period under review.

For SORAB S. ENGINEER & CO. CHARTERED ACCOUNTANTS Firm Registration No.: 110417W

CA N.D. Anklesaria PARTNER MEMB. NO. 10250

Mumbai: May 30, 2014.

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Mar 31, 2011

We have audited the attached Balance Sheet of VARUN SHIPPING COMPANY LIMITED, as at 31st March, 2011 and also the Profit and Loss Account and 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 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.

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 in Paragraph (1) 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 purposes of our audit have been received from the branches not visited by us;

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 and Profit and Loss Account dealt with by this report comply with the applicable accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. On the basis of 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. Subject to our comments in Annexure referred to in Paragraph 1, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 for the year ended on that date.

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

Annexure referred to in Para 1 of our report of even date to the members of Varun Shipping Company Limited

i a) The Company is maintaining proper records of its fixed assets except Furniture and Fixtures.

b) The fixed assets have been physically verified by the Management during the year at reasonable intervals and no material discrepancies were noticed.

c) According to the information and explanations given to us, the Company has not disposed off substantial part of its fixed assets during the year.

ii The Company owns and operates ships and hence a comment on inventory does not apply in this case. The Company does purchase stores and spare parts for its ships, which are directly treated as consumed as and when supplied to its ships. Stocks of bunkers have been physically verified by the Management.

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, 1 956:

a. The Company has granted unsecured loans to five companies covered in the register maintained under Section 301 of the Companies Act, 1956. In respect of the said loans, the maximum balance outstanding at any time during the year is Rs. 5,657,644,500 and the year end balance is Rs. 3,812,057,000.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of such loans, are not, prima facie, prejudicial to the interest of the company.

c. In respect of the said loans the borrower has been regular in payment of the interest as stipulated. The terms of arrangement do not stipulate any repayment schedule and is repayable on demand. Accordingly, paragraph 4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount.

d. There is no overdue amount of more than rupees one lakh in respect of the loans granted to companies listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii)(d) of the Order is not applicable.

e. The Company has not taken any loans, secured or unsecured from Companies, Firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly paragraphs 4(iii)(e) to 4(iii)(g) of the Order are not applicable.

iv 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 purchases of stores, spare parts and fixed assets. During the course of our audit, we have not observed any major weaknesses in internal control system of the Company.

v a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs 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 According to the information and explanations given to us, the Company has not accepted fixed deposits from public and hence, provisions of sections 58A and 58AA and 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 are not applicable.

vii In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

viii Maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub section (I) of section 209 of the Companies Act, 1956.

ix (a) According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, investor education and protection fund, employees' state Insurance, income-tax, sales-tax, wealth-tax, customs duty, cess and other statutory dues applicable to it, except for the payment of Service Tax amounting to Rs. 84,324,275, which is outstanding on 31st March, 2011 for a period of more than six months, as the liability for the same has not been accepted by the receivers of the services rendered by the Company.

There were no dues on account of cess payable under Section 441A of the Companies Act, 1 956 since the aforesaid section has not yet been made effective by the Central Government of India.

(b) According to the records of the Company, as at 31st March, 2011, the following are the particulars of disputed dues on account of various matters which have not been deposited:

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

Tamil Nadu General Sales Tax Act, 1959 Commercial Tax 83,284,324 1993-1997 Madras High Court

The Income Tax Act, 1961 Income Tax 90,619,892 2007-2008 CIT (A),Mumbai

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

xi Based on our audit procedures and on the information and explanations given by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

xii In our opinion and according to the information and explanations given by the Management, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or any 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 Order are not applicable.

xiv In our opinion the Company is not dealing in or trading in shares, securities, debentures and any other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable.

xv In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks are not prima facie prejudicial to the interest of the Company.

xvi On the basis of the records examined by us, and relying on the information compiled by the Company for co-relating the funds raised to the end-use of term loans, we state that the Company has, prima facie, applied the term loans 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 financial statements and after placing reliance on the reasonable assumptions made by the Company for classification of Short-term and Long-term usage of the funds, we are of the opinion that, prima facie, no funds raised on short-term basis have been utilized for long-term investment.

xviii According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly paragraph 4(xviii) of the Order is not applicable.

xix According to the information and explanations given to us, the Company has not issued any debentures during the year. Accordingly paragraph 4(xix) of the Order is not applicable.

xx The Company has not raised any money by public issues during the year. Accordingly paragraph 4(xx) of the Order is not applicable.

xxi Based upon the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year.

For SORAB S. ENGINEER & CO. Chartered Accountants Firm Registration Number : 110417W

M.P. ANTIA Partner Mumbai: May 26, 2011 Membership No. 7825

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Mar 31, 2010

We have audited the attached Balance Sheet of VARUN SHIPPING COMPANY LIMITED,as at 31 st March, 201 O and also the Profit and Loss Account and 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 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.

