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Auditor Report of Hindustan Petroleum Corporation Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of HINDUSTAN PETROLEUM CORPORATION 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 in which, is incorporated financial statements of Visakh Refinery, audited by the branch auditor, whose report has been considered in preparing this report.

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 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 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 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 ncluded 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 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 accounting policies used and the reasonableness of the accounting estimates made by 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 audit opinion on the standalone financial statements

Opinion

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 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 profit and its cash flows for the year ended on that date

Emphasis of Matter

a) We refer to note no. 58 which indicates that the Company has less than the minimum number of Independent Directors required in terms of the provisions contained in the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013. Pending such appointment, these financial statements have been reviewed and recommended to the Board of Directors by the Audit Committee consisting of only one Independent Director; and

b) We refer to note no. 41 in connection with 21 Un-incorporated Joint Ventures (UJVs) involved in exploration activities, of which majority of UJVs are under relinquishment. The attached financial statements include Company''s proportionate share in Assets and Liabilities, Income and Expenditure amounting to Rs, 19.98 crores and Rs, 123.41 crores, Rs, 0.47 crores and Rs, 20.22 crores respectively, as at March 31, 2016. In respect of these UJVs, the audited accounts are not available with the Company. The financial information has been incorporated based on un-audited financial statements/data received from the respective operators.

Our opinion is not modified in respect of these matters

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 section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable

2. As required by the section 143(5) of the Act, we give in the Annexure II a statement on the directions / sub-directions issued by the Comptroller and Auditor-General of India

3. 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 reports on the accounts of the branch office of the Company viz. Visakh Refinery audited under section 143(8) of the Act by the branch auditor have been sent to us and have been properly dealt with by us in preparing this report;

(d) 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;

(e) 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;

(f) As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 164(2) of the Act, accordingly, we are not required to report whether any directors are disqualified in terms of provisions contained in the said section;

(g) 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 III

(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 55 to the standalone 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; and

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure I - referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" of our report of even date

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

(b) The fixed assets of the Company, other than LPG cylinders and pressure regulators with customers are physically verified by the Management in a phased program of three to five years cycle. In our opinion, the programme is reasonable having regard to the size of the Company and the nature of its assets. In our opinion and as per the information given by the management, the discrepancies observed were not material and have been appropriately accounted in the books of account.

(c) According to the information and explanations given to us and based on verification of records on random basis, we report that the title deeds of immovable properties held as fixed assets, other than self-constructed properties, are held in the name of the Company, except for the following:

(Rs, In Crores)

Particulars No.of Gross Block net Block Remark Cases as at as at March 31 March 31 2016 2016

Freehold Land 59 5.12 5.12 Title Deeds not available for verification

Leasehold Land 4 0.30 0.13 Title Deeds not available for verification

Leasehold Land 4 195.18 145.76 Legal formalities of registration of lease deeds pending

Jointly owned land - 1 7.21 5.31 Legal formalities of conclusion and registration of joint Lease hold ownership agreement pending

Total 68 207.81 156.32

Buildings 11 4.95 3.15 Title Deeds not available for verification

(ii) During the year, the inventories have been physically verified at reasonable intervals by the management. The discrepancies noticed on physical verification, as compared to the book records, were not material having regards to size and nature of operations and have been properly dealt with in the books of account.

(iii) As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 188 of the Act in respect of contracts or arrangements entered into between the Government companies. The Company has not granted loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Hence, the question of reporting under sub-clauses (a), (b) & (c) of the clause 3(iii) of the Order does not arise.

(iv) The Company has not granted any loans or provided any guarantees or security to the parties covered under section 185 of the Act. The Company has complied with the provisions of section 186 of the Act in respect of investments made or loans or guarantee or security provided to the parties covered under section 186 of the Act.

(v) The Company has not accepted any deposits from the public, within the meaning of sections 73 to 76 of the Act and the rules framed there under except old cases under dispute aggregating to Rs, 0.02 crores where the Company has complied with necessary directions During the year, the said amount has been transferred to Investor Education and Protection Fund. We are nformed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal in this regard.

(vi) We have broadly reviewed accounts and records maintained by the Company pursuant to rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, in respect of Company''s products to which the said rules are made applicable and are of the opinion that, prima facie the prescribed accounts and records have been made and maintained We have, however, not made a detailed examination of records with a view to determine whether they are accurate

(vii) (a) According to the information and explanations given to us and according to the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, duty of Custom, duty of Excise, Value Added Tax, Cess and any other statutory dues, wherever applicable.

