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Auditor Report of Hindustan Oil Exploration Company Ltd.

Mar 31, 2015

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

Management's Responsibility for the 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 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 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 the design, implementation and maintenance of adequate internal financial control 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 issued by the Institute of Chartered Accountants of India, as 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 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 controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of 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.

Basis for Qualified Opinion

The attached financial statements include Company's share of current assets/(liabilities), non-current assets/(liabilities), expenses and cash flows aggregating to INR 829,974/ INR (79,685,217), INR 310,586,199/INR (331,065,000), INR Nil and INR (1,924) respectively as at or for the year ended March 31, 2015 in respect of two of its unincorporated joint ventures ('UJV's') not operated by the Company, the audited accounts of which are not available with the Company. The financial statements have been incorporated based on un-audited financial information detailed in note 28(b) of attached financial statements. In the absence of audited accounts of the UJVs, we are unable to comment on the adjustments that may be required to be made in these financial statements.

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 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, 2015, of its loss and its cash flows for the year ended on that date.

Emphasis of Matter

Attention is invited to Note 38 of the accompanying standalone financial statements which describes the factors and conditions that indicate the existence of material uncertainities that cast a substantial doubt on the Company's ability to continue as a going concern. Our report is not qualified for 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 of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure-1a statement on the matters specified in paragraphs 3 and 4 of the Order. In respect of clauses (i), (ii),(iv),(vii)(a),(vii)(b),(vii)(c) and (xii), our comments are restricted to the standalone operations of the Company and operations related to UJVs where the Company is the operator and it does not cover the unincorporated joint ventures where any third party is the operator.

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

(a) We have sought and, except for 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 purpose 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) 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 matters described in the Emphasis of matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

(f) On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of section 164(2) of the Companies Act, 2013;

(g) 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. Except for the possible effects of the matter d escribed in Basis of Qualified Opinion paragraph above, the Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 31 to the financial statements;

ii. Except for the possible effects of the matter described in Basis of Qualified Opinion paragraph above, the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on longterm contracts (including derivative contracts).

iii. Following are the instances of delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company:

a) Share application money of INR 177,787 received on October 2006 and INR 260,200 received on January 2008 was due to be transferred as on October 31, 2013 and January 28, 2015 respectively and the same has been paid on May 25, 2015.

b) Unclaimed dividend of INR 837,582 which was due to be transferred on October 28, 2013 has been paid on May 12, 2014.

Other Matters

We did not audit the Company's share of current assets/ (liabilities), expenses and cash flows aggregating to INR Nil/ INR (8,764,826), INR 7,206,307 and INR Nil respectively as at or for the year ended March 31, 2015 in respect of one of its unincorporated joint venture ('UJV') not operated by the Company, whose accounts and other financial information have been audited by the auditors of the respective UJV and whose reports have been furnished to us. Our opinion, in so far as it relates to the affairs of such UJV is based solely on the report of other auditor. Our opinion is not qualified in respect of this matter.

Annexure 1 referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

Re: Hindustan Oil Exploration Company Limited ('the Company')

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, 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 Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed assets which are of special nature for which alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and inventory and sale of goods and services. During the course of our audit, we have not observed major weakness or continuing failure to correct major weakness in internal control system of the Company in respect of these areas.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the extraction of mineral oil and gas and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income-tax, sales-tax, value added tax, wealth-tax, service tax, cess and other material statutory dues applicable to it. The provisions relating to employees' state insurance, customs duty and excise duty are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income-tax, sales-tax, wealth-tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax and cess on account of any dispute, are as follows:

Name of the statute Nature of the dues Amount (INR)

Income Tax Act, 1961 Tax, Interest and 617,011,890 Penalty

Income Tax Act, 1961 Penalty 30,893,925

Less: Refunds (551,692,081) Adjusted* Net Amount 96,213,734

Name of the statute Period to which the Forum where dispute is amount relates pending

Assessment Year Income Tax A Income Tax Act, 1961 2006-2007 to 2009- Appellate Tribunal 2010

Assessment Year Income Tax 2008-2009 Appellate Tribunal Income Tax Act, 1961

* Refunds pertaining to other assessment years adjusted against disputed dues, based on intimation received from Income Tax Department.

