Auditor Report of Essar Shipping Ltd.

Mar 31, 2025

We have audited the Standalone Financial Statements of
Essar Shipping Limited (“the Company”), which comprises
of the balance sheet as at March 31, 2025, the statement
of profit and loss (including Other Comprehensive Income),
statement of cash flows and the statement of changes in
equity for the year then ended and notes to the Standalone
Financial Statements, including a summary of material
accounting policies and other explanatory information.

In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid Standalone
Financial Statements give the information required by the
Companies Act, 2013 (“the Act”) in the manner so required
and give a true and fair view in conformity with the Indian
Accounting Standards prescribed under section 133 of the
Act read with the Companies (Indian Accounting Standards)
Rules, 2015, as amended, (“Ind AS”) and other accounting
principles generally accepted in India, of the state of affairs
of the Company as at March 31, 2025, the profit (financial
position including Other Comprehensive Income), changes
in equity and its cash flows for the year ended on that date.

2. Basis for Opinion

We conducted our audit in accordance with the Standards
on Auditing (SAs) specified under section 143(10) of the
Act. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the
Standalone Financial Statements section of our report. We
are independent of the Company in accordance with the Code
of Ethics issued by the Institute of Chartered Accountants of
India (ICAI) together with the ethical requirements that are
relevant to our audit of the Standalone Financial Statements
under the provisions of the Act and the Rules thereunder,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the ICAI’s Code of
Ethics. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion
on the Standalone Financial Statements.

3. Material Uncertainty Related to Going Concern

We draw attention to Note No. 28 to the Standalone
Financial Statements, which indicates that as on March
31, 2025, the Company has accumulated losses of
'' 6,520.75 crore as against capital and reserves of
'' 5,217.75 crore. The Company has defaulted on several loans
and some of the lenders of the Company’s subsidiary (which
has gone into liquidation) where the Company is a Guarantor,
have filed application before various forums for recovery of
overdue amounts and / or enforcement of guarantees. The
Company has disposed off most of its assets and some of
the investments with a view to pay off its outstanding dues to

lenders / vendors. The Company’s current liabilities exceed
its current assets as on March 31, 2025. This indicates that
a material uncertainty exists that may cast doubt on the
Company’s ability to continue as a going concern.

The Company, however, has represented that, as mentioned
in Note No. 28 to the Standalone Financial Statements,
the Company has earned operating income by way of hire
charges and management fees and is taking steps to rectify
the mismatch in working capital. In view of the above, the
Company has prepared the accounts as a going concern.

Our opinion on the Standalone Financial Statements is not
modified for the above matter.

4. Emphasis of Matter

(i) We draw attention to our observations in paragraph 3
above whereby, in spite of several factors mentioned
therein, the Standalone Financial Statements are
prepared on “Going Concern” basis.

(ii) In an earlier year, the Company had settled the loan
with a bank and paid the dues through monetisation
of assets and recognised gain on settlement. Post
settlement, the Bank had assigned the said loan to an
Asset Reconstruction Company (Assignee Company).
Pending outstanding bank guarantee (which was
withdrawn during the year ended 31^st March 2024) and
pending Group level settlement, ‘No Due Certificate’
(NOC) was not received from the Bank or the Assignee
Company till March 31,2024.

During the year, the Company has paid an amount of
'' 0.60 crore and received the NOC from the Assignee
Company. The amount paid has been charged to the
Statement of Profit and Loss and has been shown as
an exceptional item.

(iii) We draw attention to Note No. 3(A) and 8 of the
Standalone Financial Statements relating to agreement
for sale of shares held by the Company in a subsidiary.
During the year, part of the consideration amounting to
USD 52,499,960 has been received and sale of shares
to the extent of consideration received has been
recognised in the books of account. The Company has
filed necessary forms with the Reserve Bank of India in
this regard. The balance shares are held for sale and
have been disclosed accordingly.

(iv) We draw attention to Note No.19(B) of the Standalone
Financial Statements relating to payment of '' 50.83
crores to two banks during the year towards One Time
Settlement (OTS) between the said banks and a step-
down subsidiary of the Company.

In respect of one bank, the Company has settled the
loan and paid the dues and‘no dues certificate’ has
been received from the said bank. The Company does
not expect any additional liability to devolve in this
regard. In respect of the other Bank, the OTS is yet to
be concluded.

Since the entire amount paid is doubtful of recovery
from the step-down subsidiary, the same has been fully
provided for.

(v) The Company has netted off of '' 331.26 Crore payable
to a wholly owned overseas subsidiary with the amount
receivable from the said subsidiary. This is subject to
pending application and approval from the regulatory
authorities.

Our opinion on the Standalone Financial Statements is not
modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
Standalone Financial Statements of the current period. These
matters were addressed in the context of our audit of the
Standalone Financial Statements as a whole, and in forming
our opinion thereon and we do not provide a separate opinion
on these matters. In addition to the matters described in the
Material Uncertainty Related to Going Concern paragraph, we
have determined the matters described below to be the key
audit matters to be communicated in our report:

Key Audit Matter	Auditor’s Response
Goina concern As on March 31,2025, the Company has accumulated losses of '' 6,520.75 crore as against capital and reserves of '' 5,217.75 crore. Some of the Lenders of the Company’s Subsidiary (which has gone into liquidation) where the Company is a Guarantor, have filed applications before the High Court / National Company Law Tribunal / Debt Recovery Tribunals for recovery of overdue amounts and / or enforcement of guarantees. The Company has disposed off most of its assets and some of the investment in subsidiaries with a view to pay off its outstanding dues to lenders / vendors. The Company’s current liabilities exceed its current assets as on March 31, 2025. All these factors indicate that a material uncertainty exists that may cast doubt on the Company’s ability to continue as a going concern. (Refer Note No. 28 of Standalone Financial Statements).	Our audit procedures included but was not limited to the following activities: 1. Assessing steps taken by the Management to meet liabilities as and when they become due for payment. 2. Obtained and evaluated the Company’s plans to repay the loans (with interest) through communication letters and the extent of steps taken for the same. 3. Evaluating legal and other developments related to the Company and / or its subsidiaries based on Minutes of the Audit Committee and Board of Directors. We found the key assumptions were supported by the available evidence. Based on the audit procedures performed, we found disclosures in the Standalone Financial Statements to be appropriate.
Evaluation of Litigation matters The Company has certain significant open legal proceedings for various matters with the Lenders of Company’s Subsidiary & Customers, continuing from earlier years (Refer Note No. 22 of Standalone Financial Statements)	Our audit procedures included but was not limited to the following activities: Assessing management’s position through discussions with the management including review of external legal opinions obtained by the Company (where considered necessary) on both, the probability of success in the aforesaid cases and the magnitude of any potential loss. Discussion with the management on the development in these litigations during the year ended March 31,2025. Review of the disclosures made by the Company in the Standalone Financial Statements in this regard. Obtaining a representation letter from the management on the assessment of these matters (including the basis of the judgement).

