Auditor Report of Alsa Marine & Harvests Ltd.

Dec 31, 2009

We have audited the attached Balance sheet of ALSA MARINE AND HARVESTS LIMITED as at 31 December, 2009 and the Profit and Loss Account for the year ended on that date 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.

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 disclosure 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.

1. As required by the Companies (Auditor's Report) Order, 2003 Issued by the company Law Board in terms 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.

2. Further to our comments in the Annexure referred in paragraph 1 above, we state that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion, the Company has kept proper books of account as required by law so far as appears from our examination of such books.

c) The Balance Sheet and profit and Loss Account referred to in this report are in agreement with the books of account.

d) In our opinion, the Profit and Loss Account and the Balance Sheet comply with the Accounting Standards referred to in Subsections (3C) of section 211 of the Companies Act, 1956, except with regard to AS-I5 regarding retirement benefits, AS-28 regarding impairment of assets, AS-11 regarding the effects of changes

e) On the basis of written representation received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st Is December, 2009 from being appointed as a director in terms of clause (g) of subsection (I) of section 274 of the Companies Act, 1956.

f) The company does not have any business activity during the financial year and as such does not appear to be a going concern,

g) In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and the Profit and Loss Account read together with the other notes and accounting policies give the information required by the Companies Act 1956, in the manner so required and subject to note 14 of schedule 11 regarding debtors/ advances and note 7 of schedule 11 regarding non provision of claims on account of subsidiary

h) And subject to note no 8 of schedule 11 regarding the exchange fluctuations on export advance balance amount payable to M/s Aha Europe, amounting to Rs 1,59,18,235/- not recognized as additional liability in the accounts, such omission being not in accordance with AS-11 issued by the Institute of Chartered Accountants of India, and

i) Note no 11&I2 of Schedule 11 regarding non provision towards interest on outstanding to banks and financial institutions, hire purchase and bills discounting and non representations of liability to Institution(ICICI),

f) Note no 13 of schedule 11 regarding non provision of liability towards gratuity and leave encashment entitlement which is not in accordance with AS15 issued by ICAI and

k) Subject to non quantification with regard to impairment of assets as required by AS-2S issued by ICAI gives a true and fair view in conformity with the accounting principles accepted in India:

(i) In so far as it relates to the Balance Sheet, of the state of Affairs of the Company as at 31st December, 2009 and

(ii) In so far as it relates to the Profit and Loss Account of the LOSS of the Company for the year ended on that date.

ANNEXURE TO THE AUDTORS REPORT (Referred to in paragraph 3 of our report of even date)

In terms of the information and explanation given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

1, a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. However, the records maintained require to be updated.

b) The Management has not physically verified the Fixed Assets of the Company located at units. We are unable to confirm the material discrepancies if any in the fixed assets. It is Stated that the management has no access to any of the factories owing to labour problems.

c) The company has disposed of the property at Kolkata and settled some of the dues to the lenders (ref note 3 of Schedule 13). As stated in the main report, the company has ceased to be a trading concern,

2. a) The company Is not engaged in trading or manufacturing activities and therefore do not hold stock of finished goods, spare parts and raw materials etc.

3. a) The company has taken interest free unsecured loans from directors and companies in which directors are interested without stipulations as to repayment of principal. The number of such loans is 6 and the amount involved is Rs 43630399/-.

b) The company has not made any advances in the nature of loans during the year,

c) According to the information and explanations given to us, all loans borrowed by the company are overdue. The company was under BIFR and subsequently the rehabilitation proposal was rejected by BIFR.

4. The company had no manufacturing or any activity during the year and accordingly we have no comments to offer on the internal control system.

5. According to the information and explanations given to us, there were no transactions of purchase of goods and materials made in pursuance of contracts or arrangements have been duly entered in the register maintained under section 301 of the Companies Act 1956.

6. The company has not accepted any deposits from the public. The provisions of sections 58A & 58AA of the companies Act, 1956, and the Rules framed there under are not applicable.

7. In the absence of any activities , we have no comments to offer on the internal audit system.

8. The Central government has not prescribed for the company the maintenance of cost records under section 209 (I) (d) of the Companies Act, 1956.