According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as at March 31, 2016 for a period of more than 6 months from the date they became payable

(b) According to the information and explanations given to us, the particulars of statutory dues that have not been deposited on account of disputes are as under:

Sttute forum pending Amount in crores period to which amount relates

Customs Tribunal** 12.16 1998 to 2011

Appellate Authority* 2.15 1996 to 2015 2015 Supreme Court 40.78 2005 to 2007

Total 55.091



Statute Forum pending Amount in crores period to which amount relates

Central Excise Tribunal** 325.50 1994 to 2015

Adjudicating Authority*** 23.50 2004 to 2009

Revision Authority 1.08 1999 to 2012

High Court 3.95 1992 to 2008

Appellate Authority* 12.04 1996 to 2015

Total 366.07

Sales tax/ Entry tax Board of Revenue 3.07 2003 to 2013

Appellate Authority* 3,085.13 1996 to 2015

Adjudicating Authority*** 6.65 1985 to 2008

Supreme Court 64.25 2002 to 2004, 2006 to 2008

High Court 933.94 1979 to 2014

Objection Hearing Authority 18.04 2008 to 2012

Appellate & Provisional Board 0.57 2009 to 2010

Tribunal** 5,315.95 1985 to 2011

Total 9,427.60

Service Tax Appellate Authority* O80 1996 to 2015

Tribunal** 67.45 2002 to 2013

High Court 3.75 1981 to 2010

Total 72.00

Income Tax_ Tribunal** 0.17 2006 to 2011

Total 0.17



* Appellate Authority represents Assistant Commissioner (A), Deputy Commissioner (A), Joint commissioner (A), Additional Commissioner (A) ** Tribunal represents Sales Tax Appellate Tribunal, Central excise and Service tax Appellate Tribunal (CESTAT) , Income tax Appellate Tribunal (ITAT) *** Adjudicating authority represents Assessing Officer, Additional Commissioner, Deputy Commissioner, Joint commissioner, Additional Commissioner, Chief Commissioner (viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowing to financial institutions, banks, government or dues to debenture holders, (ix) The Company has not raised money by way of initial public offer or further public offer (including debt instruments). According to the information and explanations given to us and on the basis of the records examined by us, the Company has prima facie applied the term loan for the purpose for which it was obtained, (x) During the course of our examination of the books and records of the Corporation, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, no instances of material fraud by the Corporation or on the Corporation by its officers and employees have been noticed or reported during the year, (xi) As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 197 of the Act, accordingly, the guest ion of reporting whether the payment of managerial remuneration is in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act does not arise (xii) The Company is not a chit fund or a nidhi company. Hence, the guest ion of reporting under clause 3(xii) of the Order does not arise (xiii)As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 188 of the Act in respect of contracts or arrangements entered into between the Government companies. The Company has complied with the provisions of section 177 and section 188 of the Act in respect of transactions with the related parties and the details have been disclosed in the financial statements 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 audit, (xv) The Company has not entered into any non-cash transactions with directors or persons connected with him covered under the provisions of section 192 of the Act.

(xvi)The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934

Annexure II referred to in paragraph 2 under "Report on Other Legal and Regulatory Requirements" of our report of even date

Based on the verification of records of the Company and based on information and explanation given to us, we give below a report on the directions issued by the Comptroller and Auditor General of India in terms of section 143(5) of the Act

1 Whether the company has clear Based on the verification of the records of the Company and as reported in title / lease deeds for freehold and Annexure I para 1 (c) of this report, the Company does not have the original clear leasehold land respectivelyRs, If not title deeds in respect of 68 freehold land /lease hold lands. The details of area of please state the area of freehold and such land as compiled by the management is as under:

leasehold land for which title /lease I

Particulars No. of Acres Remarks Cases

Freehold Land 59 294.91 Title Deeds not available for verification

Leasehold Land 4 35.86 Title Deeds not available for verification

Leasehold Land 4 306.00 Legal formalities of registration of lease deeds pending

Jointly owned land - 1 37.00 Legal formalities of lease hold conclusion and registration of joint ownership agreement pending

Total 68

2 Whether there are any cases of As per the process followed by the Company, any waiver of debt is accounted waiver/write off of debts/ loans/ only with the approval of Competent Authority in line with the Delegation of interest etc., if yes, the reasons there Authority. Interest on delayed payments is waived from Customers on merit of for and the amount involved. each case by approving authority. During the year, the Company has written off Rs, 9.62 crores. This includes Rs, 6.75 crores in respect of recoveries on account of Additional Sales tax on CST sales which is not recoverable as per the determination order passed by the Office of the Commissioner of Commercial taxes, West Bengal.

3 Whether proper records are a. Proper records are maintained for inventories lying with third parties, maintained for inventories lying with b Dung the yea^ the Company has not received any assets as gifts from third parties & assets received as gift Government or other authorities.

/ grant(s) from Government or other authorities.