Information other than the Standalone financial Statements
and Auditor’s Report thereon

The Company’s Management and the Board of Directors is
responsible for the preparation of the Other Information. The
Other Information comprises of the information included in the
Annual Report including its annexures, Corporate Governance
and Shareholder’s Information, but does not include the
Standalone Financial Statements and our independent
auditor’s report thereon. The Company’s annual report is
expected to be made available to us after the date of this
auditor’s report.

Our opinion on the Standalone Financial Statements does not
cover the Other Information and we will not express any form of
assurance conclusion thereon.

In connection with our audit of the Standalone Financial
Statements, our responsibility is to read the Other Information
and, in doing so, consider whether the Other Information is
materially inconsistent with the Standalone Financial Statements
or our knowledge obtained during the course of our audit or
otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that
there is a material misstatement of the Other Information, we
are required to report that fact.

Responsibilities of the management and those charged
with governance for the Standalone Financial Statements

The Company’s Management and the Board of Directors is
responsible for the matters stated in section 134(5) of the
Act, with respect to the preparation of these Standalone
Financial Statements that give a true and fair view of the
financial position, financial performance, total comprehensive
income, changes in equity and cash flows of the Company
in accordance with Ind AS and other accounting principles
generally accepted in India. This responsibility also includes
maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding of the assets
of the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate
accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation
and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant to the
preparation and presentation of the Standalone Financial
Statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, the
Management and the Board of Directors is responsible for
assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the
Management or the Board of Directors either intends to
liquidate the Company or to cease operations, or has no realistic
alternative but to do so.

The Company’s Management and the Board of Directors
are also responsible for overseeing the Company’s financial
reporting process.

Auditor’s Responsibilities for the Audit of the Standalone
Financial Statements

Our objectives are to obtain reasonable assurance about
whether the Standalone Financial Statements as a whole are
free from material misstatement, whether due to fraud or error,
and to issue an independent auditor’s report that includes our
opinion.

Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with Standards
on Auditing will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of these Standalone Financial
Statements.

As part of an audit in accordance with Standards on Auditing,
we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of
the Standalone Financial Statements, whether due to fraud
or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances. Under section 143(3)(i) of the Act, we
are also responsible for expressing our opinion on whether
the Company has adequate internal financial control systems
in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by management.

• Conclude on the appropriateness of management’s use of
the going concern basis of accounting and based on the
audit evidence obtained, whether a material uncertainty
exists related to event or conditions that may cast significant
doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the
related disclosures in the Standalone Financial Statements
or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained
up to the date of our independent auditor’s report. However,
future events or conditions may cause the Company to
cease to continue as a going concern.

• Evaluate the overall presentation, structure and content
of the Standalone Financial Statements, including the
disclosures, and whether the Standalone Financial
Statements represent the underlying transactions and
events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding
the Standalone Financial Statements of the Company to
express an opinion on the Standalone Financial Statements.

Materiality is the magnitude of misstatements in the Standalone
Financial Statements that, individually or in aggregate, makes
it probable that the economic decisions of a reasonably
knowledgeable user of the Standalone Financial Statements
may be influenced. We consider quantitative materiality and
qualitative factors in (i) planning the scope of our audit work and
in evaluating the results of our work; and (ii) evaluating the effect
of any identified misstatements in the Standalone Financial
Statements.

We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related
safeguards.

From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of Standalone Financial Statements
of the current period and are therefore the Key Audit Matters.
We describe these matters in our auditor’s report unless law
or regulation precludes public disclosures about the matters
or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order,
2020 (“the Order”) issued by the Central Government in
terms of Section 143 (11) of the Act, and on the basis of
such checks of the books and records of the Company as
we considered appropriate and according to the information
and explanations given to us, we give in the “Annexure A”
a statement on the matters specified in paragraphs 3 and 4
of the Order.

2. As required by Section 143(3) of the Act, we report that:

a. We have sought and 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 it
appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss
including Other Comprehensive Income, Statement of
Changes in Equity and the Cash Flow Statement dealt
with by this Report are in agreement with the relevant
books of account.

d. In our opinion, the aforesaid Standalone Financial
Statements comply with the Ind AS specified under
Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014.

e. The matters described under “Emphasis of Matter”
paragraph and the Going Concern matter described
under the “Material Uncertainty Related to Going
Concern” paragraph, in our opinion, may have an
adverse effect on the functioning of the Company.

f. On the basis of the written representations received
from the directors as on March 31, 2025, taken on
record by the Board of Directors, none of the directors
is disqualified as on March 31, 2025, from being
appointed as a director in terms of Section 164(2) of
the Act.

g. With respect to the adequacy of the internal financial

controls with reference to Standalone Financial

Statements of the Company and the operating
effectiveness of such controls, refer to our separate
report in “Annexure B”. Our report expresses an
unmodified opinion on the adequacy and operating
effectiveness of the Company’s internal financial
controls with reference to Standalone Financial

Statements.

h. With respect to the other matters to be included in the
Auditor’s Report in accordance with the requirements
of section 197(16) of the Act, as amended:

In our opinion and to the best of our information
and according to the explanations given to us, the
remuneration paid by the Company to its directors
during the year is in accordance with the requisite
approvals mandated by the provisions of Section 197,
read with Schedule V to the Act.

i. With respect to the other matters to be included in
the Auditor’s Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, as
amended in our opinion and to the best of our information
and according to the explanations given to us:

a) The Company does not have any pending
litigations on its financial position in its Standalone
Financial Statements, other than as mentioned
in Note No. 22 to the Standalone Financial
Statements.

b) The Company did not have any long-term
contracts including derivatives for which there
were any material foreseeable losses.

c) The Company is not required to transfer any
amount to the Investor Education and Protection
Fund during the ended March 31,2025.

d) i) The management has represented that, to the

best of its knowledge and belief, other than
as disclosed in the notes to accounts (refer
Note no.31), no funds have been advanced
or loaned or invested (either from borrowed
funds or share premium or any other sources
or kind of funds) by the company to or in
any other person(s) or entity(ies), including
foreign entities (“Intermediaries”), with the
understanding, whether recorded in writing
or otherwise, that the Intermediary shall,
whether, directly or indirectly lend or invest
in other persons or entities identified in any
manner whatsoever by or on behalf of the
company (“Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf
of the Ultimate Beneficiaries;

i) The management has represented, that, to
the best of its knowledge and belief, other
than as disclosed in the notes to the accounts
(refer Note No.32), no funds have been
received by the company from any person(s)
or entity(ies), including foreign entities
(“Funding Parties”), with the understanding,
whether recorded in writing or otherwise,
that the company shall, whether, directly or
indirectly, lend or invest in other persons or
entities identified in any manner whatsoever
by or on behalf of the Funding Party (“Ultimate
Beneficiaries”) or provide any guarantee,

security or the like on behalf of the Ultimate
Beneficiaries; and

ii) Based on such audit procedures that we have
considered reasonable and appropriate in
the circumstances nothing has come to our
notice that has caused us to believe that the
representations under sub-clause (i) and (ii)
contain any material mis-statement.

e) The Company has not declared or paid any
dividend during the year.

f) Based on our examination, which included test
checks, the Company has used accounting
software for maintaining its books of account which
has the feature of recording audit trail (edit logs)
facility and the same has operated throughout the
year for all relevant transactions recorded in the
respective software. Further, during the course of
our audit we did not come across any instances
of audit trail feature being tampered with, in
respect of accounting software for which the
audit trail feature was operating. The Company
has complied with the statutory requirements
of preservation of the audit trail for transactions
recorded in the software except for audit trail at
the database level for accounting software SAP to
log in any direct changes.