9. A) According to the records of the Company, the company is not regular in depositing undisputed statutory dues including provident fund, employee state insurance dues, income tax, and professional tax with the appropriate authorities. According to the information and explanations given to us the following undisputed amounts were outstanding as at 31-12-2009 for a period of more than six months from the date they became payable:

Profession tax Rs 1,81,489

Tax Deducted at source Rs 1,97,620

Excise duty Rs 1,35,462

ESI Rs 36,820

Provident fund damages Rs 1,61,552

ESI(interest) Rs 1,46,611

Sales Tax Rs 36,09,546

b) The details of disputed liabilities are as follows:

STATUTE AMOUNT IN FORUM WHERE LAKHS DISPUTE IS PENDING

Customs duty 436.80 Dept appeal pending with SC

Customs duty 25.16 Co appeal pending with CESTAT

Customs 23.71 Coy reply to the duty/central excise SCN pending with Commissioner of central excise

Penalty under 1.00 Coy's waiver FEMA application pending with commissioner of central excise.

Provident Fund 2.47 Company's appeal with tribunal

Sales tax 118.36 Company's appeal is pending with high court

Sales tax 0.44 Pending with Assistant commissioner of sales tax, Appellate unit Bhubhaneswar

10. The Company has accumulated losses at the end of the financial year which exceeds the net worth of the company and it has incurred cash losses in the current financial year and in the immediately preceding financial year.

11. The company has defaulted in the payment of dues to financial institutions and banks.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company has given indemnity towards advances taken by its subsidiary ALSA EUROPE NV BELGIUM which was assigned in favour of KBC BANK BELGIUM. The subsidiary has since been declared bankrupt. There is a decree against the company by KBC BANK BELGIUM for Rs 95.15 crores including interest.

14. The company has not obtained term loans during the year.

15. As per the records of the company, no funds were raised on short term basis and used for long term investment and vice versa.

16. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

17. The Company has not issued any debentures, so creation of securities in respect of debentures does not arise.

18. The company has not raised money by way of public issues.

19. According to the information and explanations furnished to us, no fraud on or by the Company has been noticed or reported during the year.

For VENKATESH & CO.,

CHARTERED ACCOUNTANTS

PLACE: CHENNAI V. DASARATY

DATE: 04-06-2011 PARTNER

M.No .26336

---

Dec 31, 2007

We have audited the attached Balance sheet of ALSA MARINE AND HARVESTS LIMITED as at 31 December, 2007 and the Profit and Loss Account for the year ended on that date 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.

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 disclosure 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.

1. As required by the Companies (Auditor's Report) Order, 2003 Issued by the company Law Board in terms 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.

2. Further to our comments in the Annexure referred in paragraph 1 above, we state that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion, the Company has kept proper books of account as required by law so far as appears from our examination of such books.

c) The Balance Sheet and profit and Loss Account referred to in this report are in agreement with the books of account.

d) In our opinion, the Profit and Loss Account and the Balance Sheet comply with the Accounting Standards referred to in Subsections (3C) of section 211 of the Companies Act, 1956, except with regard to AS-I5 regarding retirement benefits, AS-28 regarding impairment of assets, AS-11 regarding the effects of changes in foreign exchange rates.

e) On the basis of written representation received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st December, 2007 from being appointed as a director in terms of clause (g) of subsection (I) of section 274 of the Companies Act, 1956.

f) The company does not have any business activity during the financial year and as such does not appear to be a going concern,

g) In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and the Profit and Loss Account read together with the other notes and accounting policies give the information required by the Companies Act 1956, in the manner so required and subject to note 15 of schedule 12 regarding debtors/ advances and note 8 of schedule 13 regarding non provision of claims on account of subsidiary

h) And subject to note no 9 of schedule 12 regarding the exchange fluctuations on export advance balance amount payable to M/s Alsa Europe, amounting to Rs 1,57,31,930/- not recognized as additional liability in the accounts, such omission being not in accordance with AS-11 issued by the Institute of Chartered Accountants of India, and

i) Note no 13 & 13 of Schedule 12 regarding non provision towards interest on outstanding to banks and financial institutions, hire purchase and bills discounting and non representations of liability to Institution(ICICI),

ii) Note no 14 of schedule 121 regarding non provision of liability towards gratuity and leave encashment entitlement which is not in accordance with AS15 issued by ICAI and

k) Subject to non quantification with regard to impairment of assets as required by AS-28 issued by ICAI gives a true and fair view in conformity with the accounting principles accepted in India:

(i) In so far as it relates to the Balance Sheet, of the state of Affairs of the Company as at 31st December, 2007 and

(ii) In so far as it relates to the Profit and Loss Account of the LOSS of the Company for the year ended on that date.