For G. M. Kapadia & Co. For CVK & Associates

Chartered Accountants Chartered Accountants

Firm Registration No.: 104767W Firm Registration No.: 101745W



Sd/- Sd/-

AtulShah A.K. Pradhan

Partner Partner

Membership No.: 039569 Membership No.: 032156

Place: New Delhi

Dated: 27th May, 2016


Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of HINDUSTAN PETROLEUM CORPORATION LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2015, 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 in which, is incorporated financial statements of Visakh Refinery, audited by the branch auditor, whose report has been considered in preparing this report.

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 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 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 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 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 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 audit opinion on the standalone financial statements.

Opinion

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 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, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

a) We refer to Note No. 58 which indicates that the Company has less than the minimum number of Independent Directors required in terms of the provisions contained in the listing agreement and the Companies Act, 2013. Pending such appointment, these financial statements have been reviewed and recommended to the Board of Directors by the Audit Committee consisting of only one Independent Director; and

b) We refer to Note No. 50 which describes the basis of calculation of the overall ceiling for investments in joint ventures and subsidiaries in terms of the guidelines issued by the Department of Public Enterprises, Government of India where the Company has approached the Ministry of Petroleum and Natural Gas and necessary approval / clarification is awaited.

Our opinion is not modified in respect of these matters.

Other Matter

The accompanying standalone financial statements include the Company''s proportionate share in jointly controlled assets Rs. 24.15 crores, liabilities Rs. 114.20 crores, Income Rs. Nil, expenditure Rs. 27.13 crores and the elements making up the Cash Flow Statement and related disclosure in respect of 23 nos. of blocks under NELP / joint venture accounts for exploration and production, which are based on unaudited statements from the respective operators and certified by the management. Our observations thereon are solely based on such statements from the operators and certification of the management.

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 section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable.

2. As required by the section 143(5) of the Act, we give in the Annexure II a statement on the directions / sub-directions issued by the Comptroller and Auditor-General of India.

3. 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 reports on the accounts of the branch office of the Company viz. Visakh Refinery audited under section 143(8) of the Act by branch auditor have been sent to us and have been preperly dealt with by us in preparing this report;

(d) 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;

(e) 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;

(f) On the basis of written representations received from the directors 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 Act and

(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. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 55 (I) 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; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure I referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" of our report of even date

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

b) The fixed assets of the Company, other than LPG cylinders and pressure regulators with customers are physically verified by the Management in a phased program of three to five years cycle. In our opinion, the programme is reasonable having regard to the size of the Company and the nature of its assets. In our opinion and as per the information given by the management, the discrepancies observed were not material and have been appropriately accounted in the books of account.

(ii) a) As explained to us, the inventories were physically verified during the year by the management at reasonable intervals other than inventories lying with third parties. In case of materials lying with third parties, certificates confirming stocks held have been received from them.

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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the inventory records, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification, as compared to the book records, were not material and have been properly dealt with in the books of account.

(iii) Based on the audit procedures applied by us and according to the information and explanations given to us and on the basis of our examination of the records, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 to the Act. Consequently, clauses (a) and (b) of sub-para (iii) of the Order regarding interest and repayment of such loans are not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items are of a specialized nature, in respect of which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanation given to us, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) The Company has not accepted any deposits from the public, within the meaning of sections 73 to 76 of the Act and the rules framed there under except old cases under dispute aggregating to Rs. 0.02 crores where the Company has complied with necessary directions.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under Section 148 (1) of the Act and the rules framed there under and we 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 these records with a view to determine whether they are accurate or complete.

(vii) a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company, has been generally regular in depositing undisputed statutory dues, including Provident fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, duty of Customs, duty of Excise, Value Added tax, Cess and other material statutory dues, as applicable, with the appropriate authorities. There are no undisputed statutory dues, as at March 31, 2015, which were in arrears for a period of more than six months from the date they became payable.

b) According to information and explanation given to us and the records of the Company examined by us, the dues of Sales tax, Income Tax, duty of Customs, Wealth tax, Service tax, duty of Excise, Value added tax, Cess, which have not been deposited on account of disputes with the relevant authorities, are as under:

Amount Statute Forum pending in Crores

Commissioner of Central Excise Appeal 11.55 Tribunal Customs Supreme Court 40.78

Total - A 52.33

Commissioner of Central Excise Appeal 302.24 Tribunal

Revision Authority 1.10

Various High Courts 3.30 Central Excise Asst. Commissioner/Asst. Dy. Comm. / 7.68 Comm. Appeals