For C N K & Associates LLP

Chartered Accountants
Firm Registration No.: 101961 W/W - 100036

Diwakar Sapre

Partner

Place: Mumbai Membership No. 040740

Date: May 29, 2025 UDIN: 25040740BMIGMH7659

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Mar 31, 2024

We have audited the Standalone Financial Statements of Essar Shipping Limited (“the Company”), which comprises of the balance sheet as at March 31, 2024, the statement of profit and loss (including Other Comprehensive Income), statement of cash flows and the statement of changes in equity for the year then ended, and notes to the Standalone Financial Statements, including a summary of material accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, the loss (financial position including Other Comprehensive Income), changes in equity and its cash flows for the year ended on that date.

2. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

3. Material Uncertainty Related to Going Concern

We draw attention to Note No. 28 to the Standalone Financial Statements, which indicates that as on March 31, 2024, the Company has accumulated losses of

Rs. 6,892.16 crore as against capital and reserves of Rs. 5,217.92 crore. The Company has defaulted on several loans and some of the lenders of the Company’s subsidiary (which has gone into liquidation) where the Company is a Guarantor, have filed application before the High Court / National Company Law Tribunals / Debt Recovery Tribunals for recovery of overdue amounts and / or enforcement of guarantees. The Company has disposed off most of its assets with a view to pay off its outstanding dues to lenders / vendors. The Company’s current liabilities [including outstanding portion of Foreign Currency Convertible Bonds (FCCB) which have fallen due for redemption] exceed its current assets as on March 31, 2024. This indicates that a material uncertainty exists that may cast doubt on the Company’s ability to continue as a going concern.

The Company, however, has represented that, as mentioned in Note No. 28 to the Standalone Financial Statements, the management is exploring various business opportunities for a future business build up including in-chartering in the shipping sector. The Company has earned operating income by way of hire charges and management fees and is taking steps to rectify the mismatch in working capital. In view of the above, the Company has prepared the accounts as a going concern.

Our opinion on the Standalone Financial Statements is not modified for the above matter.

4. Emphasis of Matter

(i) We draw attention to our observations in paragraph 3 above whereby, in spite of several factors mentioned therein, the Standalone Financial Statements are prepared on “Going Concern” basis.

(ii) We draw attention to Note No.9(A) of the Standalone Financial Statements relating to recognition of gain on settlement with one of the banks. In the preceding year, the Company had settled the loan with the said bank and paid the dues through monetisation of assets and recognised gain on settlement. Pending outstanding bank guarantee and pending group level settlement, ‘No Due Certificate’ was not received from the said bank till 31^st March 2023. Post settlement, the Bank has assigned the said loan to Asset Reconstruction Company (Assignee Company).

During the year, the pending bank guarantee has been withdrawn. The Company does not expect any additional liability to devolve in this regard and is in the process of obtaining NOC from the Assignee Company.

(iii) We draw attention to Note No. 6(C) of the Standalone Financial Statements relating to write off of Rs. 66.99 crore out of amount of Rs. 369.81 crore (including accrued interest up to March 31, 2018) receivable in respect of revenue recognised in the financial year 2017-18 and shown as an exceptional item based on compensation granted to the Company in the arbitration proceedings for breach of contract terms by a charterer. Post the year end, the Company entered into a settlement agreement with the charterer under Vivad se Vishwas Scheme under which the amount receivable including interest up to date is Rs. 302.82 crore. The balance irrecoverable amount of Rs. 66.99 crore has been written off and is shown as an Exceptional Item.

(iv) We draw attention to Note No.9(A) of the Standalone Financial Statements relating to the FCCB amounting to Rs. 1,537.62 crore which have become due for repayment on August 24, 2023. During the year, the Company has made partial repayment of FCCBs to the tune of Rs.1003.45 crore by availing short-term loan. The balance amount of Rs. 534.17 crore, which has fallen due for repayment, is outstanding as at March 31,2024. The Company is in the process of complying

with the procedures of the Reserve Bank of India in this regard.

(v) We draw attention to Note No. 6(B) and 11 of the Standalone Financial Statements relating to netting off of Rs. 331.26 crore payable to a wholly owned overseas subsidiary with the amount receivable from the said subsidiary. This is subject to pending application and approval from the regulatory authorities.

Our opinion on the Standalone Financial Statements is not modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters described in the Material Uncertainty Related to Going Concern paragraph, we have determined the matters described below to be the key audit matters to be communicated in our report:

Key Audit Matter

Auditor’s Response

Goina concern As on March 31,2024, the Company has accumulated losses of Rs. 6,892.16 crore as against capital and reserves of Rs. 5,217.92 crore. Some of the Lenders of the Company’s Subsidiary (which has gone into liquidation) where the Company is a Guarantor, have filed applications before the High Court / National Company Law Tribunal / Debt Recovery Tribunals for recovery of overdue amounts and / or enforcement of guarantees. The Company has disposed off most of its assets with a view to pay off its outstanding dues to lenders / vendors. The Company’s current liabilities [including outstanding portion of Foreign Currency Convertible Bonds (FCCB) which have fallen due for redemption] exceeds its current assets as on March 31,2024. (Refer Note No. 28 of Standalone Financial Statements). All these factors indicate that a material uncertainty exists that may cast doubt on the Company’s ability to continue as a going concern.

Our audit included but was not limited to the following activities: 1. Assessing management’s steps being taken to meet liabilities as and when they become due for payment. 2. Obtained and evaluated the Company’s plans to repay these loans (with interest) through communication letters and the extent of steps taken for the same. 3. Evaluating legal and other developments related to the Company and / or its subsidiaries based on Minutes of the Audit Committee and Board of Directors. We found the key assumptions were supported by the available evidence. Based on the audit procedures performed, we found disclosures in the Standalone Financial Statements to be appropriate.

Key Audit Matter

Auditor’s Response

Evaluation of Litigation matters The Company has certain significant open legal proceedings for various matters with the Lenders of Company’s Subsidiary & Customers, continuing from earlier years (Refer Note No. 22 of Standalone Financial Statements)

Our audit included but was not limited to the following activities: Assessing management’s position through discussions with the management including review of external legal opinions obtained by the Company (where considered necessary) on both, the probability of success in the aforesaid cases and the magnitude of any potential loss. Discussion with the management on the development in these litigations during the year ended March 31,2024. Review of the disclosures made by the Company in the Standalone Financial Statements in this regard. Obtaining representation letter from the management on the assessment of these matters (including the basis of the judgement).

