Varun Shipping Company

1 . We have audited the attached Balance Sheet of VARUN SHIPPING
 COMPANY LIMITED, as at 31st March, 2009 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.
 
 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 issued by
 the Central Government of India in terms of sub-section C4A) 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.
 
 I.  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 and proper returns adequate for the purposes of our audit
 have been received from the branches not visited by us;
 
 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 and Profit and Loss Account dealt
 with by this report comply with the applicable accounting standards
 referred to in sub-section (30 of Section 211 of the Companies Act,
 1956;
 
 v) On the basis of written representations received from the Directors,
 as on 31st March, 2009 and taken on record by the Board of Directors,
 we report that none of the Directors is disqualified as on 31st March,
 2009 from being appointed as a Director in terms of Clause (g) of
 sub-section CD of Section 274 of the Companies Act, 1956;
 
 vi) 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 31 st March, 2009.
 
 b) In the case of the Profit and Loss Account, of the profit for the
 year ended on that date.
 
 c) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure to the Auditors Report
 
 Annexure referred to in Para 3 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) 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) The Company has not granted or taken any loans secured or
 unsecured to/from the firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 (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) Particulars of contracts or arrangements referred to in Section
 301 of the Act have been entered in the register required to be
 maintained in that Section.
 
 b) The transactions made in pursuance of such contracts or arrangements
 have been made at prices which are reasonable having regard to
 prevailing market price of same type of services at the relevant time.
 
 (vi) The Company has not accepted fixed deposits from public.
 
 (vii) In our opinion, 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 Cd) of sub-section CD Section 209 of
 the Companies Act, 1 956.
 
 (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 protection fund,
 employees state insurance, income-tax, sales-tax, wealth-tax, service
 tax, customs duty, cess and other statutory dues applicable to it.
 
 The Central Government has not specified the rate of cess payable under
 Section 441A of the Companies Act.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of income tax, wealth tax,
 service tax, sales tax, customs duty and excise duty were outstanding,
 as at 31.03.2009 for a period of more than six months from the date
 they became payable.
 
 (b) Following are the amounts which are disputed and not paid by the
 Company
 
 Nature of demand     Amount (Rs.)   Forum where appeal has been filed
 
 Commercial Tax        83,284,324     Sales Tax Appellate Tribunal
 
 (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 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) The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares etc.
 
 (xiii) Provisions of any special statute applicable to chit funds are
 not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing or trading in shares,
 securities, etc.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions,
 
 (xvi) The term loans have been applied for the purpose for which they
 were raised.
 
 (xvii) Based on our examination and in our opinion 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 or companies covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (xix) 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 course of our
 audit.
 
                                          For SORAB S. ENGINEER & CO.
                                               Chartered Accountants
 
                                                           M.R ANTIA
                                                             Partner 
                                                 Membership No. 7825 
 Mumbai: May 21, 2009