Supreme Court 4.05

Total - B 318.37

Board of Revenue 1.82

Commissioner/DCCT/ADC/JCCT/ACCT 4,886.60

Supreme Court 68.61

Sales tax Various High Courts 1,277.43

Sales Tax Appellate Tribunal 5,269.54

Total - C 11,504.00

Commissioner of Central Excise Appeal 68.56

Commissioner of Central Excise Appeal 0.84

Service Tax High Court 3.75

Total - D 73.15

Income Tax Income Tax Appellate Tribunal 234.47

Total - E 234.47

Grand Total - (A B C D E) 12,182.32

Statute Period to which amount relates

Customs Various periods from 1997 to 2012

Period from 2005 to 2007

Central Excise Various periods from 1994 to 2014

Various period from 1999 to 2012

Various years pertaining to 2007 to 2009

Various periods from 1994 to 2014

2007-08

Sales tax Various years pertaining to 2003 to 2008

Various years pertaining to 1976 to 2013

2002-2004, 2006-2008

Various years pertaining to 1979 to 2014

Various years pertaining to 1985 to 2011

Service Tax Various period from 2002 to 2013

Various period from 2004 to 2010

Various period from 2004 to 2008

Income Tax Various years pertaining to 1996-2013

c) According to the information and explanations given to us and as per the records of the Company examined by us, in our opinion, the amounts required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 and rules there under have been transferred to the said fund within time to the extent applicable.

(viii) The Company neither has accumulated losses as on March 31, 2015, nor it has incurred any cash loss during the financial year ended on that date or in the immediately preceding financial year.

(ix) According to the information and explanations given to us and the records of the Company examined by us, the Company has not defaulted in repayment of dues to bank or debenture holders. There are no outstanding dues in respect of any financial institution.

(x) In our opinion and according to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions during the year.

(xi) In our opinion and according to the information and explanations given to us, the term loans prima facie, have been applied for the purpose for which they were raised.

(xii) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we neither came across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

Annexure II referred to in paragraph 2 under "Report on Other Legal and Regulatory Requirements" of our report of even date

Based on the verification of records of the Company and based on information and explanation given to us, we give below a report on the directions issued by the Comptroller and Auditor-General of India in terms of Section 143(5) of the Act.

Sr Areas to be examined Observation /Finding No

1 If the Corporation has been selected for We have been informed that the Government of India has not intimated the disinvestment, a complete status report Company about any plan of direct disinvestment.Further, on a review of the in terms of valuation of Assets (including minutes of the Audit Committee and Board of Directors, we have not come intangible assets and land) and Liabilities across discussions related to disinvestments being made. (including committed and general reserves) maybe examined including the mode and present stage of disinvestment process.

2 Please report whether there are any cases There are no significant cases of waiver of debts. As per the process of the of waiver / write off of debts/loans/interest Company any waiver of debt is accounted, only with the approval of Competent etc., if yes, the reasons there for and the Authority in line with the Delegation of Authority. Interest on delayed payments amount involved. is waived from Customers on merit of each case by approving authority. The Company has written off Rs. 6,838 during the year.

3 Whether proper records are maintained a. Proper records are maintained for inventories lying with third parties. for inventories lying with third parties and b. During the year the Company has not received any assets as gifts from assets received as gift from Government or Government or other authorities. other authorities.

4 A report on age-wise analysis of pending The age-wise analysis of pending legal/ arbitration cases are as under: legal / arbitration cases including the Year No of pending cases reasons for pendency and existence / 2015 221 effectiveness of a monitoring mechanism 2012-2014 1,913 for expenditure on all legal cases (foreign 2009-2011 1,186 and local) may be given. 2005-2008 684

Prior to 2005 676

Total 4,680

The above does not include pending legal cases concerning direct and indirect tax matters.

Reasons of pendency:

The cases are pending due to various reasons like adjournments sought by either of the parties, pre-occupation of courts due to heavy backlog of cases, transfer / retirement of the arbitrators, delay in compliance of arbitrators directions, etc.

Monitoring mechanism for expenditure for all legal cases:

There exists a monitoring system for expenditure on legal cases. As informed to us there are no legal or arbitration matters pending outside India.

For CVK & Associates For G. M. Kapadia & Co

Chartered Accountants Chartered Accountants

Firm Registration No. 101745W Firm Registration No. : 104767W

A. K. Pradhan Rajen Ashar

Partner Partner

Membership No. 032156 Membership No.048243

Place: New Delhi

Date: 28th May, 2015


Mar 31, 2014

1. We have audited the accompanying Financial Statements of HINDUSTAN PETROLEUM CORPORATION LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and 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, in which, is incorporated financial statements of Visakh Refinery, audited by the branch auditor, whose report has been considered in preparing this report.

Management''s responsibility on the Financial Statements

2. 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") read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013. 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.

Auditor''s responsibility

3. 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.