Information other than the Standalone financial Statements and Auditor’s Report thereon

The Company’s Management and the Board of Directors is responsible for the preparation of the Other Information. The Other Information comprises of the information included in the Annual Report including its annexures, Corporate Governance and Shareholder’s Information, but does not include the Standalone Financial Statements and our independent auditor’s report thereon. The Company’s annual report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the Standalone Financial Statements does not cover the Other Information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of the Other Information, we are required to report that fact.

Responsibilities of the management and those charged with governance for the standalone Financial statements

The Company’s Management and the Board of Directors is responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes

in equity and cash flows of the Company in accordance with Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, the management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Company’s management and Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the standalone Financial statements

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an independent auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial control systems in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to event or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our independent auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial

Statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the Standalone Financial Statements of the Company to express an opinion on the Standalone Financial Statements.

Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Standalone Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of Standalone Financial Statements of the current period and are therefore the Key Audit Matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosures about the matters or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”) issued by the Central Government in terms of Section 143 (11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

a. We have sought and 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 it appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account.

d. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. The matters described under “Emphasis of Matter” paragraph and the Going Concern matter described under the “Material Uncertainty Related to Going Concern” paragraph, in our opinion, may have an adverse effect on the functioning of the Company.

f. On the basis of the written representations received from the directors as on March 31, 2024, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024, from being appointed as a director in terms of Section 164(2) of the Act.

g. With respect to the adequacy of the internal financial

controls with reference to Standalone Financial

Statements of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls with reference to Standalone Financial

Statements.

h. With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with requisite approvals mandated by the provisions of Section 197, read with Schedule V of the Act.

i. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014,

as amended in our opinion and to the best of our information and according to the explanations given to us:

a) The Company does not have any pending litigations on its financial position in its Standalone Financial Statements, other than as mentioned in Note No. 22 to the Standalone Financial Statements.

b) The Company did not have any long-term contracts including derivative for which there were any material foreseeable losses.

c) The Company is not required to transfer any amount to the Investor Education and Protection Fund during the ended March 31,2024.

d) i) The management has represented that, to the best of it’s knowledge and belief, other than as disclosed in the notes to accounts (refer Note no.31), no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

i) The management has represented, that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts (refer Note No.32), no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

ii) Based on such audit procedures that we have considered reasonable and appropriate in the circumstances nothing has come to our notice that

has caused us to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.

e) The Company has not declared or paid any dividend during the year.

f) Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account which has the feature of recording audit trail (edit logs) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software. Further, during the course of our audit we did not come across any instances of audit trail feature being tampered with.

For C N K & Associates LLP

Chartered Accountants Firm Registration No.: 101961 W/W - 100036

Diwakar Sapre Partner

Membership No. 040740

UDIN: 24040740BKEYGR5970 Place: Mumbai Date: May 28, 2024

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Mar 31, 2023

Essar Shipping Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the Standalone Financial Statements of Essar Shipping Limited (“the Company”), which comprises of the balance sheet as at 31^st March 2023, the statement of profit and loss (including Other Comprehensive Income), statement of cash flows and the statement of changes in equity for the year then ended, and notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us,the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March 2023, the profit (financial position including Other Comprehensive Income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together withthe ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

Material Uncertainty Related to Going Concern

We draw attention to Note No. 28 to the Standalone Financial Statements, which indicates that as on 31^st March 2023 the Company has accumulated losses of Rs. 6,821.80 crore as against capital and reserves of Rs.5,218.33 crore. The Company has also defaulted on several loans and some of the lenders of the Company have filed application before the High Court / National Company Law Tribunals / Debt Recovery Tribunals for recovery of overdue amounts and / or enforcement of guarantees. The Company has disposed off most of its assets with a view to pay off its outstanding dues to lenders / vendors.. . The Company’s current liabilities substantially exceed its current assets as on 31^st March 2023. This indicates that a material

uncertainty exists that may cast doubt on the Company’s ability to continue as a going concern. The Company, however, has represented that, as mentioned in Note No. 28 to the Standalone Financial Statements, the management is exploring business opportunity for a future business build up. Further, the company has bought one tug during the year and given to a customer on Bareboat charter hire.

Our opinion on the Standalone Financial Statements is not modified for the above matter.

Emphasis of Matter

a. We draw attention to Note No.9(A) of the Standalone Financial Statements relating to recognition of gain on settlement with one of the banks. Standby Letter of Credit (SBLC) issued by the Company with the said bank for Rs.303.37 crore in earlier years to secure a loan availed by a subsidiary, were invoked in an earlier year. In the preceding year, the Company had settled the loan with the said bank and paid the dues through monetisation of assets. Pending outstanding bank guarantee, ‘no due certificate’ has not been received from the said bank. The Company does not expect any additional liability to devolve in this regard. During the year, the Company has accounted for the gain of Rs. 340.80 Crore on One Time Settlement and included the same under Exceptional Items.

b. We draw attention to Note No. 6(C) of the Standalone Financial Statements relating to recognition of revenue amounting to Rs. 369.81 crore (including accrued interest up to 31^st March 2018) in the financial year 2017-18 based on compensation granted to the Company in the arbitration proceedings for breach of contract terms by a charterer of which Rs. 305.81 crore remains outstanding receivable as on 31^st March 2023. The Company is confident of full recovery of its claims. However, pending conclusion of the said proceedings, no interest is accrued on the same for the period 1^st April 2018 till 31^st March 2023;

c. We draw attention to Note No.6(B) and 11 of the Standalone Financial Statements, relating to netting off of Rs. 331.26 Crore payable to a wholly owned overseas subsidiary with the amount receivable from the said subsidiary. This is subject to pending application and approval from the regulatory authorities.

d. In an earlier year, loan of Rs. 25 Crore taken by the Company from an Alternate Investment Fund (AIF) was assigned to Environ Energy Corporation India Private Limited (EECIPL). The NCLT vide its order dated 19th May, 2021 has ordered EECIPL to be liquidated in terms of Section 33(2) of IBC Code, 2016. The Company does not expect any claim from the liquidator and hence, during the year, the Company has written back Rs. 35.41 Crore (Comprising principal of Rs. 25 Crore and interest of Rs. 10.41 crore) and included the same under Exceptional Items.

e. Borrowings from various lenders are subject to confirmation/ reconciliation Our opinion is not modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters described in the Material Uncertainty Related to Going Concern paragraph, we have determined the matters described below to be the key audit matters to be communicated in our report:

