1.  We have audited the attached Balance Sheet of Great Offshore
 Limited as at March 31, 2012 and also the Statement of Profit and Loss
 and Cash Flow Statement of the Company for the year ended on that date,
 both 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 (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditor''s Report) Order, 2004, issued by the
 Central Government of India in terms of section 227 (4A) of the
 Companies Act, 1956, we annex hereto 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 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 such
 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 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) We draw attention to Note 32 of the Notes to Account. The Company
 has changed its accounting policy with effect from 1st April 2011, for
 recognition and measurement of Mark to Market losses in respect of
 derivatives instruments like interest rate swaps as per the principals
 enunciated in Accounting Standard (AS)30 Financial Instruments:
 Recognition and Measurement and in accordance with the recommendation
 of the Institute of Chartered Accountants of India. Accordingly Mark to
 Market (MTM) losses in respect of derivative instruments like Interest
 rate swaps have been accounted in accordance with principal of hedge
 accounting and the MTM losses on such derivative instruments is
 recorded in the Hedge reserve account instead of recognising the same
 to statement of Profit and Loss. Accordingly as at 31st March 2012 MTM
 loss on outstanding interest rates swaps'' amounting to Rs. 9,685 lakhs
 has been recognised in hedge reserves instead of debiting the same to
 statement of Profit and Loss. Accordingly the profit for the year is
 higher by Rs. 9,046 lakhs.
 
 f) As on March 31, 2012, the Company has investment in
 equity/redeemable preference shares of wholly owned subsidiary KEI-RSOS
 Maritime Limited amounting to Rs. 18,863 lakhs and also a loan
 outstanding of Rs. 3,100 lakhs. The Company has also issued corporate
 guarantee to Indian Bank amounting to Rs.14,585 lakhs. As per the latest
 audited financial statements of KEI-RSOS Maritime Limited the net worth
 of the company has substantially eroded and the cash flows are under
 stress.  No provision has been made in the financial statements of the
 company for depletion in value of investment and the loans and advances
 given by the company amounting to Rs.21,963 lakhs. Had the provision for
 the same been made, the profits before tax for the year would have been
 lower to that effect.
 
 g) Subject to our comment in para 4(f) above, in our opinion and to the
 best of our information and according to the explanations given to us,
 the said accounts read with the notes thereon, give the information
 required by the Companies Act, 1956 in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2012;
 
 ii) in the case of the Statement of Profit and Loss, 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.
 
 5.  On the basis of written representations received from the directors
 of the Company as on March 31, 2012, and taken on record by the Board
 of Directors, we report that none of the directors of the Company are
 disqualified as on March 31, 2012, from being appointed as a director
 in terms of clause (g) of sub-section (1) of section 274 of the
 Companies Act, 1956.
 
 Referred to in paragraph 3 of our report of even date on the accounts
 of Great Offshore Limited for the year ended March 31, 2012:
 
 1.  (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets are physically verified by the management as per a
 phased programme of verification.  In our opinion, the frequency of
 verification is reasonable having regard to the size of the Company and
 the nature of its assets. To the best of our knowledge no material
 discrepancies were reported on such verification.
 
 (c) In our opinion, the fixed assets disposed off during the year were
 not substantial and do not affect the going concern assumption.
 
 2.  (a) We have been informed by the Management that the physical
 verification of inventory is conducted as per the preset cyclical
 programme on monthly basis during the year. In our opinion the
 frequency of such physical verification of inventory is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 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 has implemented inventory system w.e.f. January 1, 2012
 and is in process of strengthening the same. Discrepancies noticed on
 the physical verification have been properly dealt in the books of
 accounts.
 
 3.  (a) As informed, the company has not granted any loan, secured/
 unsecured to any Companies firms or parties covered in the register
 maintained under Section 301 of the Companies Act, 1956. Accordingly
 the provisions of Para 4 caluse (iii) (a) to (d) of the said order are
 not applicable.
 
 (b) The Company has taken loans amounting to Rs. 18,309 lakhs from six
 companies covered in the register maintained under Section 301 of the
 Companies Act, 1956. In respect of the said loans, the maximum amount
 outstanding at any time during the year is Rs. 9,220 lakhs and the
 year-end balance is Rs. 2,798 lakhs.
 
 (c) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions of the
 loans taken by the Company, are not prejudicial to the interest of the
 Company.
 
 (d) The loan and interest is payable on demand and there are no
 specific terms of repayment of principal and interest hence whether the
 principal and interest has been paid regularly or not cannot be
 commented upon.
 
 4.  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 Company and the nature of its business for the
 purchase of inventory, fixed assets and for the sale of services.
 Further, on the basis of our examination of the books of account and
 records of the Company, and according to the information and
 explanations given to us, we have neither come across nor we have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 5.  Based on the audit procedures applied by us and according to the
 information and explanations provided by the management, the
 particulars of contracts or arrangements referred to in Section 301 of
 the Act have been entered in the register required to be maintained
 under that section.
 
 In our opinion and according to the information and explanations given
 to us, the transactions made in pursuance of such contracts or
 arrangements have been made at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 within the meaning of sections 58A and 58AA of the Act and the rules
 framed there under.
 
 7.  In our opinion, the Company has an internal audit system, which is
 commensurate with the size and nature of its business.
 
 8.  As informed to us, the company is maintaining cost records as
 prescribed by the Central Government under section 209(1) (d) of the
 Companies Act, 1956. We have not, however made a detailed examination
 of these records.
 
