ABG Shipyard

1.  We have audited the attached Balance Sheet of ABG SHIPYARD LIMITED,
 as at 31st March 2009, and 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.
 
 2.  We conducted our audit in accordance with the Auditing Standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended) issued by the 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.
 
 4.  Attention is drawn to Note no. 24 of Schedule 20 whereby the
 company has applied the principles of Accounting Standard 30 issued by
 Institute of Chartered Accountants of India (AS 30).
 
 5.  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 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 dealt with by this report comply with the Accounting
 Standards referred to in sub-section (3C) of section 211 of the
 Companies Act, 1956. Attention is drawn to point no. 4 above whereby
 the company has not adopted AS 30 fully but applied the principles of
 hedging as per AS 30 where there are firm commitments payable and
 receivable.
 
 e) On the basis of written representations received from the directors
 as at 31st March, 2009 and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31 st March
 2009 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 Significant Accounting Policies and Notes thereon, give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 company as at 31st March 2009;
 
 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 the Cash Flow statement, of the cash flows for the
 year ended on that date.
 
 Annexure to Auditors Report
 
 (Referred in paragraph 3 of our report of even date to the members of
 ABG Shipyard Limited on the financial statements for the year ended
 31st March 2009.)
 
 As required by the Companies (Auditors Report) Order, 2003 (as
 amended) (the Order) issued by the Central Government of India in terms
 of Section 227(4A) of the Companies Act, 1956 on the matters specified
 in paragraphs 4 and 5 of the said Order, we further report that:
 
 i. (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets;
 
 (b) The fixed assets have been physically verified in a phased manner
 by the management during the period as per program of verification
 which, in our opinion, is reasonable having regard to the size of the
 company and the nature of its assets. As informed to us no material
 discrepancies were noticed between book records and physical inventory;
 
 (c) During the year, the company has not disposed off any substantial
 part of the fixed assets.
 
 ii. (a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable;
 
 (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) On the basis of our examination of the records of inventory, we are
 of the opinion that the company is maintaining proper records of
 inventory and no material discrepancies were noticed on physical
 verification.
 
 iii. As informed, during the year under audit the company has neither
 granted nor taken any loans, secured or unsecured to or from companies,
 firms or other parties covered in the Register maintained under Section
 301 of the Companies Act, 1956: Accordingly the provisions of clause
 4(iii)(b)(c)(d)(f) and (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 inventory, fixed assets and with
 regard to the sale of goods and services. During the course of our
 audit, we have not observed any continuing failure to correct major
 weaknesses in internal control.
 
 v. (a) Based on the audit procedures applied by us and according to the
 information and explanations provided by the management, we are of the
 opinion that the contracts or arrangements that need to be entered into
 the register maintained undeletion 301 of the Companies Act, 1956 have
 been so entered.
 
 (b) The price at which such contract or arrangement is entered is
 reasonable compared to prevailing market price.
 
 vi.  The company has not accepted any deposit from the public during
 the year.
 
 vii.  In our opinion, the company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii. As informed to us, the maintenance of cost records have not been
 prescribed by the Central Government under clause (d) of sub-section
 (1) of section 209 of the Companies Act, 1956.
 
 ix. (a) According to the records of the company, 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,
 Wealth-tax, Service tax, Custom duty, Excise duty, Cess and other
 statutory dues applicable to it.
 
 (b) According to the records of the company, there are no dues in
 respect of disputed liability in respect of Provident Fund, Sales tax,
 Wealth tax, Custom duty, Cess, Service tax and other statutory dues
 which have not been deposited on account of dispute.
 
 x. The company does not have accumulated losses at the end of the
 Financial Year. The company has not incurred any cash loss during the
 financial year covered by our audit and in the immediately preceding
 financial year.
 
 xi. According to the information and explanations given to us the
 company has not defaulted in repayment of dues to any financial
 institutions, banks or debenture-holders.
 
 xii. Based on our examination of documents and records, the 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 chitfund / nidhi /mutual benefit fund /
 society to which the provisions of special statute relating to chitfund
 are applicable. Accordingly paragraph 4 (xiii)ofthe Order is not
 applicable.
 
 xiv. The company is not engaged in dealing or trading in shares,
 securities, debentures and other investments. Accordingly the
 provisions of clause 4 (xiv) of the Order are not applicable to the
 company.
 
 xv. According to information and explanations given to us, the company
 has not given guarantees for loans taken by others from bank or
 financial institutions.
 
 xvi. In our opinion and according to the information and explanations
 given to us, on the overall basis, term loans have been applied for the
 purposes for which they were obtained.
 
 xvii. According to the information and explanations given to us and
 based on our examination of the books of account of the company short
 term fund to the extent of approximately Rs. 300 crores have been used
 for long term purposes for project under construction.
 
 xviii. According to the information and explanations given to us the
 company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under section 301 of the
 Companies Act, 1956. Accordingly, the provisions of paragraph 4(xviii)
 of the order are not applicable to the company
 
 xix. According to the information and explanations given to us, during
 the period covered by audit report, the company had issued 1,000
 debentures of Rs. 1,00,000 each. The company has created security in
 respect of debentures issued.
 
 xx. The management has disclosed the end use of money raised from the
 public, in 2005-06, and the same has been verified by us.
 
 xxi. Based upon the information and explanations given by the
 management and audit procedures performed, we report that no fraud on
 or by the company has been noticed or reported during the course of our
 audit.
 
                                           For Nisar & Kumar
                                       Chartered Accountants
  
                                                  M.N.Ahmed
 Place: Mumbai                                     (Partner)
 Date : 19th June, 2009                          M.No.18380