Key Audit Matter	Auditor’s Response
Goina concern As on 31st March 2023, the Company has accumulated losses of Rs. 6,821.80 crore as against capital and reserves of Rs. 5,218.33 crore. The Company has also defaulted on several loans and lenders have initiated recovery proceedings as mentioned in Note No. 28 of the Standalone Financial Statements. The Company has disposed off most of its assets with a view to pay off its outstanding dues to lenders / vendors. The value of the security offered in connection with various borrowings as at 31st March 2023 is substantially lower than the amounts outstanding to the lenders. The Company’s current liabilities exceeds its current assets as on 31 March, 2023 (Refer Note No. 28 of Standalone Financial Statements). All these factors indicate that a material uncertainty exists that may cast doubt on the Company’s ability to continue as a going concern.	Our audit included but was not limited to the following activities: 1. Requested external confirmation of balances from each of these lenders to confirm the balance outstanding as on 31 March, 2023; 2. Assessing management’s steps being taken to meet liabilities as and when they become due for payment; 3. Obtained and evaluated the Company’s plans to repay these loans (with interest) through communication letters and the extent of steps taken for the same; 4. Obtaining and evaluating various communications with the lenders for the one- time settlement proposed by the Company. 5. Evaluating legal and other developments related to the Company and / or its subsidiaries based on Minutes of the Audit Committee and Board of Directors We found the key assumptions were supported by the available evidence. Based on the audit procedures performed, we found disclosures in the Standalone Financial Statements to be appropriate.
Evaluation of Litiaation matters The Company has certain significant open legal proceedings including under arbitration for various matters with the Lenders & Customers, continuing from earlier years (Refer Note No. 22 of Standalone Financial Statements)	Our audit included but was not limited to the following activities: Assessing management’s position through discussions with the management including review of external legal opinions obtained by the Company (where considered necessary) on both, the probability of success in the aforesaid cases and the magnitude of any potential loss; Discussion with the management on the development in these litigations during the year ended 31st March 2023; Review of the disclosures made by the Company in the Standalone Financial Statements in this regard; Obtaining representation letter from the management on the assessment of these matters (including the basis of the judgement).
Information other than the Standalone financial Statements and Auditor’s Report thereon The Company’s Board of Directors is responsible for the preparation of the Other Information. The Other Information comprises of the information included in the Annual Report including its annexures, Corporate Governance and Shareholder’s Information, but does not include the Standalone Financial Statements and our independent auditor’s report thereon. The Company’s annual report is expected to be made available to us afterthe date of this auditor’s report.	Our opinion on the Standalone Financial Statements does not cover the Other Information and we will not express any form of assurance conclusion thereon. In connection with our audit of the Standalone Financia Statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Other Information, we are required to report that fact.

Responsibilities of the management and those charged with governance for the Standalone financial Statements

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, the management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Company’s management and Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an independent auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whetherdue to fraud or error, design and perform audit procedures responsive

to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial control systems in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to event orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our independent auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the Standalone Financial Statements of the Company to express an opinion on the Standalone Financial Statements.

Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Standalone Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all

relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of Standalone Financial Statements of the current period and are therefore the Key Audit Matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosures about the matters or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”) issued by the Central Government in terms of Section 143 (11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

a. We have sought and 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 it appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account;

d. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. The matters described under “Emphasis of Matter” paragraph and the Going Concern matter described under the “Material Uncertainty Related to Going Concern” paragraph, in our opinion, may have an adverse effect on the functioning of the Company;

f. On the basis of the written representations received from the directors as on 31^st March 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March 2023 from being appointed as a director in terms of Section 164(2) of the Act;

g. With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such

controls, refer to our separate report in “Annexure B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls with reference to Standalone Financial Statements;

h. With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with requisite approvals mandated by the provisions of Section 197, read with Schedule V of the Act;

i. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:

a) The Company does not have any pending litigations on its financial position in its Standalone Financial Statements, other than as mentioned in Note No. 22 to the Standalone Financial Statements;

b) The Company did not have any long-term contracts including derivative for which there were any material foreseeable losses;

c) The Company is not required to transfer any amount to the Investor Education and Protection Fund during the ended 31^st March 2023;

d) i) The management has represented that, to the best of it’s knowledge and belief, other than as disclosed in the notes to accounts (refer Note no.31), no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

ii) The management has represented, that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts (refer Note No.32), no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether,

directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

iii) Based on such audit procedures that we have considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) contain any material misstatement.

e) The Company has not declared or paid any dividend during the year.

f) As the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company only w.e.f. April 1,2023, reporting under this clause is not applicable for the year under audit.

For C N K & Associates LLP

Chartered Accountants Firm Registration No.: 101961 W/W - 100036

Diwakar Sapre Partner

Membership No. 040740 UDIN: 23040740BGSEUH3060

Place: Mumbai

Date: 29^th May, 2023

---

Mar 31, 2016

To the Members of

Essar Shipping Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Essar Shipping Limited (‘the Company''), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that except for the matter described in Basis for Qualified opinion paragraph, the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Basis for Qualified Opinion

Attention is invited to note 13(a)(ii) of the financial statements regarding Managements ongoing assessment of ‘other than temporary'' decline in the value of long term investment of Rs.4747.78 crores as at March 31, 2016 in equity shares of Essar Oilfileds Services Limited, Mauritius, a wholly owned subsidiary of the Company, in terms of Accounting Standard 13, ‘Accounting for Investments''. We have been informed that the Management has not yet concluded the process of validating various operational assumptions impacting the estimated future cash flows from the operations of the rigs of the said subsidiary, and the consequent effect on the valuation of the subsidiary to determine whether there is a decline, other than temporary, in the value of the aforesaid investment. Pending conclusion of the said exercise, we are unable to comment on the extent of diminution, if any, which may be required in respect of the carrying amount of the said investment.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of matter paragraph

Managerial Remuneration paid to a Director of the Company for the year ended March 31, 2016, to the extent of Rs.0.16 crores exceeds the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013. We have been informed by the management that approval has already been sought for the same and is currently awaited.

Our opinion is not modified in respect of this Matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the ‘Annexure A'', a statement on the matters specified in the paragraph 3 and 4 of the order.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and, except for the possible effects of the matter described in Basis for Qualified Opinion paragraph above, 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, except for the possible effects of the matter described in Basis for Qualified Opinion paragraph above, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, except for the possible effects of the matter described in Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on March 31, 2016, taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2016 from being appointed as a director in terms of Section 164 (2) of the Act;

(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

(h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in ‘Annexure B’; and

(i) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer note 27(a) to the financial statements.

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts- Refer note 31 to the financial statements.

(iii) There were no amounts that were required to be transferred to the investor education protection fund by the Company.

