1.  We have audited the attached Balance Sheet of Shreyas Shipping and
 Logistics Ltd. as at 31st March 2011, the Profit and Loss account and
 also 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 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.
 
 4.  Further to our comments in the Annexure referred to 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) 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
 that date from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 (v) As per the Guidance provided by the Accounting Standards Board of
 The Institute of Chartered Accountants of India through frequently
 asked questions on AS 11 Notification, the exchange differences arising
 from foreign currency borrowings to the extent they are regarded as an
 adjustment to interest costs are to be considered as borrowing costs
 and accounted for in accordance with Accounting Standard 16
 (AS16)-Borrowing Costs.  The Company has not considered the borrowing
 costs while adjusting the foreign currency differences to the cost of
 the assets. In view of this
 
 a.  Cumulative foreign exchange loss is understated to the extent of
 Rs.2,12,27,712 (of this Rs.32,15,949 relates to period before March 31
 2008, Rs.1,44,20,050 for the year ended March 31 2009, Rs.26,40,609 for the
 year ended March 31 2010 and Rs.951,104 for the current year)
 
 b.  Depreciation related to above including the adjustment to opening
 reserves is cumulatively overstated to the extent of Rs.24,14,872 (of
 this Rs.1398 relates to period before March 31 2008, Rs.1,73,929 for the
 year ended March 31 2009, Rs.18,82,072 for the year ended March 31 2010
 and Rs.3,57,473 for the current year)
 
 c.  Loss for the current year is stated lower by Rs.5,93,631 and
 
 d.  Fixed assets and Reserves are stated higher to the extent of
 Rs.1,88,12,840
 
 (vi) 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 except to the extent indicated in para (v)
 above relating to capitalization of certain borrowing costs that are
 not eligible for capitalization.
 
 (vii) Subject to our comments with respect to capitalization of certain
 borrowing costs that are not eligible for capitalization as referred to
 in paragraph (v) 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 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:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011.
 
 (b) In case of the Profit and Loss account, of the profit for the year
 ended on that date; and
 
 (c) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
 Annexure to the Auditors Report
 Re: Shreyas Shipping and Logistics Limited
 
 Referred to in paragraph 3 of our report of even date,
 
 (i) (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets;
 
 (b) The major fixed assets have been physically verified by the
 management at reasonable intervals; no material discrepancies were
 noticed on such verification;
 
 (c) The Company has not disposed off any material assets during the
 year.
 
 (ii) (a) Physical verification of inventory has been conducted at
 reasonable intervals by the management;
 
 (b) 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 is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) During the year, except for an unsecured interest free loan
 of Rs.5,25,00,000 to Shreyas Relay Systems Ltd, a wholly owned
 subsidiary, the Company has not granted any other loans, secured or
 unsecured to companies, firms or other parties covered in the register
 maintained under section 301 of the Act. In our opinion the terms of
 the loan given to wholly owned subsidiary are not prejudicial to the
 interests of the company.
 
 (b) The Company has not taken any loans, secured or unsecured from
 companies, firms or other parties covered in the register maintained
 under section 301 of the Act.
 
 (iv) 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 and fixed assets and for the sale of services. No goods are
 sold by the Company. There is no continuing failure to correct major
 weaknesses in internal control system;
 
 (v) (a) 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; and (b) In respect of transactions
 exceeding the value of Rs. five lakhs in respect of each party made in
 pursuance of such contracts or arrangements, they have been made at
 prices which are reasonable having regard to the prevailing market
 prices at the relevant time wherever applicable.
 
 (vi) The Company has not accepted deposits from the public;
 
 (vii) The Company has an internal audit system commensurate with its
 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 (1) of section 209
 of the Act,
 
 (ix) (a) The Company has been generally regular in depositing
 undisputed statutory dues including Provident Fund, Investor Education
 and Protection Fund, Employees State Insurance, Income-tax, Wealth
 Tax, Service tax, Custom Duty, Cess and any other material statutory
 dues with the appropriate authorities. The Company is not registered
 under Value Added Tax and Excise duty legislations. There are no
 arrears of outstanding statutory dues as at the last day of the
 financial year for a period of more than six months from the date they
 became payable.
 
 (b) There are no dues of Income tax / Sales tax / Wealth tax / Service
 tax / Custom duty / Cess that have not been deposited on account of any
 dispute.
 
 (x) The Company has no accumulated losses at the end of the financial
 year. There is no cash loss in the current financial year. However it
 has incurred cash losses in the previous financial year.
 
 (xi) The Company has not defaulted in repayment of dues to a financial
 institution or bank.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities;
 
 (xiii) As the Company is not a Nidhi / Mutual benefit fund/ Society,
 the provisions of special statute applicable to chit fund etc. is not
 applicable to this Company.
 
 (xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments.
 
 (xv) The Company has not given any guarantee for loans taken by others
 from bank or financial institutions except for guaranteeing loans taken
 by its Subsidiary, the terms and conditions of which are not
 prejudicial to the interest of the Company.
 
 (xvi) Term loans were applied for the purpose for which the loans were
 obtained;
 
 (xvii) On an overall examination of the Balance Sheet, we report that
 the funds raised on short-term basis have not been used for long term
 investment.
 
 (xviii) 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 has not issued any debentures.
 
 (xx) There have been no public issues during the year.
 
 (xxi) Based on the audit procedures adopted and according to the
 information and explanations given to us by the management no fraud on
 or by the Company has been noticed or reported during the course of our
 audit.
 
 
                                         For PKF Sridhar & Santhanam
 
                                               Chartered Accountants 
 
                                                 Firm Regn No 03990S
 
                                                        S.Narasimhan
 
 Place: Mumbai                                               Partner
 
 Date: 25th May, 2011                                  M. No. 206047