4. 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 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 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.

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

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, 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:

(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 Statement of Profit and Loss, of the profit 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

7. Without qualifying our opinion we draw attention to

(a) Note No. 39 (b) of Financial Statements regarding recognition of Minimum Alternative Tax (MAT) credit wherein, we have relied on the management judgement / assessment that the MAT credit of Rs. 568.44 crore will be availed during the period specified in section 115JAA of the Income Tax Act, 1961

(b) Note No. 35 of Financial Statements regarding recognition of unrealized marked to market loss of Rs. 168.33 Crores on forward contract taken to hedge the commitment to return USD to Reserve Bank of India. However the marked to market gain on the said underlying commitment of Rs. 192.73 Crores is not recognized for reasons stated in the said note.

8. As required by the Companies (Auditor''s Report) Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act ("the Order"), 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 statement on the matters specified in paragraphs 4 and 5 of the Order.

9. 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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us;

bb. The report on the accounts of the Visakh Refinery audited by the auditor appointed by the Company has been forwarded to us as required by clause (c) of sub-section (3) of Section 228 and have been dealt with in preparing our report in the manner considered necessary by us;

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 Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e. Disclosure in terms of clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956 is not required for Government Companies as per Notification No. GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs.

Annexure To The Auditors'' Report (Referred to in Paragraph (7) of our report of even date)

(i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in respect of items like pipes, valves, meters, instruments and other similar items peculiar to a continuous process industry.

b) As per the information and explanation given to us, the Company has physically verified its fixed assets during the previous year, other than LPG cylinders with customers, in accordance with the phased programme. The existence of fixed assets situated at the residence of employee has, however, been ascertained on a self-declaration basis. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its asset. We were informed that discrepancies noticed on such verification were not material as compared to the book records and have been properly dealt with in the books of account.

c) In our opinion and according to the information and explanations given to us, fixed assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

(ii) a) As explained to us, the inventories were physically verified during the year by Management at reasonable intervals. In case of materials lying with third parties, certificates confirming stocks held have been received from them.

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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the inventory records, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification, as compared to the book records, were not material and have been properly dealt with in the books of account..

(iii) Based on the audit procedures applied by us and according to the information and explanations given to us and on the basis of our examination of the records, the Company has neither granted or nor taken loans, secured or unsecured to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, sub-clause (b),(c), (d), (e), (f)and (g)of sub-para (iii) of para 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items are of a specialized nature, in respect of which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanation given to us, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) In our opinion and according to the information and explanation given to us, there are no contracts and arrangements referred in section 301 of the Companies Act,1956 entered during the year that need to be entered in the Register maintained under that section. Accordingly, sub-clause (b) of sub-para (v) of Para 4 of the Order is not applicable to the Company for the current year.

(vi) The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and the rules framed thereunder.

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

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

We have not, however, made a detailed examination of these records with a view to determine whether they are accurate or complete.

(ix) a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company, during the year, has been generally 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, Custom duty, Excise duty, Cess and any other material statutory dues, as applicable, with the appropriate authorities.

b) According to the information and explanations given to us and the records of the Company examined by us there are no undisputed dues in respect of Income tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess, as at March 31, 2014, which were in arrears for a period of more than six months from the date they became payable.

c) According to information and explanation given to us and the records of the Company examined by us, the dues relation to Sales tax, Income Tax, Customs duty, Wealth tax, Service tax, Excise duty, Cess, which have not been deposited on account of disputes with the relevant authorities, are as under:

Amount Statute Forum Pending Period to which amount relates Rs. in crores

Central Excise Service Tax Appellate 146.77 Various years pertaining to 1994 to 2013 Tribunal

Asst. Commiss -ioner/ Asst. Deputy 9.99 Various years pertaining to 1994 to 2013 Commissioner/ Commission Appeal/ Commissioner of Central Excise Central Excise Appeal Various High Courts 1.02 1996-1997 & Various years pertaining to 2007 to 2009

Revision Authority 1.04 Various years pertaining to 1999 to 2012

Supreme Court 4.05 2007-08

Total - A 162.87

Central Excise Service Tax Appellate 6.64 Various years pertaining to 1997 to 2012 Tribunal Customs

Supreme Court 40.78 Various years pertaining to 2005 to 2007

Total - B 47.42

Commissioner of Central Excise 0.31 Various years pertaining to 2004 to 2009 Service Tax Appeal

Central Excise Service Tax Appellate 185.25 Various years pertaining to 2002 to 2013 Tribunal

Total - C 185.56

Board of Revenue 4.90 Various years pertaining to 2003 to 2008

Sales Tax Appellate Tribunal 5,521.73 Various years pertaining to 1985 to 2009

Various High Court 1,262.63 Various years pertaining to 1979 to 2013 Supreme Court 72.44 2002-2004, 2006-2007