ANNEXURE - A TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section 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) During the year, the fixed assets were physically verified by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification;

(c) The title deeds of immovable properties are held in the name of the company;

(ii) As informed to us, the inventory has been physically verified by the Management at reasonable intervals during the year and no material discrepancies have been noticed on such verification;

(iii) The Company has granted unsecured loan, to one company covered in the register maintained under Section 189 of the Companies Act 2013;

(a) In respect of the aforesaid loan, the terms and conditions of the grant of such loan are not prejudicial to the company''s interest;

(b) In respect of the aforesaid loan, since the loan is repayable on demand the regularity of the repayments of principal and payment of interest cannot be commented upon;

(c) In respect of the aforesaid loan, since the loan is repayable on demand the overdue amounts cannot be determined;

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans, Investments, guarantees and security;

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the rules framed there under to the extent notified;

(vi) According to the information and explanations given to us, the Company is not required to maintain cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub-section (1) of section 148 of the Companies Act 2013;

(vii) (a) According to the information and explanation given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including provident fund, duty of customs and value added tax and other material statutory dues as applicable with appropriate authorities. However delays in deposits of tax deducted at source and service tax were observed ranging from 228 to 289 days. The extent of the arrears of tax deducted at source and service tax outstanding as at March 31, 2016, for a period of more than six months from the date the same became payable is Rs.27.38 crores and Rs.7.66 crores due for 206 to 238 days and 206 to 694 days respectively;

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax and duty of customs at March 31, 2016 which have not been deposited on account of a dispute, are as follows:

Name of the Statute	Nature of Dues	Amount in crores	Period to which the amount relates	Forum where the matter is pending
Income Tax Act, 1961	Income Tax	7.29	1993-94	The High Court of Bombay
Foreign Trade (Development and Regulation Act, 1992)	Custom Duty	27.40	2006-07	The High Court of Bombay

(viii) According to the records of the Company examined by us and the information and explanations given to us, except for the loans, borrowings and dues mentioned in the below table, the Company has not defaulted in repayment of loans or borrowings to any Financial Institution, Bank, Government or dues to Debenture Holders as at the balance sheet date;

(Amounts in crores)

Lender Name	Amount of Default		Total	Period of Default
	Principal | Interest
Debenture Holders
Life Insurance Corporation	700.00	178.00	878.00	1 to 740 days
CSEB (Chattisgarh State Electricity Board) Gratuity and Pension fund Trust		1.38	1.38	4 to 300 days
MTNL - Employees Provident Fund Trust	-	0.16	0.16	15 days
Rajasthan Rajya Vidyut Prasaran Nigam Limited	-	0.54	0.54	53 to 145 days
Banks
State Bank of India	3.52	-	3.52	1 day
State Bank of Patiala	1.35	-	1.35	1 day
State Bank of Bikaner & Jaipur	2.43	-	2.43	1 day
State Bank of Travancore	1.50	-	1.50	1 day
Syndicate Bank	5.57	-	5.57	63 to 155 days
Indian Overseas Bank	4.58	-	4.58	67 to 159 days
Export Import Bank of India	2.35	-	2.35	31 days
Financial Institutions
IL&FS Financial Services Limited	1.40	-	1.40	1 day
Total	722.70	180.08	902.78

(ix) According to the records of the Company examined by us and the information and explanation given to us, the Company has not raised money by way of initial public offer or further public offer (including debt instruments) during the year and in case of term loans taken during the year, the same were applied for the purposes for which those were raised;

(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit;

(xi) According to the records of the Company examined by us and the information and explanations given to us, managerial remuneration to the extent of Rs.0.16 crores exceeds the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013. Approval has already been sought for the same and is currently awaited;

(xii) The Company is not a Nidhi company and therefore the provisions of clause 3 (xii) of the Order are not applicable to the company;

(xiii) According to the records of the Company examined by us and the information and explanation given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details thereof have been disclosed in the Financial Statements etc., as required by the applicable accounting standards;

(xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Therefore clause 3(xiv) is not applicable to the Company;

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, clause 3(xv) of the Order is not applicable to the Company;

(xvi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934;

ANNEXURE - B TO THE AUDITORS’ REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Essar Shipping Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For CNK & ASSOCIATES LLP

Chartered Accountants

Firm''s registration number: 101961W

Himanshu Kishnadwala

Partner

Membership number: 37391

Mumbai, May 25, 2016

---

Mar 31, 2015

We have audited the accompanying standalone financial statements of ESSAR SHIPPING LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement, and a summary of the significant accounting policies and other explanatory information for the year then ended.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the preparation of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

Attention is invited to note 13(a)(ii) of the financial statements regarding Management's ongoing assessment from the last financial year of 'other than temporary' decline in the value of long term investment ofRs. 4,747.78 Crore as at 31st March, 2015 in equity shares of Essar Oilfields Services Limited, Mauritius, a wholly owned subsidiary of the Company, in terms of Accounting Standard (AS) 13, Accounting for Investments. We have been informed that the Management has not yet concluded the process of validating various operational assumptions impacting the estimated future cash flows from the operations of the rigs of the said subsidiary, and the consequent effect on the valuation of the subsidiary to determine whether there is any decline, other than temporary, in the value of the aforesaid investment. Pending conclusion of the said exercise, we are unable to comment on the extent of diminution, if any, which may be required in respect of the carrying amount of the investment.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 35 regarding preparation of the financial statements on a going concern basis which is predicated on the expectation that the Company will be able to refinance its existing borrowings in a manner such that repayment schedules are aligned with projected debt servicing ability of the fleet.

Our report is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought, and except for the matter described in the Basis for Qualified Opinion paragraph obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) The matter described in the Basis for Qualified opinion paragraph above may have an adverse effect on the functioning of the Company. The matter described in the Emphasis of Matter Paragraph above may have an adverse effect on the functioning of the Company if the existing borrowings are not refinanced in a manner such that repayment schedules are aligned with projected debt servicing ability of the fleet.

(f) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164(2) of the Act.

(g) The qualification relating to the maintenance of accounts and other matters connected therewith is as stated in the Basis for Qualified Opinion paragraph above.

(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us :

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer note 27(a) to the financial statements;

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long- term contracts including derivative contracts - Refer Note 31 to the financial statements;

(iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT (Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

(i) In respect of its fixed assets:

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

(b) The fixed assets were physically verified in the previous year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventories :

(a) The Company carries inventories of fuel oil and lubricants on board the fleet. The Company purchases stores and spare parts for the fleet, which are directly treated as consumed as and when supplied to fleet. As explained to us, the inventories of fuel oil and lubricants were physically verified during the year by the Master of fleet at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, having regard to the nature and location of inventory, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) Having regard to the nature of the Company's business and scale of operations, quantities of fuel oil and lubricants are determined by physical count and it is not considered feasible by the Management to maintain records of movements of inventories of such items by the fleet in which they are carried. As quantities are determined by physical count and records of movements are not maintained on board the fleet, the question of discrepancies on physical verification thereof does not arise.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, 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, and during the course of our audit we have not observed any continuing failure to correct major weakness in such internal control system. The activities of the Company do not involve sale of goods.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year.

(vi) The Company is not required to maintain cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Value Added Tax, Cess and other material statutory dues applicable to it except that there have been delays in number of cases in depositing undisputed statutory dues of service tax, Provident Fund and tax deducted at source with the appropriate authorities. As informed to us, the provisions for Employee's State Insurance and Excise duty were not applicable to the Company during the year.