(d) According to the information and explanations given to us, there are significant delays in the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder

(viii) Without considering the consequential effects, if any, of the matter stated in paragraph Basis for Qualified Opinion of our auditors' report, the Company's accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash loss during the year In the immediately preceding financial year, the Company had not incurred cash loss.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a bank. The Company has not obtained any borrowings from a financial institution or issued any debentures during the period.

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

(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S. R. BATLIBOI & ASSOCIATES LLP Chartered Accountants

ICAI Firm Registration Number: 101049W

per Subramanian Suresh Place : Chennai Partner Date : May 28, 2015 Membership No.: 83673


Mar 31, 2014

We have audited the accompanying financial statements of Hindustan Oil Exploration Company Limited (''the Company'') which comprise the Balance Sheet as at March 31, 2014 and the Statement of Profit and loss and the cash fow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 accounting principles generally accepted in India, including the Accounting Standards notifed under the Companies Act, 1956, read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Afairs. Tis responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Tose 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 disclosures in the financial statements. Te 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 efectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.

Basis for qualified Opinion

Attention is invited to note 39 of the accompanying financial statements which describes the uncertainty relating to the recoverability of the carrying value of INR 116,571 Lakhs in respect of a producing property of the Company. We are unable to obtain sufcient appropriate audit evidence in relation to the assessment of impairment loss, if any, in the carrying value of the producing property. In view of the significant uncertainties involved, we are unable to comment on the adjustments that may be required to be made in these financial statements.

qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible efects of the matter described in the Basis for qualified Opinion paragraph above, the financial statements give the information required by the Companies Act, 1956 ("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 afairs of the Company as at March 31, 2014;

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

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

Emphasis of Matter

Attention is invited to Note 38 of the accompanying financial statements which describes the factors and conditions that indicate the existence of a material uncertainty that cast a substantial doubt on the Company''s ability to continue as a going concern. Our opinion is not qualified for this matter.

Other Matter

We did not audit the Company''s share of net fixed assets (including exploration costs written of ), current assets and liabilities (net), expenses and cash flows aggregating to INR 498,050,426, INR 13,012,194, Nil and INR (443) respectively as at March 31, 2014 in respect of two of its unincorporated joint ventures (''UJV''s'') not operated by the Company, whose accounts and other financial information have been audited by the auditors of the respective UJV''s and whose reports have been furnished to us. Our opinion, in so far as it relates to the afairs of such UJVs are based solely on the report of other auditors. Our opinion is not qualified in respect of this matter.

Te attached financial statements and other financial information include Company''s share of net fixed assets, current assets, expenses and cash flows aggregating to INR 627,525,693, Nil, Nil and Nil respectively as at March 31, 2014 in respect of one of its UJV not operated by the Company, the accounts of which have not been audited by the auditors of the respective UJV''s. Te financial statements and other financial information have been incorporated based on unaudited financial statements as provided by the Operator of respective UJV and relied upon by us. Our opinion is not qualified in respect of this matter.

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 of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 ("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 possible efects of the matter stated in Basis for qualified Opinion paragraph above, we were able to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by the Company as far as appears from our examination of those books;

(c) Te balance sheet, statement of Profit and loss and cash fow statement dealt with by this report are in agreement with the books of account;

(d) Except for the possible efects of the matter described in Basis for qualified Opinion paragraph above, the balance sheet, statement of Profit and loss and cash fow statement comply with the accounting standards notifed under the Companies Act, 1956, read with General Circular 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Afairs;

(e) On the basis of the written representations received from the directors, as on March 31, 2014, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on March 31, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date Re: Hindustan Oil Exploration Company Limited (''the Company'')

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

(b) All fixed assets have not been physically verifed by the management during the year but there is a regular programme of verifcation which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verifcation.

(c) Tere was no disposal of substantial part of fixed assets during the year.

(ii) (a) Te management has conducted physical verifcation of inventory at reasonable intervals during the year.

(b) Te procedures of physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) Te Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifcation.