ANNEXURE TO THE AUDTORS REPORT (Referred to in paragraph 3 of our report of even date)

In terms of the information and explanation given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

1. a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. However, the records maintained require to be updated.

b) The Management has not physically verified the Fixed Assets of the Company located at units. We are unable to confirm the material discrepancies if any in the fixed assets. It is Stated that the management has no access to any of the factories owing to labour problems.

c) The company has disposed of the property at Kolkata and settled some of the dues to the lenders (ref note 3 of Schedule 13). As stated in the main report, the company has ceased to be a trading concern,

2. a) The company is not engaged in trading or manufacturing activities and therefore do not hold stock of finished goods, spare parts and raw materials etc.

3. a) The company has taken interest free unsecured loans from directors and companies in which directors are interested without stipulations as to repayment of principal. The number of such loans is 6 and the amount involved is Rs 43630399/-.

b) The company has not made any advances in the nature of loans during the year.

c) According to the information and explanations given to us, all loans borrowed by the company are overdue. The company was under BIFR and subsequently the rehabilitation proposal was rejected by BIFR.

4. The company had no manufacturing or any activity during the year and accordingly we have no comments to offer on the internal control system.

5. According to the information and explanations given to us, there were no transactions of purchase of goods and materials made in pursuance of contracts or arrangements have been duly entered in the register maintained under section 301 of the Companies Act 1956.

6. The company has not accepted any deposits from the public. The provisions of sections 58A & 58AA of the companies Act, 1956, and the Rules framed there under are not applicable.

7. In the absence of any activities , we have no comments to offer on the internal audit system.

8. The Central government has not prescribed for the company the maintenance of cost records under section 209 (I) (d) of the Companies Act, 1956.

9. A) According to the records of the Company, the company is not regular in depositing undisputed statutory dues including provident fund, employee state insurance dues, income tax, and professional tax with the appropriate authorities. According to the information and explanations given to us the following undisputed amounts were outstanding as at 31-12-2007 for a period of more than six months from the date they became payable:

Profession tax Rs 1,81,489

Tax Deducted at source Rs 1,97,620

Excise duty Rs 1,35,462

ESI Rs 36,820

Provident fund damages Rs 1,61,552

ESI(interest) Rs 1,46,611

Sales Tax Rs 36,09,546

b) The details of disputed liabilities are as follows:

STATUTE AMOUNT IN FORUM WHERE LAKHS DISPUTE IS PENDING

Customs duty 436.80 Dept appeal pending with SC

Customs duty 25.16 Co appeal pending with CESTAT

Customs 23.71 Coy reply to the duty/central excise SCN pending with Commissioner of central excise

Penalty under 1.00 Coy's waiver FEMA application pending with commissioner of central excise.

Provident Fund 2.47 Company's appeal with tribunal

Sales tax 118.36 Company's appeal is pending with high court

Sales tax 0.44 Pending with Assistant commissioner of sales tax, Appellate unit Bhubhaneswar

10. The Company has accumulated losses at the end of the financial year which exceeds the net worth of the company and it has incurred cash losses in the current financial year and in the immediately preceding financial year.

11. The company has defaulted in the payment of dues to financial institutions and banks.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company has given indemnity towards advances taken by its subsidiary ALSA EUROPE NV BELGIUM which was assigned in favour of KBC BANK BELGIUM. The subsidiary has since been declared bankrupt. There is a decree against the company by KBC BANK BELGIUM for Rs 81.32 crores including interest.

14. The company has not obtained term loans during the year.

15. As per the records of the company, no funds were raised on short term basis and used for long term investment and vice versa.

16. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

17. The Company has not issued any debentures, so creation of securities in respect of debentures does not arise.

18. The company has not raised money by way of public issues.

19. According to the information and explanations furnished to us, no fraud on or by the Company has been noticed or reported during the year.

For VENKATESH & CO.,

CHARTERED ACCOUNTANTS

PLACE: CHENNAI V. DASARATY

DATE: 04-06-2011 PARTNER

M.No .26336