(b) There are no undisputed amounts payable in respect of Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Value Added Tax, Cess and other material statutory dues in arrears as at 31st March, 2015 for a period of more than six months from the date they became payable except arrears of Tax Deducted at Source amounting to Rs.13.52 Crore due for 205-328 days.

(c) Details of dues of Income-tax and Customs duty which have not been deposited as on 31st March , 2015 on account of disputes are given below:

Name of Nature Amount Period to Forum statute of dues (Rs. in which the where Crore) amount dispute is relates pending

Income tax Income 7.29* 1993-94 The High Act, 1961 Tax Court of Bombay

Foreign Customs 27.40 2006-07 The High Trade duty Court of (Development Bombay and Regulation) Act, 1992

*The Income Tax Department has preferred an appeal against the order of the Appellate Tribunal pursuant to which the said amount deposited earlier was refunded to the Company.

(d) There are no amounts that are due to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder.

(viii) The Company is registered for a period of less than five years as of the balance sheet date. Accordingly, the provisions of clause (viii) of the Order are not applicable to the Company.

(ix) Delays in repayment of dues (including interest) to banks, financial institutions and debenture holders aggregating to Rs. 122.53 Crore, Rs. 11.23 Crore and Rs. 43.19 Crore have been regularised within 90 days, 91-150 days and 151-214 days respectively, from due dates. Dues aggregating to Rs. 245.44 Crore, Rs. 60.71 Crore and Rs. 41.30 Crore outstanding for a period of less than 90 days, 91-150 days and 151-283 days respectively, as at 31st March, 2015 have not been paid till the date of this report.

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants (Firm Registration No. 117365W)

Samir R. Shah

Partner

Mumbai, May 21,2015 Membership No. 101708

---

Mar 31, 2014

We have audited the accompanying financial statements of ESSAR SHIPPING LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2003 dated September 13, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis of Qualified Opinion

Attention is invited to note 12(a) to the financial statements regarding Management''s assessment of ''other than temporary'' decline in the value of long term investment of Rs. 4,747.78 Crore as at March 31, 2014 in equity shares of Essar Oilfields Services Limited, Mauritius, a wholly owned subsidiary of the Company, in terms of Accounting Standard (AS) 13, Investments. We have been informed that the Management of the Company is in the process of validating various operational assumptions impacting the estimated future cash flows from the operation of the rigs of the said subsidiary, and the consequent effect on the valuation of the subsidiary to determine whether there is any decline, other than temporary, in the carrying value of the aforesaid investment. Pending conclusion of the said exercise, we are unable to comment on the provision for diminution, if any, which may be required in respect of the carrying amount of the aforesaid investment.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis of Qualified Opinion paragraph, the aforesaid financial statements give the information required by the Act 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 March 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the Year Ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the Year Ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) Except for the matter described in Basis of Qualified Opinion paragraph, 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) Except for the possible effect of the matter described in Basis of Qualified Opinion paragraph, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) Except for the possible effect of the matter described in Basis of Qualified Opinion paragraph, in our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

(i) In respect of its fixed assets:

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

(b) The fixed assets of the Company were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventories:

(a) The Company carries inventories of fuel oil and lubricants on board the fleet. The Company purchases stores and spare parts for the fleet, which are directly treated as consumed as and when supplied to fleet. As explained to us, the inventories of fuel oil and lubricants were physically verified during the year by the Master of fleet at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, having regard to the nature and location of inventory, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) Having regard to the nature of the Company''s business and scale of operations, quantities of fuel oil and lubricants are determined by physical count and it is not considered feasible by the Management to maintain records of movements of inventories of such items by the fleet in which they are carried. As quantities are determined by physical count and records of movements are not maintained on board the fleet, the question of discrepancies on physical verification thereof does not arise.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (a) to (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, 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. During the course of our audit, we have not observed any major weakness in such internal control system. The activities of the Company do not involve sale of goods.

(v) According to the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4 (v) of the Order are not applicable to the Company.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year to which the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA or any other relevant provisions of the Act and the rules framed thereunder would apply. Accordingly, the provisions of clause 4 (vi) of the Order are not applicable to the Company.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business.

(viii) To the best of our knowledge and as explained to us, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the services provided by the Company.

(ix) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth tax, Customs Duty, Cess, and other material statutory dues applicable to it except that there have been delays in number of cases in depositing undisputed statutory dues of service tax, Provident fund and tax deducted at source with the appropriate authorities. As informed to us, the provisions of Employee''s State Insurance and Excise Duty were not applicable to the Company during the year.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth tax, Service Tax, Customs Duty, Cess, and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(c) Details of dues of Income Tax and Customs duty which have not been deposited as on March 31, 2014 on account of disputes are given below:

Name of Nature Amount Period to Forum statute of dues (Rs. in which the where Crore) amount dispute is relates pending

Income tax Income 7.29* 1993-94 The High Act, 1961 Tax Court of Bombay

Foreign Trade Customs 27.40 2006-07 The High (Development duty Court of and Bombay Regulation) Act. 1992

* The Income Tax Department has preferred an appeal against the order of the Appellate Tribunal pursuant to which the said amount deposited earlier was refunded to the Company.

According to the information and explanations given to us, there were no dues pending to be deposited on account of any dispute in respect of Sales Tax, Wealth Tax, Service Tax and Cess as on March 31, 2014.

(x) The Company is registered for a period of less than five years. Accordingly, the provisions of clause 4(x) of the Order are not applicable to the Company.

(xi) Delays in repayment of dues (including interest) to banks, financial institutions and debenture holders aggregating to Rs. 167.44 Crore, Rs. 32.76 Crore and Rs. 30.77 Crore have been regularised within 90 days, 91-150 days and 151-212 days respectively, from due dates. There are no outstanding dues to banks as at March 31, 2014.

(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4

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

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

(xvii) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that short term funds (other than borrowings) of Rs. 72.98 Crore have, prima facie, been used for long-term investment/ purposes.

(xviii) According to the information and explanations given to us, 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. Accordingly, the provisions of clause 4 (xviii) of the Order are not applicable to the Company.

(xix) According to the information and explanations given to us, the Company has not issued any debentures during the year. Accordingly, the provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) The Company has not raised any money by way of public issues during the financial year. Accordingly, the provisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS Chartered Accountants (Firm''s Registration No. 117365W)

Samir R. Shah Partner Mumbai, May 20, 2014 Membership No. 101708

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of ESSAR SHIPPING LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Proft and Loss and the Cash Flow Statement for the year then ended, and a summary of the signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the fnancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the fnancial statements.

We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid fnancial statements give the information required by the Act 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 March 31, 2013;

(b) in the case of the Statement of Proft and Loss, of the loss of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, 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 it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Proft and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Proft and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2013 taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act.

ANNEXuRE TO THE INDEPENDENT AuDITORS'' REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

(i) In respect of its fxed assets:

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

(b) Some of the fxed assets of the Company were physically verifed during the year by the Management in accordance with a regular programme of verifcation which, in our opinion, provides for physical verifcation of all the fxed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verifcation.