(iii) (a-d) According to information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Terefore the provisions of clause 4(iii) (a) to (d) of the Order are not applicable to the Company.

(e) Te Company had taken loan from one company covered in the register maintained under section 301 of the Companies Act, 1956. Te maximum amount involved during the year was INR 9,375.95 million and the year- end balance of loans taken from that party was INR 9,375.95 million.

(f ) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of loans taken, repayment of the principal amount is as stipulated and payments of interests have been regular.

(iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed assets which are of special nature for which alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and inventory and sale of goods and services. During the course of our audit, we have not observed major weakness or continuing failure to correct major weakness in internal control system of the Company in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act that need to be entered into the register maintained under section 301 of the Companies Act have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

(vi) Te Company has not accepted any deposits from the public.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(ix) (a) Te Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other material statutory dues applicable to it. Te provisions relating to employees'' state insurance, customs duty and excise duty are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, and cess on account of any dispute, are as follows:

Name of Nature of Amount (INR) Period to which Forum where the statute the dues the amount dispute is relates pending Income Tax and 342,679,519 Assessment Year Income Tax Tax Act, Interest 2007-2008 Appellate 1961 Tribunal Tax and 30,893,925 Assessment Year CIT (Appeals) Interest 2008-2009

Less: (277,359,710) Refunds Adjusted* Net Amount 96,213,734

Fringe 741,728 Commissioner benefit Tax of Income Tax (Appeals)

* Refunds pertaining to other assessment years adjusted against disputed dues, based on intimation received from Income Tax Department.

(x) Without considering the consequential efect, if any, of the matter stated in paragraph "Basis for qualified Opinion" of our Auditor''s report, the Company''s accumulated losses at the end of the financial year are more than fifty per cent of its net worth. Te Company has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. Te Company has no outstanding dues in respect of a financial institution and has not issued any debentures during the period.

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

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Terefore, the provisions of Clause 4 (xiii) of the Order are not applicable to the Company.

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

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) Te Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act.

(xix) Te Company did not have any outstanding debentures during the year.

(xx) Te Company has not raised any money through public issues during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S. R. BATLIBOI & ASSOCIATES LLP Chartered Accountants ICAI Firm registration number: 101049W

per Subramanian Suresh Place : New Delhi Partner Date : May 30, 2014 Membership No.: 83673


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

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 accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). Tis 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.

Auditor''s 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. Tose 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 disclosures in the fnancial statements. Te 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fnancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.

Basis for qualifed opinion

Te Company follows "Successful Eforts Method" method of accounting for its exploration and production activities and as detailed in Note B (iii) to the fnancial statements, the Company has capitalised costs of INR 342.29 million (including INR 64.49 million to March 31, 2012), incurred in respect of surveys and studies relating to exploration activities.

Te "Guidance Note on Accounting for Oil and Gas Producing Activities" (Guidance Note) issued by the Institute of Chartered Accountants of India requires costs of surveys and studies relating to exploration activities to be expensed when incurred under the "Successful Eforts Method" of accounting. Had the Company followed the recommendation of the Guidance Note, survey costs of INR 342.29 million (including prior period charge of INR 64.49 million) would have been written of as an expense and after considering related tax efects the net loss for the year would have been higher by INR 342.29 million and reserves and surplus would have been lower by INR 342.29 million respectively. Our audit opinion on the fnancial statements for the year ended March 31, 2012 was also qualifed in respect of the above matter.

Qualifed opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the efects of the matter described in the Basis for Qualifed Opinion paragraph, the 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 afairs of the Company as at March 31, 2013;

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

(c) in the case of the Cash Flow Statement, of the cash fows 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 of India in terms of sub-section (4A) of section 227 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 purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

(d) In our opinion, the Balance Sheet, Statement of Proft and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors as on March 31, 2013, and 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 clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Other Matter

We did not audit the Company''s share of net fxed assets, net current assets, expenses and cash fows aggregating to INR 220,618,926, INR 11,108,879, INR Nil and INR Nil respectively as at March 31, 2013 in respect of one of its unincorporated joint venture (''UJV'') not operated by the Company, whose accounts and other fnancial information have been audited by the auditors of the respective UJV and whose reports have been furnished to us. Our opinion, in so far as it relates to the afairs of such UJVs are based solely on the report of other auditors. Our opinion is not qualifed in respect of this matter.

