1.  We have audited the attached Balance Sheet of Western India
 Shipyard Ltd. as at 31st March, 2012, the Profit and Loss Account for
 the year ended on that date and the Cash Flow Statement for the year
 ended on that date, both annexed thereto. These financial statements
 are the responsibility of the Company''s Management.
 
 2.  We conducted our audit in accordance with Auditing Standards
 generally accepted in India. These 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 report.
 
 3.  As required by the Companies (Auditor''s Report) Amendment 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 & 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in para (1)
 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 the
 books.
 
 (c) The Balance Sheet, Profit & 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 & Loss Account and Cash
 Flow Statement materially comply with the Mandatory Accounting
 Standards referred to in Sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 (e) On the basis of written representation received from the Directors
 as on 31st March, 2012 and taken on record by the Board of Directors,
 we report that none of the Directors are disqualified as on 31st March,
 2012 from being appointed as Directors 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
 notes to accounts give the information required by the Companies Act,
 1956, in the manner so required subject to the comments in paragraph
 (f) above , 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 the affairs of
 Company as at 31st March, 2012.
 
 ii) in the case of Profit & Loss Account, of the profit of the Company
 for the year ended on that date.
 
 iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITOR''S REPORT
 
 (Referred to in Paragraph (1) of our Report of even date)
 
 1.  i) As informed to us, the Company has maintained proper records
 showing full particulars including quantitative details and situation
 of fixed assets and it needs to be updated.
 
 ii) As informed to us, all the 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 business. No material
 discrepancies were noticed on such verification.
 
 (iii) As explained to us, no substantial part of the fixed assets have
 not been disposed off during the year.
 
 2.  i) As informed to us, the Management has physically verified the
 inventory during the year. In our opinion, the frequency of
 verification is reasonable.
 
 ii) As explained to us, the procedure 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.
 
 (iii) 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. The discrepancies noticed on verification between the
 physical stocks and the book stocks were not material.
 
 3.  a. According to the information and explanation provided to us the
 Company had taken loans from the companies covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 b.  In our opinion the rate of interest and other terms and conditions
 of loans taken by the Company are prima- facie not prejudicial to the
 interest of the Company.
 
 
 
 c.  According to the information and explanation given to us, the
 payment of principal amount and interest are regular wherever
 applicable.
 
 d.  According to the information and explanation given to us, there is
 no over due amount pending for repayment.
 
 4.  According to the information and explanation given to us the
 Company has not granted any loans to companies/ parties etc. covered
 under register maintained under Section 301 of the Companies Act, 1956.
 
 5.  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 purchase of inventory, fixed assets and with
 regard to the sale of goods. During the course of our audit, no major
 weakness has been noticed in the internal controls.
 
 6.  Transactions that need to be entered in the register maintained
 under Section 301 of the Companies Act, 1956:
 
 a) Based upon the audit procedures applied by us and 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, have been entered in the register required
 to be maintained under that section.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 and exceeding the value of Rs. 500,000/- in
 respect of any party during the year, have been made at prices which
 are reasonable, having regard to prevailing market prices at the
 relevant time.
 
 7.  According to the information and explanations given to us, the
 Company has not accepted any deposits from the public under the
 provisions of Sections 58A and 58AA of the Companies Act, 1956 or any
 other relevant provisions of the Act.
 
 8.  In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 9.  As explained to us, the Central Government has not prescribed for
 the maintenance of cost records under Section 209 (1) (d) of the
 Companies Act, 1956 in respect of Company''s product and activity.
 
 10.  a) According to the records of the Company, the Company has
 deposited Provident Fund, Employees State Insurance and other
 undisputed statutory dues with the appropriate authorities.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
 Tax including VAT, Service Tax, Customs duty, Excise duty, cess and
 other statutory dues were outstanding, as at the last day of financial
 year for a period of more than six months from the date they became
 payable other than TDS and VAT amounting to Rs. 2,05,89,448/-. However,
 Rs.  12,38,478/- has been paid subsequently.
 
 c) Dues against the Company as per Sales Tax and Service Tax assessment
 are contested by the Company.  Details are as under; 
 
 Nature of      Name of the      Financial    Amount    Forum where 
 Dues           Statute          Year          (Rs)     dispute is
                                                        pending
 
 
 1.   Sales     The Goa Sales     1995-96     1,43,821  Commissioner
      Tax       Tax Act           1996-97    41,26,399  (Sales Tax)
 
                                  1997-98    62,07,881
 
                                  1998-99    64,99,976
 
                                  1999-00     8,14,406
 
                                  2000-01    89,49,596
 
                                  2001-02    54,11,182
 
                                  2002-03  2,31,00,478
 
                                  2003-04  2,11,58,350
 
                                  2004-05    73,79,288
 
 2.   Value    The Goa Value      2005-06  2,20,77,259
      Added    Added Tax Act                            Commissioner
      Tax                         2006-07  2,15,79,204       VAT
      (VAT)
 
 3.   Service  Central Excise     2001-02  1,88,11,550  Bombay High
      Tax      and Customs Act    2002-03  2,53,09,680     Court
                                  2003-04  2,69,92,343
 
 4.   Income   The Income Tax     2005-06  5,67,138         ITAT
      Tax
      Demand
 
 11.  As per records of the Company, the accumulated losses of the
 Company exceed fifty percent of its net worth.  However, the Company
 has not incurred cash losses during the current financial year.
 
 12.  The Company has been regular in repayment of dues to Bank &
 Financial Institutions other than the delay in quarter ending March,
 2012 to ICICI Bank Ltd. for Rs.1,92,85,714/- and IFCI Ltd. for Rs.
 2,75,00,000/-.
 
 13.  As informed to us, the Company had given Rs. 575.63 lacs to
 certain companies under escrow agreements against which the original
 share certificates of the face value of Rs. 169.39 lacs (Market Value
 on the Balance Sheet date is Rs. 569.16 lacs) had been deposited with
 the Company.
 
 14.  As informed to us, the Company has not given any guarantee for
 loans taken by others from Bank or Financial Institutions.
 
 15.  As informed to us, the term loans have been applied forthe purpose
 For which they were raised.
 
 16.  As per the records, the Company has not made any preferential
 allotment of shares to parties and companies mentioned in the register
 maintained under Section 301 of the Companies Act, 1956 during the
 year.
 
 17.  As per the records of the Company, the Company has not raised any
 money by way of public issues during the year under audit.
 
 18.  As per information and explanations given by the Management, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 19.  Other clauses to the said Order are considered to be not
 applicable to the Company.
 
                                          For V.V. Kale & Co.
 
                                         Chartered Accountants 
 
                                         Firm Regd No-000897N 
 
                                                 Sd /- 
 
                                             Vijay V. Kale
 
 Place: Mumbai                                  Partner
 
 Date : May 25, 2012                         M. No- 080821