(c) The fxed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fxed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventories:

(a) The Company carries inventories of fuel oil and lubricants on board the feet. The Company purchases stores and spare parts for the feet, which are directly treated as consumed as and when supplied to feet. As explained to us, the inventories of fuel oil and lubricants were physically verifed during the year by the Master of feet at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, having regard to the nature and location of inventory, the procedures of physical verifcation of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) Having regard to the nature of the Company''s business and scale of operations, quantities of fuel oil and lubricants are determined by physical count and it is not considered feasible by the Management to maintain records of movements of inventories of such items by the feet in which they are carried. As quantities are determined by physical count and records of movements are not maintained on board the feet, the question of discrepancies on physical verifcation thereof does not arise.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, frms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (a) to (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, 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 fxed assets and for the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. The activities of the Company do not involve sale of goods.

(v) According to the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4 (v) of the Order are not applicable to the Company.

(vi) The management of the Company has obtained a legal opinion confrming that the directives issued by the Reserve Bank of India relating to public deposits, the provisions of sections 58A, 58AA or any other relevant provisions of the Act and the rules framed thereunder, are not applicable to the non-convertible unsecured debentures issued by the Company during the year as the Company cannot be said to have accepted ''deposits from the public''. Accordingly, the question of compliance with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Company Act, 1956 and the rules framed thereunder does not arise.

We have been informed that security has been created for the said debentures subsequent to balance sheet date.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business.

(viii) To the best of our knowledge and as explained to us, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the services provided by the Company.

(ix) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth tax, Service Tax, Customs Duty, Cess, and other material statutory dues applicable to it with the appropriate authorities. However, there have been delays in depositing undisputed statutory dues of service tax and tax deducted at source with the appropriate authorities. As informed to us, the provisions of Employee''s State Insurance and Excise Duty were not applicable to the Company during the year.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth tax, Service Tax, Customs Duty, Cess, and other material statutory dues in arrears as at March 31, 2013 for a period of more than six months from the date they became payable.

(c) Details of dues of Income Tax and Customs duty which have not been deposited as on March 31, 2013 on account of disputes are given below:

Name of the Nature of Amount Period to Forum where statute dues (Rs. in which the dispute is crore) a m o u n t pending relates

Income Tax Act, Income Tax 7.29* 1993-94 The High 1961 Court of Bombay

Foreign Trade C u s t o m s 27.40 2006-07 The High (Development and Duty Court of Regulation) Act. Bombay 1992

* The Income Tax Department has preferred an appeal against the order of the Appellate Tribunal pursuant to which the said amount deposited earlier was refunded to the Company.

According to the information and explanations given to us, there were no dues pending to be deposited on account of any dispute in respect of Sales Tax, Wealth Tax, Service Tax and Cess as on March 31, 2013.

(x) The Company is registered for a period of less than fve years. Accordingly, the provisions of clause 4(x) of the Order are not applicable to the Company.

(xi) Delays in repayment of dues (including interest) to banks, fnancial institutions, foreign currency convertible bond holders and debenture holders amounting to Rs. 235.44 crores have generally been regularised within 90 days from due dates.

(xii) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual beneft fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others

from banks and fnancial institutions are not, prima facie, prejudicial to the interests of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

(xvii) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that short term funds (other than borrowings) of Rs. 91.81 crores have, prima facie, been used for long-term investment/ purposes.

(xviii) According to the information and explanations given to us, 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. Accordingly, the provisions of clause 4 (xviii) of the Order are not applicable to the Company.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company had issued unsecured debentures [Refer clause (vi) above]. Accordingly, the provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) The Company has not raised any money by way of public issues during the fnancial year. Accordingly, the provisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.



For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm Registration No. 117365W)

Samir R. Shah

Partner

Membership No. 101708

MuMBAI

28th May, 2013

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of Essar Shipping Limited (formerly Essar Ports & Terminals Limited) ("the Company") as at March 31, 2012, the Statement of Profit and Loss and Cash Flow Statement of the Company for the year ended March 31, 2012 both 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.

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 (Auditor's Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give 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 in paragraph 3 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

(v) 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, 2012;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

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

5. On the basis of written representations received from Directors as on 31st March, 2012 taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of Section 274(1 )(g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITOR'S REPORT TO THE MEMBERS OF ESSAR SHIPPING LIMITED

(Referred to in paragraph 3 of our report of even date)

In our opinion and according to the information and explanations given to us, the nature of the Company's business/activities during the year are such that clauses (vi), (viii), (x),(xiii), (xiv), (xviii), and (xx) of para 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

1. In respect of its fixed assets:

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

b. The fixed assets of the Company are physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is largely reasonable having regard to the size of the Company and the nature of its assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets verified during the year.

c. In our opinion and according to the information and explanations given to us, the Company has not made substantial disposals of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a. As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us, the Company's inventories comprise fuel oil and lube oil on board the ships. Having regard to the nature of the Company's business and scale of operations, quantities are determined by physical count and it is not considered feasible to maintain records of movements of inventories of such items by the vessel in which they are carried. As quantities are determined by physical count and records of movements are not maintained on board the ships, the question of discrepancies on physical verification thereof does not arise.

3. In our opinion and according to the information and explanations given to us, there are no companies, firms or parties required to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii) (a) to (g) of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, 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. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal controls. The nature of the Company's business does not involve sale of goods.

5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act 1956.

6. In our opinion, the internal audit system of the Company is commensurate with the size of the Company and nature of its business.

7. According to the information and explanations given to us in respect of statutory dues:

a. The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Service tax, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and any other material statutory dues, as applicable, with the appropriate authorities during the year. As informed to us Employees State Insurance Scheme is not applicable to the Company.

There are no undisputed amounts payable in respect of the above statutory dues that are outstanding as at 31st March, 2012 for a period exceeding six months from the date they became payable.

b. The details of Income Tax and Sales Tax dues which have not been deposited as at March 31, 2012 on account of disputes pending, are given below:

Name of Nature of Amount Period to Forum where the statute the disputed (Rs. in crore) which the dispute dues amount relates is pending

Income tax Income Tax 7.29 Assessment Appellate Act, 1961 Year from Authority- 1994-1995 Tribunal Level

Director Customs duty 27.40 FY 07 to 09 Bombay High General of court Foreign Trade, Bangalore

According to the information and explanation given to us, there were no dues pending to be deposited on account of any dispute in respect of Wealth Tax, Service Tax, sales tax, Excise Duty and Cess as on 31st March, 2012.

8. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institutions or debenture holders.

9. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

10. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for the loans taken by others from banks and financial institutions, are not, prima facie, prejudicial to the interests of the Company.

11. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application.

12. According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

13. According to the information and explanations given to us, during the period covered by our audit report, in respect of the debentures outstanding the securities created fully cover the amount of debentures.

14. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company was noticed or reported during the year.

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 117365W)

Khurshed Pastakia

Partner

(Membership No.31544)

Mumbai,

May 17, 2012