1.  We have audited the attached Balance Sheet of Dolphin Offshore
 Enterprises (India) Limited (‘the Company'') as at March 31, 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.
 
 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 by the Companies (Auditors'' Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of The Companies Act, 1956'' of India (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 a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the paragraph 3 above, we report that:
 
 i. We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 ii. 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;
 
 iii. The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. 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.
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi. Without qualifying our opinion, attention is invited to:
 
 (a) Note no. P(b) of Schedule 18 - to Notes to accounts with regard
 to long outstanding sundry debtors of Rs.47.90 Crores, which has been
 considered by the management as good and recoverable.
 
 (b) Note no. P(d) of Schedule 18- to Notes to accounts with regard to
 recognition of Rs. 33.59 Crores being only a portion of extra claim for
 additional work carried out as revenue, for the reasons stated therein.
 
 vii. As stated in Note No. P(c) of Schedule 18 - to Notes to
 accounts, no provision is made for Liquidated damages amounting to Rs.
 28.30 Crores for reasons stated therein. The profit for the year and
 reserves and surplus are without considering the said provision.
 
 viii. Subject to our observation at point (vii) above, 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
 Act, in the manner so required, and also give a true and fair view in
 conformity with the accounting principles generally accepted in India;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 b) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 Referred to in paragraph 3 of the Auditors'' Report of even date to the
 members of Dolphin Offshore Enterprises (India) Limited on the
 financial statements for the year ended March 31, 2011.
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All the fixed 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. As informed, no
 material discrepancies were noticed on such verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the company during the year.
 
 (ii) As per the information and explanation given to us, the Company
 does not hold any inventory.  Accordingly, the provisions of Clause
 (ii) of the Companies (Auditors'' Report) Order, 2003 (as amended) are
 not applicable to the Company.
 
 (iii) (a) The Company has granted unsecured interest free loan to a
 company covered in the register maintained under section 301 of the
 Companies Act, 1956. The maximum amount involved during the year was
 Rs. 78,90.08 Lacs and the year end balance of loan granted to such
 party was Rs. 78,90.08 Lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loan given are not, prima facie, prejudicial to the interest of
 the Company.
 
 (c) As regards repayment of principal, there are no stipulations for
 repayment.
 
 (d) There is no overdue amount of loans granted to companies, firms or
 other parties listed in the register maintained under section 301 of
 the Companies Act, 1956.
 
 (e) The Company had taken loan from four parties covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 2,11.15 Lacs and the
 year end balance of loans taken from such parties was Rs. 2,11.15 Lacs.
 
 (f) In our opinion, the rate of interest and other terms and conditions
 for such loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (g) In respect of the aforesaid loans, the Company is regular in
 repaying the principal amounts 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 exists an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of fixed assets and for services
 rendered. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in the aforesaid
 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 contracts or arrangements
 referred to in section 301 of the Companies Act, 1956 that need to be
 entered into the register maintained under section 301 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 exceeding value of Rupees Five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 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.  According to the information
 and explanations given to us, 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 on the company in respect of the
 aforesaid deposits.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) The Central Government of India has not prescribed the
 maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Act for any of the activity of the Company.
 
 (ix) (a) 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, service tax, customs duty, cess and
 other material statutory dues applicable to it.  Further, since the
 Central Government has till date not prescribed the amount of cess
 payable under section 441A of the Companies Act,1956, we are not in a
 position to comment upon the regularity or otherwise of the Company in
 depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, cess and other
 undisputed statutory dues were outstanding, at the year end, for a
 period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales- tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of       Nature of    Amount    Period to    Forum where 
 the statute   dues          (Rs.)    which the    dispute is
                                      amount       pending
                                      relates
 
 Income Tax    Income tax  24.94 Lacs  2005-06      ITAT
 Act, 1961
 
 (x) In our opinion, the Company does not have accumulated losses as on
 March 31, 2011.  Further, the Company has not incurred cash losses
 during the financial year covered by our audit and 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) According to the information & explanations given to us & based
 on the documents and records produced to us the Company has not granted
 loans and advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditors'' Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, 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 (as amended) are not applicable to the Company.
 
 (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 or financial institutions
 during the year, are not prejudicial to the interest of the Company.
 
 (xvi) In our opinion, the term loans have been applied for the purpose
 for which the loans were raised.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii)According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the register maintained under section 301 of
 the Act.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by public issue during the
 year.
 
 (xxi) During the course of our examination of the books and records of
 the Company carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                               For Haribhakti & Co.
 
                                             Chartered Accountants
 
                                                    FRN No.103523W
 
                                                      Chetan Desai
 
                                                           Partner
 
                                            Membership No. : 17000
 Place: Mumbai
 
 Date: May 20, 2011