1.As required by the Companies (Auditors Report)Order,2003 issued by the Central Government of India in terms of sub-section C4A)of Section 227 of the Companies Act,1 956,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 in Paragraph (1)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 purposes of our audit have been received from the branches not visited by us;

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 and Profit and Loss Account dealt with by this report comply with the applicable accounting standards referred to in sub-section (3C)of Section 21 1 of the Companies Act,1 956;

e.On the basis of written representations received from the Directors,as on 31 st March,2O1 O and taken on record by the Board of Directors,we report that none of the Directors is disqualified as on 31 st March,2O1 O from being appointed as a Director in terms of clause (g)of sub-section (1)of Section 274 of the Companies Act,1 956;

f.As stated in Note No.7 [c)of Schedule N,the Company has paid Rs.34,837,264 as Managerial Remuneration,of which Rs.i4,46t,534 is in excess of limits under the Companies Act,1 956.Had the Company accounted for the remuneration in accordance with the Act,the profit for the year would have been higher by Rs.44,46i,534.

g.Subject to the above Note [/),in our opinion and to the best of our information and according to the explanations given to us,the said accounts give the information required by the Companies Act, 1 956 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 31 °*March, 2010.

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

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

Annexure referred to in Para 1 of our report of even date to the members of Varun Shipping Company Limited:

(i)a)The Company is maintaining proper records of its fixed assets except Furniture and Fixtures. tO The fixed assets have been physically verified by the Management during the year at reasonable intervals and no material discrepancies were noticed.

c)According to the information and explanations given to us,the Company has not disposed off substantial part of its fixed assets during the year.

GO The Company owns and operates ships and hence a comment on inventory does not apply in this case.The Company does purchase stores and spare parts for its ships,which are directly treated as consumed as and when supplied to its ships.Stocks of bunkers have been physically verified by the Management.

(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 3O1 of the Companies Act, 1956:

a)The Company has granted loans to its erstwhile wholly owned subsidiary.In respect of the said loans,the maximum balance outstanding at any time during the year is Rs.2,255,O1 8.3OO and the year end balance is Rs.2,21 1,370,000.

b)In our opinion and according to the information and explanations given to us,the rate of interest and other terms and conditions of such loans,are not,prima facie,prejudicial to the interest of the Company.

c)According to the information and explanations given to us,the party,to whom the loans have been granted by the Company as referred to in paragraph 4(iii)(a)above has been regular in repayment of principal amount as stipulated and has been regular in payment of interest.

d)According to the information and explanations given to us,there are no overdue amounts in excess of Rupees One Lakh in respect of the loans granted to the party as referred to in paragraph 4(iii)(a3 above and interest thereon.

e)The Company has taken loans during the year from a Company covered in the Register maintained under Section 3O1 of the Companies Act,1956.In respect of the said loans,the maximum balance outstanding during the year was Rs.250,OOO,OOO and the year end balance of loans taken from the party was Rs.NIL.

f)In our opinion and according to the information and explanations given to us,the rate of interest and other terms and conditions on which loans have been taken from the Company referred to in paragraph 4CiiOCe)above,are not,prima facie,prejudicial to the interest of the Company.

g)According to the information and explanations given to us,the Company has been regular in repayment of principal amount as stipulated and has been regular in payment of interest.

(iv)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 purchases of stores,spare parts and fixed assets.During the course of our audit,no major weakness has been noticed in the internal controls.

(v)a)According to the information and explanations given to us,we are of the opinion that the particulars of all contracts or arrangements that need tobe entered into the Register maintained under Section 3O1 of the Companies Act,1 956 have been so entered.

b)In our opinion and according to the information and explanations given to us,the transactions made in pursuance of such contracts or arrangements entered in the Register maintained under Section 3O1 of the Companies Act,1956 and exceeding the value of Rupees Five Lakhs 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.


(vii) In our opinion and according to the information and explanations given to us,the Company has an internal audit system commensurate with the size and nature of its business.


x)a)According to the records of the Company,the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident fund,investor education and protection fund,employeesstate Insurance,income-tax,sales-tax,wealth-tax,customs duty, cess and other statutory dues applicable to it,except for the payment of Service Tax amounting toRs.92,040,973, which is outstanding on 3CMarch 20iofor a period of more than six months,as the liability for the same has not been accepted by the receivers of the services rendered by the Company.

The Central Government has not specified the rate of cess payable under Section 441A of the Companies Act and hence the same is not payable by the Company. tO According to the records of the Company,as at 3istMarch,20 to,the following are the particulars of disputed dues on account of Commercial Tax which have not been deposited:

Nature of demand Amount (Rs.) Forum where appeal has been filed

Commercial Tax 83,284,324 Madras High Court

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



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

Cxiv)In our opinion,the Company is not dealing in or trading in shares,securities,debentures and any other investments.Therefore,the provisions of clause 4(xiv)of the Order are not applicable.

(xv)In our opinion and according to the information and explanations given by the Management,the Company has given corporate guarantees,for loans taken by VSC International Pte Ltd.(erstwhile wholly owned subsidiary),from a bank.


(xvii)According to the information and explanations given to us and on an overall examination of the financial statements and after placing reliance on the reasonable assumptions made by the Company for classification of Short-term and Long-term usage of the funds,we are of the opinion that,prima facie,no funds raised on short-term basis have been utilized for long-term investment.

(xviii)According to the information and explanations given to us,the Company has not made any preferential allotment of shares to parties or Companies covered in the register maintained under Section 3O1 of the Companies Act,1956.

(xix)According to the information and explanations given to us,the Company has not issued any debentures during the year.

(xx)The Company has not made any public issue during the year.

(xxi)Based upon the audit procedures performed and information and explanations given by the Management,we report that no fraud on or by the Company has been noticed or reported during the year.

For SORAB S.ENGINEER &CO. Chartered Accountants Firm Registration Number :110417W

M.P.ANTIA Partner Membership No.7825

Mumbai

May 21,2010