Te attached fnancial statements and other fnancial information include Company''s share of net fxed assets, net current assets, expenses and cash fows aggregating to INR 807,757,669, INR Nil, INR Nil and INR Nil respectively as at March 31, 2013 in respect of two of its UJV''s not operated by the Company, the accounts of which have not been audited. Te fnancial statements and other fnancial information have been incorporated based on un-audited fnancial statements as provided by the Operator of respective UJV''s and relied upon by us. Our opinion is not qualifed in respect of this matter.

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

(b) All fxed assets have not been physically verifed by the management during the year but there is a regular programme of verifcation which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verifcation.

(c) Tere was no substantial disposal of fxed assets during the year.

(ii) (a) Te management has conducted physical verifcation of inventory at reasonable intervals during the year.

(b) Te procedures of physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) Te Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifcation carried out at the end of the year.

(iii) (a-d) As informed, the Company has not granted any loans, secured or unsecured to companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Terefore the provisions of clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

(e) Te Company had taken loan from one company covered in the register maintained under section 301 of the Companies Act, 1956. Te maximum amount involved during the year was INR 9,051.25 million and the year end balance of loans taken from that party was INR 8,631 million.

(f ) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of loans taken, repayment of the principal amount is as stipulated and payment of interests have been regular.

(iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fxed assets which are of special nature for which alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fxed assets and inventory and sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, that need to be entered into the register maintained under section 301 of the Companies Act, have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees fve lakhs entered into during the fnancial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

(vi) Te Company has not accepted any deposits from the public.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Te Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other material statutory dues applicable to it. Te provisions relating to employees'' state insurance, customs duty and excise duty are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, and cess on account of any dispute, are as follows:

Name of Nature of Amount (INR) Period to which the Forum where Statute the Dues amount relates Dispute is Pending

Income Tax and 342,679,519 Assessment Year Income Tax Tax Act, Interest 2007-2008 Appellate Tribunal 1961

Tax and 30,893,925 Assessment Year CIT (Appeals) Interest 2008-2009

Less: Refunds (277,359,710) Adjusted*

Net Amount 96,213,734

Fringe Beneft 741,728 Commissioner Tax of Income Tax (Appeals)

* Refunds pertaining to other assessment years adjusted against disputed dues, based on intimations received from Income Tax Department.

(x) Te Company''s accumulated losses at the end of the fnancial year are less than ffty percent of its net worth and it has not incurred cash losses in the current and immediately preceding fnancial yea r.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. Te Company has no outstanding dues in respect of a fnancial institution and has not issued any debentures during the period.

(xii) 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.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual beneft fund / society. Terefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, 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) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or fnancial institutions.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) Te Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act.

(xix) Te Company did not have any outstanding debentures during the year.

(xx) Te Company has not raised any money through public issues during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fnancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. BATLIBOI & ASSOCIATES LLP

Chartered Accountants

ICAI Firm registration number: 101049W

per Subramanian Suresh

Place : Chennai Partner

Date : May 29, 2013 Membership No.: 83673


Mar 31, 2012

1. We have audited the attached Balance Sheet of Hindustan Oil Exploration Company Limited ('the Company') as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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. The attached financial statements and other financial information include Company's share of net fixed assets, net current assets, expenses and cash flows aggregating to INR 207,405,350, INR 11,012,935, INR Nil and INR Nil respectively as at March 31, 2012 in respect of one of its unincorporated joint venture ('UJV') not operated by the Company, the accounts of which have been audited by the auditors of the respective UJV and relied upon by us.

4. The attached financial statements and other financial information include Company's share of net fixed assets, net current assets, expenses and cash flows aggregating to INR 589,354,182, INR Nil, INR 143,010,507 and INR Nil respectively as at March 31, 2012 in respect of two of its UJV's not operated by the Company, the accounts of which have not been audited by the auditors of the respective UJV's. The financial statements and other financial information have been incorporated based on un-audited financial statements as provided by the Operator of respective UJV's and relied upon by us.