Sales Tax Commissioner /Deputy 5,326.11 Various years pertaining to 1976 to 2012 Commissioner Commercial Tax/ Asst. Deputy Commissioner/ Joint Commiss -ioner Commercial Tax/ Asst. Commiss -ioner Commercial Tax

Total - D 12,187.81

Income Tax Income Tax Appellate Tribunal 33.25 Various years 2006 to 2011

Total - E 33.25

Grand Total - (A B C D E) 12,616.91

(x) The Company has no accumulated losses as at the end of the financial year and has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) According to the information and explanations given to us and the records of the Company examined by us,the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

(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.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund and or a nidhi/ mutual benefit fund/ society.Accordingly, the provisions of sub-para (xiii) of para 4 of the Order are not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of sub-para (xiv) of para 4 of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions during the year. Accordingly, the provisions of sub-para (xv) of para 4 of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans taken during the year, prima facie, have been applied for the purpose for which they were raised. Accordingly, the provisions of sub-para (xvi) of para 4 of the Order are not applicable to the Company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet,funds raised on short-term basis have, prima facie, not been used for making long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act 1956. Accordingly, the provisions of sub-para (xviii) of para 4 of the Order are not applicable to the Company.

(xix) The Company has created securities / charge as per the debenture trust deed in respect of debentures issued and outstanding at the year end.

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

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we neither came across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For B. K. Khare & Co. For CVK & Associates

Chartered Accountants Chartered Accountants

Naresh Kumar Kataria A. K. Pradhan

Partner Partner

Membership No.037825 Membership No. 032156

Firm No. : 105102W Firm No. 101745W

Place : New Delhi Date : 28th May, 2014


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying Financial Statements of HINDUSTAN PETROLEUM CORPORATION LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and 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, in which, is incorporated financial statements of Visakh Refinery, audited by the branch auditor, whose report has been considered in preparing this report.

Management''s responsibility on the Financial Statements

2. 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 referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). 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.

Auditor''s responsibility

3. 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.

4. 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 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. 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.

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

6. In our opinion and to the best of our information and according to the explanations given to us, 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:

(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 Statement of Profit and Loss, of the profit 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

Without qualifying our opinion we draw attention to

i) Note # 44 of Financial Statements regarding impairment of assets , which being technical matters subject to uncertainty we have relied on the estimates and assumptions made by the Company in arriving at recoverable value of assets, based on desired margins.

ii) Note # 38(b) of Financial Statements regarding recognition of Minimum Alternative Tax (MAT) credit wherein, we have relied on the management judgement / assessment that the MAT credit of Rs. 406.85 Crore will be availed during the period specified in Section 115JAA of the Income Tax Act, 1961.

7. 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 specified in paragraphs 4 and 5 of the Order.

8. 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. 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 Balance Sheet, Statement of Profit 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. Disclosure in terms of clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956 is not required for Government Companies as per Notification No. GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under Section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure To The Auditors'' Report

(Referred to in Paragraph (7) of our report of even date)

(i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in respect of items like pipes, valves, meters, instruments and other similar items peculiar to a continuous process industry.

b) As per the information and explanation given to us, the Company has physically verified its fixed assets during the previous year, other than LPG cylinders with customers, in accordance with the phased programme. The existence of fixed assets situated at the residence of employee has, however, been ascertained on a self-declaration basis. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its asset. We were informed that discrepancies noticed on such verification were not material as compared to the book records and have been properly dealt with in the books of account.

c) In our opinion and according to the information and explanations given to us, fixed assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

(ii) a) As explained to us, the inventories were physically verified during the year by Management at reasonable intervals. In case of materials lying with third parties, certificates confirming stocks held have been received from them.

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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the inventory records, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification, as compared to the book records, were not material and have been properly dealt with in the books of account.

(iii) Based on the audit procedures applied by us and according to the information and explanations given to us and on the basis of our examination of the records, the Company has neither granted nor taken loans, secured or unsecured to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 Consequently, sub-clause (b),(c), (d), (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items are of a specialized nature, in respect of which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed assets and for the sale of goods and services. Further , on the basis of our examination of the books and records of the Company, and according to the information and explanation given to us, we have neither come across, nor have been informed of , any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) In our opinion and according to the information and explanation given to us, there are no contracts and arrangements referred in Section 301 of the Companies Act,1956 entered during the year that need to be entered in the register maintained under that section. Accordingly, sub-clause (b) of sub-para (v) of Para 4 of the Order is not applicable to the Company for the current year.

(vi) The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and the rules framed here under.