 9.  (a) According to the information and explanations given to us and
 according to the books and records as produced and examined by us, in
 our opinion, the company is generally regular in depositing undisputed
 statutory dues including Shore Staff Provident fund, Investor Education
 and Protection Fund, Employees State Insurance, Income tax, Sales tax,
 Wealth tax, Service tax, Excise duty, Customs duty, Cess, and other
 statutory dues with the appropriate authorities.
 
 (b) According to the books of account and records as produced and
 examined by us, there are no dues of Sales tax, Income tax, Custom
 duty, Wealth tax, Service tax, Excise duty or cess which have not been
 deposited on account of any dispute, other than those stated below:
 
 Name of the 
 statute      Nature of Dues    Amount (Rs.   Period to    Forum where
                                                           dispute
                                in lakhs)     which the    is pending
                                              amount 
                                              relates
 
 The Tamil 
 Nadu         Tax u/s 3A of The     100.78    1995-96 and  The Sales Tax
 General 
 Sales Tax    Tamil Nadu General              1996-97      Appellate 
                                                           Tribunal,
 Act 1959     Sales Tax Act, 1959                          Chennai
 
 The 
 Karnataka 
 Sales        Tax u/s 5-C of the    170.71    1995-96 to   Stay granted 
                                                           by
 Tax Act , 
 1957         Act                             2001-02      Supreme Court
 
 The 
 Karnataka 
 Sales        Sales Tax               6.03    2007-08      Assistant
 Tax 
 Act, 1957                                                 Commissioner
                                                          (CT) III,
                                                           Enforcement 
                                                           Tribunal
 
 The Customs 
 Act,         Customs Duty           70.37    2001-02      Customs Excise
 1962                                                      and Gold 
                                                          (Control)
                                                           Appellate
                                                           Tribunal
 
 The Customs 
 Act,         Customs Duty          235.93    December 99  Commissioner 
                                                           of
 1962                                                      Customs 
                                                          (Import)
 
 The APVAT 
 Act,         VAT                    96.53    2004-05      APGST / SPVAT
                                              2005 2005-06 Malviya Nine-
                                                           deemed 
                                                           Transfer of 
                                                           right to use
 
 Central 
 Excise and   Service Tax            72.53    2002-03 to   Superintendent  
                                                           of
 Customs Act                                  2004-05      Central Excise
 
 West Bengal 
 Sales        Sales Tax              41.59    2001-02      The
                                                           Commissioner 
                                                           of
 Tax Act                                                   Commercial 
                                                           Taxes,
                                                           Kolkatta
 
 10.  The Company has no accumulated losses as at the end of the
 financial year and it has not incurred any cash losses in the current
 year and in the immediately preceding financial year.
 
 11.  On the scrutiny of the repayment schedules to banks and financial
 institutions and the books of accounts of the company it is observed
 that the Company has defaulted in repayment of dues to banks and
 financial institutions. The following are the details of the defaults
 days for the financial year 2011-12:
 
                                                         (Rs. in lakhs)
 
 Particulars     Delay upto  
                 30            Delay      Delay     Delay     Total
                 Days          31-60 
                               Days       61-90 
                                          Days      90-125
                                                    Days
 
 Loan               151          4,420    18,043     4,750    27,365
 
 Interest             -          2,174     1,690       326     4,190
 
 Total              151          6,594    19,734     5,076    31,555
 
 of the above Rs. 9,120 lakhs in respect of term loan installment and Rs.
 3,348 lakhs in respect of interest payment were in arrears as of the
 balance sheet date.
 
 12.  According to the information and explanations given to us and the
 records examined by us, the Company has not granted any loans on the
 basis of security by way of pledge of shares, debentures or other
 securities.
 
 13.  In our opinion and according to the information and explanation
 given to us, the nature of the activities of the Company does not
 attract any special statute applicable to the chit fund and nidhi/
 mutual benefit fund/ societies.
 
 14.  In our opinion, the Company has maintained proper records of the
 transactions and contracts of the investments dealt in by the Company
 and timely entries have been made therein. The investments made by the
 Company are held in its own name except to the extent of the exemption
 under section 49 of the Act.
 
 15.  The Company has given guarantees for the loans taken by its
 subsidiaries from banks or financial institutions, the terms and
 conditions thereof are not prima facie prejudicial to the interests of
 the Company.
 
 16.  According to the information and explanations given to us and the
 records examined by us, on an overall basis, the term loans were
 applied by the Company for the purpose for which they were obtained
 except for a term loan amounting to Rs.23,227 lakhs which was disbursed
 by a financial institution for acquisition of a vessel and was
 temporarily used to repay high cost debt as next stage payment for
 acquisition for the said vessel is still not due.
 
 17.  On the basis of an overall examination of the balance sheet and
 cash flows of the Company and the information and explanation given to
 us, we report that the Company has not utilised any funds raised on
 short-term basis for long-term investments.
 
 18.  The Company has not made any preferential allotment of shares to
 parties or companies covered under section 301 of the Act.
 
 19.  The Company has not issued any debentures during the year. Hence,
 security or charge created in respect of debentures issued is not
 applicable.
 
 20.  The Company has not raised any money through a public issue during
 the year.
 
 21.  Based upon the audit procedures performed and the 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 and on behalf of
 
 KALYANIWALLA & MISTRY
 
 CHARTERED ACCOUNTANTS
 
 Registration No. 104607W
 
 VINAYAK M. PADWAL
 
 Partner
 
 M. No. F49639
 
 Mumbai, May 25, 2012