5. As required by the Companies (Auditor's Report) Order, 2003 (as amended) ('the Order') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. In respect of clauses (ii), (ix)(a), (ix)(b), (ix)(c) and (xxi), our comments are restricted to the standalone operations of the Company and operations related to UJVs where the Company is the operator and it does not cover the unincorporated joint ventures where any third party is the operator.

6. In accordance with the accounting policy detailed in Note B(xii) to the financial statements, the Company has either capitalized or accumulated in foreign currency monetary item translation difference account, exchange loss of INR 764.57 million in respect of long term borrowings in foreign currency outstanding as at March 31, 2012. However, in determining the amount of exchange loss to be accounted in this manner, the Company has not excluded exchange differences to the extent that the same can be regarded as an adjustment to interest costs as required by Paragraph 4(e) of Accounting Standard 16, "Borrowing Costs". The Company has not computed / estimated the extent of such adjustment to interest costs and, in the absence of such information, we are unable to comment on the extent to which the finance costs are stated lower and also the consequential impact on profits for the year and the reserves and surplus as at March 31, 2012.

7. The Company follows "Successful Efforts Method" of accounting for its exploration and production activities and as detailed in Note B(iii) to the financial statements, the Company has capitalised costs of INR 64.49 million (including INR 6.33 million to March 31, 2011), incurred in respect of surveys and studies relating to exploration activities.

The "Guidance Note on Accounting for Oil and Gas Producing Activities" (Guidance Note) issued by the Institute of Chartered Accountants of India requires costs of surveys and studies relating to exploration activities to be expensed when incurred under the "Successful Efforts Method" of accounting. Had the Company followed the recommendation of the Guidance Note, survey costs of INR 64.49 million (including prior period charge of INR 6.33 million) would have been written off as an expense and the net profit for the year and reserves and surplus after considering the related tax effects would have been lower by INR 43.06 million.

8. Further to our comments in the Annexure referred to above, we report that:

i. Except for the effects of the matter referred to in paragraphs 6 above, 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, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

iv. Except for the effects of the matters referred to in paragraphs 6 above, in our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub- section (3C) of Section 211 of the Companies Act, 1956;

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

vi. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters referred to in paragraphs 6 above, the said accounts give the information required by the Companies Act, 1956, in the manner so required and except for the effects of the matters referred to in paragraphs 6 and 7 above, the said accounts 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, 2012;

b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date,

ANNEXURE REFERRED TO IN PARAGRAH 5 OF OUR REPORT OF EVEN DATE Re; Hindustan Oil Exploration Company Limited ('the Company')

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out at the end of the year.

(iii) (a-d) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore the provisions of clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

(e) The Company had taken loan from one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was INR 6,129,000,000 and the year-end balance of loans taken from that party was INR 5,539,475,000.

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of loans taken, repayment of the principal amount is as stipulated and payment of interest have been regular.

(iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed assets which are of special nature for which alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and inventory and sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(l)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other material statutory dues applicable to it. The provisions relating to employees' state insurance, customs duty and excise duty are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, and cess on account of any dispute, are as follows:

Name of Nature of the Amount (INR) Period to which the Forum where Statute Dues amount relates Dispute is Pending

Income Tax and 342,679,519 Assessment Year Income Tax Tax Act, Interest 2007-2008 Appellate Tribunal 1961 Less: Refunds (277,359,710) Adjusted *

Net Amount 65,319,809

Fringe Benefit 741,728 Commissioner Tax of Income Tax (Appeals)

* Refunds pertaining ro other assessment years adjusted against disputed dues, based on intimations received from income tax department.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. The Company has no outstanding dues in respect of a financial institution and has not issued any debentures during the period.