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

(viii) We have broadly reviewed the cost records maintained by the Company in respect of the products, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1)(d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of these records with a view to determine whether they are accurate or complete.

(ix) a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company, during the year, has been generally 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, Custom Duty, Excise duty, Cess and any other material statutory dues, as applicable, with the appropriate authorities.

b) According to the information and explanations given to us and the records of the Company examined by us there are no undisputed dues in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess were in arrears, as at March 31, 2013, which were in excess for a period of more than six months from the date they became payable.

c) According to information and explanation given to us and the records of the Company examined by us, the dues relation to Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess, which have not been deposited on account of disputes with the relevant authorities, are as under:

Statute Forum Pending Amount Period to which amount relates Rs. in crores

Income Tax Appellate Tribunal 0.60 Various years pertaining to 2006 to 2011

Income Tax Total - A 0.60

Central Excise Service Tax Appellate 240.90 Various years pertaining to 1994 to 2012 Tribunal

Asst. Commissioner/ Asst. Deputy 7.34 Various years pertaining to 1994 to 2012 Commissioner/ Commission Appeal/

Central Excise Commissioner of Central Excise Appeal

Various High Courts 0.05 Various years pertaining to 2007 to 2009

Revision Authority 1.16 Various years pertaining to 1999 to 2009

Total - B 249.45

Central Excise Service Tax Appellate 6.80 Various years pertaining to 1992 to 2011 Tribunal

Customs Commissioner (Appeals) 0.85 Various years pertaining to 1994 to 1999

Supreme Court 40.78 Various years pertaining to 2005 to 2007

Total - C 48.43

Commissioner of Central Excise 0.05 Various years pertaining to 2005 to 2009 Service Tax Appeal

Central Excise Service Tax Appellate 147.59 Various years pertaining to 2002 to 2010 Tribunal

Total - D 147.64

Board of Revenue 1.71 Various years pertaining to 2003 to 2008

Sales Tax Appellate Tribunal 5,631.86 Various years pertaining to 1985 to 2009

Various High Court 1,218.55 Various years pertaining to 1979 to 2012

Supreme Court 10.04 2006-2007

Sales Tax Commissioner /Deputy 5,276.91 Various years pertaining to 1976 to 2012

Commissioner Commercial Tax/ Asst. Deputy Commissioner/ Joint Commissioner Commercial Tax/ Asst. Commissioner Commercial Tax

Total - E 12,139.07

Grand Total - (A B C D E) 12,585.15

(x) The Company has no accumulated losses as at the end of the financial year and has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) According to the information and explanations given to us and the records of the Company examined by us the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

(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.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund and or a nidhi/ mutual benefit fund/ society. Accordingly, the provisions of sub-para (xiii) of para 4 of the Order are not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of sub-para (xiv) of para 4 of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions during the year. Accordingly, the provisions of sub-para (xv) of para 4 of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans taken during the year, prima facie, have been applied for the purpose for which they were raised. Accordingly, the provisions of sub-para (xvi) of para 4 of the Order are not applicable to the Company.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet, funds raised on short-term basis have, prima facie, not been used for making long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act 1956. Accordingly, the provisions of sub-para (xviii) of para 4 of the Order are not applicable to the Company.

(xix) The Company has created securities / charge as per the debenture trust deed in respect of debentures issued and outstanding at the year end.

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

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us , we neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For and on behalf of For and on behalf of

For Om Agarwal & Co. For B. K. Khare & Co.

Chartered Accountants Chartered Accountants

Firm No. 000971C Firm No. 105102W

K. C. Gupta Naresh Kumar Kataria

Partner Partner

Membership No.072936 Membership No.037825

Place : New Delhi

Date : 28th May, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of HINDUSTAN PETROLEUM CORPORATION LIMITED as at 31st March 2012 and the Statement of Profit and Loss and the Cash Flow Statement of the Company 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 the 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 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 (together 'the Order'), 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 Order.

4. Further to our comments in the Annexure referred to in paragraph (3) and (4) above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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 the books and proper returns, adequate for the purposes of our audit, have been received from the branch not visited by us

c) The Branch Auditors' report, made available to us, has been appropriately dealt with while preparing our report.

d) The Balance Sheet and the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account and with audited returns from the branch.

e) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the 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.

f) Disclosure in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956 is not required for Government Companies as per Notification No. GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs.

g) Without qualifying our opinion, we invite attention to

i) Note No. 42 of Notes to Accounts, regarding impairment of assets wherein, being technical matters subject to uncertainty we have relied on the estimates and assumptions made by the Company in arriving at recoverable value of assets, based on desired margins.

ii) Note No. 35(b) of Notes to Accounts regarding recognition of Minimum Alternative Tax (MAT) credit wherein, we have relied on the management representation that the MAT credit of Rs. 268.77 Crores will be set off during the period specified in Section 115JAAof the Income Tax Act, 1961.

iii) Note No. 33 of Notes to Accounts regarding recoverability of outstanding amount of Rs. 505.53 Crores from Kingfisher Airlines Limited, wherein we have relied on the management representation that the entire outstanding will be realised.

iv) Note No. 34 of Notes to Accounts regarding amortization of ancillary cost over the tenure of External Commercial Borrowings.

