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 misstatements. 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.

As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government in terms of provisions of Section 227 (4A) 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.

Further to our comments in the annexure referred to above, we report that:

a) We have obtained all the information and the 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 those books.

c) The Balance Sheet, Profit & Loss account and Cash Flow Statement dealt with by this report are in agreement with the Company's books of account.

d) 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;

e) We are informed that in terms of clarification issued by Ministry of Finance, Justice and Company Affairs, Department of Company Affairs, Government of India vide General circular No.8 dated 22nd March, 2002 , the directors of the Company are not subject to any disqualification under section 274(1 )(g) of the Companies Act, 1956, as their appointment is made by the Government of India;

f) The shipping operations of the company stand suspended. The company has continuously incurred losses and thereby net worth of the company has been totally eroded and a substantial loss is carried forward as at 31" March, 2011. The company has filed a petition with the High Court of Bombay on February 28, 2011 to wind up the company by Order of the court under the relevant provisions of the Companies Act, 1956. In view of these facts, the company will no longer be a 'Going Concern'. Despite this, the accounts of the company have been prepared on a 'Going Concern Basis' in the absence of adequate data and information for its compilation on an alternative basis. Consequently, no adjustments are made in accounts relating to the recoverability of recorded asset amounts and in respect of recorded liabilities and contingent liabilities that might devolve on the company. (Refer note no. 5 of notes forming part of accounts)

g) 77ie Company has granted a loan to Scindia Workshop Limited, the Subsidiary Company. Outstanding amount of such loan with accrued interest as at 31st March, 2011 is Rs.1707Lakhs (Previous year Rs.1938 Lakhs). The recoverability of this amount is, in our opinion, dependent on outcome of (he review application to be made before the Division Bench of the Higfi Court of Bombay by the Subsidiary for further enhancement of compensation for the land and buildings acquired by the Government of Maharashtra (Refer note no. 6 of notes forming part of accounts)

We further report that subject to f and g above, the effect of which could not be quantified, 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 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 31st March, 2011; and (ii) in the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date; and

(iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT (Referred to in Paragraph 3 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management at reasonable intervals and no discrepancies were noticed on such verification.

(c) The Company has already disposed off substantial part of its fixed assets. (Also refer point f of our main report.)

(ii) Since the Company does not hold any stock during the year, the requirement of clauses 4 (ii) (a), (b), (c) of the Order are not applicable to the company.

(iii) The Company has not granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 except for a loan of Rs.1707 Lakhs to its Subsidiary namely Scindia Workshop Limited (SWL). In respect of loan granted to subsidiary company there is no stipulation as regards repayment. Interest charged up to the financial year 1995-96 is also not recovered. The recovery of the principal and interest due from the said subsidiary is dependent on the outcome of the appeal filed for enhancement of compensation as detailed in note no 6 to the accounts.

(iv) On the basis of checks carried out in course of our audit and according to the information given to us, we are of the opinion that there are adequate internal control systems commensurate with the size of the Company and the nature of its business although there are no purchase of fixed assets,

sale of goods and services.

(v) As informed to us, there are no transactions of purchase of goods, materials and services and sale of goods, material and services with the parties stated in the register maintained as per section 301 of the Companies Act 1956.

(vi) During the year the Company has not accepted any deposits from the public, therefore the provisions of Section 58A, 58AA or other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules 1975 are not applicable to the Company.

(vii) In our opinion, the Company's present internal audit system, though not formal, is generally commensurate with the size and nature of its business.

(viii) The maintenance of cost records under section 209(1) (d) of the companies

Act, 1956 is not applicable to the Company.

(ix) (a) According to the records of the Company, the company has been generally regular in depositing undisputed statutory dues including Investor Education and Protection Fund, Income Tax, Wealth Tax, Service Tax, Custom Duty, Cess and other material statutory dues with the appropriate authorities. Based on our audit procedures and according to the information and explanations given to us, there are no arrears of statutory dues which remained outstanding as at 31st March, 2011 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company, there are no dues of sales tax, custom duty, income tax, wealth tax, service tax, excise duty/cess which have not been deposited on account of any dispute.

(x) The Company's accumulated losses, as on 31" March 2011 is more than fifty percent of its net worth. The Company has incurred cash losses in the financial year covered by this report and has also incurred cash losses in the immediately preceding financial year.

(xi) As per the books of the Company and as per the information and explanations given to us, the Company has defaulted in payment of dues to a bank on Cash credit account and the total amount due including interest thereon up to 31.03.2011 is Rs.2763 Lakhs (P.Y.2384 Lakhs).

(xii) The Company has not granted loans and advance on the basis of the security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund and nidhi/mutual benefit funds/ societies and therefore the requirements of clauses 4 (xiii) are not applicable to the company.

(xiv) The Company does not deal or trade in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4

(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given guarantee for loans taken by others from bank or financial institutions.

(xvi) There are no term loans obtained by the Company during the year.

(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 funds raised on short-term basis have not been used to finance long term investments.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered under section 301 of the Companies Act, 1956.

(xix) During the year Company has not issued any debentures.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedure and the information and explanation given to us, we report that there are no frauds on or by the Company noticed or reported during the year.

                                                  For K. S. AIYAR & CO.

                                                  Chartered Accountants

                                                  Firm Regn. No.100186W

                                                       RAGHUVIR M.AIYAR
                                                                Partner
                                                   Membership No: 38128
Mumbai,
Date:20th June, 2011