(xii) 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.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

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

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

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

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. BATLIBOI & ASSOCIATES Chartered Accountants

Firm registration number: 101049W

per Subramanian Suresh Place : New Delhi Partner

Date : May 18, 2012 Membership No.: 83673


Mar 31, 2011

1. We have audited the attached Balance Sheet of Hindustan Oil Exploration Company Limited ('the Company') as at March 31, 2011 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. Tese 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. Tose 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. Te attached financial statements and other financial information include Company's share of net fixed assets, net current assets, expenses and cash flows aggregating to INR 588,294,910, INR (8,535,030), INR 297,162,129 and INR (19,049,219) respectively as at March 31, 2011 in respect of one of its unincorporated joint venture ('UJV') not operated by the Company, the accounts of which have been audited by the auditors of the respective UJV and relied upon by us.

4. Te attached financial statements and other financial information include Company's share of total exploration/ development work in progress, net current assets, expenses and cash flows aggregating to INR 200,452,559, INR 11,021,398, INR Nil and INR (13,163) respectively as at March 31, 2011 in respect of two of its UJV's not operated by the Company, the accounts of which have not been audited by the auditors of the respective UJV's. Te financial statements and other financial information have been incorporated based on un-audited financial statements as provided by the Operator of respective UJV's and relied upon by us.

5. As required by the Companies (Auditor's Report) Order, 2003 (as amended) ('the Order') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. In respect of clauses (ii), (ix)(a), (ix)(b), (ix)(c) and (xxi), our comments are restricted to the standalone operations of the Company and operations related to UJVs where the Company is the operator and it does not cover the unincorporated joint ventures where any third party is the operator.

6. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. Te balance sheet, Profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, Profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) in the case of the balance sheet, of the state of afairs of the Company as at March 31, 2011;

(b) in the case of the Profit and loss account, of the Profit for the year ended on that date; and

(c) in the case of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAH 5 OF OUR REPORT OF EVEN DATE Re: Hindustan Oil Exploration Company Limited ('the Company')

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) Tere was no substantial disposal of fixed assets during the year.

(ii) (a) Te management has conducted physical verification of inventory at reasonable intervals during the year.

(b) Te procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) Te Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out at the end of the ye a r.

(iii) (a-d) As informed, the Company has not granted any loans, secured or unsecured to companies, forms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Terefore the provisions of clause 4(iii) (b), (c) and (d) of the Order are not applicable to the Company.

(e) Te Company had taken loan from one company covered in the register maintained under section 301 of the Companies Act, 1956. Te maximum amount involved during the year was Rs. 5,697,500,000 and the year-end balance of loans taken from that party was Rs. 5,307,475,000.

(f ) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of loans taken, repayment of the principal amount is as stipulated and payment of interest have been regular.

(iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed assets which are of special nature for which alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and inventory and sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 of the Act have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

(vi) Te Company has not accepted any deposits from the public.

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

(viii) To the best of our knowledge and as explained, 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 products of the Company.

(ix) (a) Te Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other material statutory dues applicable to it. Te provisions relating to employees' state insurance, customs duty and excise duty are not applicable to the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, and cess on account of any dispute, are as follows:

Name of Nature of the Amount (Rs.) Period to which the Forum where Statute Dues amount relates Dispute is Pending

Income Tax and 2,836,952 Assessment Year Tax Act, Interest 2003-2004 1961 1,430,040 Assessment Year Income Tax 2006-2007 Appellate Tribunal

145,499,694 Assessment Year 2007-2008

84,545,109 Assessment Year Commissioner 2008-2009 of Income Tax (Appeals)

Sub-total 234,311,795

Less: Refunds (34,202,040) Adjusted *

Net Amount 200,109,755

Fringe benefit 741,728 Commissioner Tax of Income Tax (Appeals)

* Refunds pertaining to other assessment years adjusted against disputed dues, based on intimations received from income tax department.

(x) Te Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. Te Company has no outstanding dues in respect of a financial institution and has not issued any debentures during the period.

(xii) 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.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/society. Terefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

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

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) Te Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

(xix) Te Company did not have any outstanding debentures during the year.

(xx) Te Company has not raised any money through public issues during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. R. Batliboi & Associates

Firm registration number: 101049W

Chartered Accountants

per Subramanian Suresh

Place : New Delhi Partner

Date : May 9, 2011 Membership No.: 83673









 
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