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

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

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

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

Annexure to the Auditors' Report

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

(i) a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in respect of items like pipes, valves, meters, instruments and other similar items peculiar to a continuous process industry.

b) As explained to us, the Company, having regards to nature and size of its business, has adopted the practice of carrying out physical verification of fixed assets, except LPG cylinders and fixed assets of the erstwhile Kosan Gas Company Undertaking, not handed over, on a staggered basis, over a period of five years in the case of furniture, fixtures and office equipment and over a period of three years in the case of Plant and Machinery and other assets. We were informed that discrepancies noticed on such verification were not material as compared to the book records and have been properly dealt with in the books of account. The existence of fixed assets situated at the residence of employee has, however, been ascertained on a self-declaration basis.

c) Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

(ii) a) As explained to us, the inventories were physically verified during the year by Management at reasonable intervals. In case of material lying with third parties, certificates confirming sticks held have been received from them.

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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. We were informed that discrepancies noticed on physical verification, as compared to the book records, were not material and have been properly dealt with in the books of account.

(iii) Based on the audit procedures applied by us and according to the information and explanations given to us, the Company has neither granted nor taken loans, secured or unsecured to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, sub-clause (b), (c), (d), (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items are of a specialized nature, in respect of which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed assets and for the sale of goods and services.

(v) In our opinion and according to the information and explanation given to us, there are no contracts and arrangements referred in Section 301 of the Companies Act,1956 entered during the year that need to be entered in the Register maintained under that Section. Accordingly, sub-clause (b) of sub-para (v) of Para 4 of the Order is not applicable to the Company for the current year.

(vi) In our opinion, and according to the information and explanation given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to deposits accepted from public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India.

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

(viii) We have broadly reviewed the cost records maintained by the Company in respect of the product, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1 )(d) of the Companies Act, 1956.We are of the opinion that prima facie the prescribed accounts and records have been maintained and being made. We have not, however, made a detailed examination of these records with a view to determine whether they are accurate or complete.

(ix) a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company, during the year, has been generally 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, Custom duty, Excise duty, Cess and any other material statutory dues.

b) According to the information and explanations given to us and the basis of our examination of the books of account, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess were in arrears, as at March 31st, 2012, for a period of more than six months from the date they became payable.

c) According to information and explanation given to us, the dues relation to Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess, which have not been deposited on account of disputes with the relevant authorities, have been reflected in the table below.

Statute Forum Pending Amount Period to which amount relates Rs./crores

CCCIT (Appeals) 6.50 Various years pertaining to 2005 to 2011

Income Tax IW 0.20 2006-07

Total 6.70

CESTAT 313.24 Various years pertaining to 1992 to 2010 Central Commissioner (Appeals) 1.57 Various years pertaining to 1998 to 2010

Excise High Court 0.12 2005-2006

RA 1.18 Various years pertaining to 1999 to 2006

Total 316.12

CESTAT 64.57 Various years pertaining to 1992 to 2006

Total 64.57

CCEA 0.08 Various years pertaining to 2004 to 2011 Service Tax CESTAT 136.20 Various years pertaining to 2002 to 2010

Total 136.28

Board of Revenue 1.89 Various years pertaining to 1985 to 1987

STAT 526.60 Various years pertaining to 1985 to 2008

Sales Tax High Court 606.66 Various years pertaining to 1979 to 2009

Supreme Court 168.98 Various years pertaining to 2002 to 2007

Commissioner/DCCT/ADC/ 6,880.38 Various years pertaining to 1976 to 2011

JCCT/ACCT

Total 8,183.42

Grand Total 8,707.09

(x) The company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us the Company has not defaulted in repayment of dues to Financial Institutions, Banks or debenture holders.

(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.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund and or a nidhi/ mutual benefit fund/ society. Therefore the provisions of sub-para (xiii) of para 4 of the Order are not applicable to the Company.

(xiv) According to the information and explanation given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore the provisions of sub-para (xiv) of para 4 of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions.

(xvi) In our opinion and according to the information and explanations given to us, the term loans taken during the year, prima facie, have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us, based on an overall examination of the Balance Sheet, funds raised on short-term basis have, prima facie, not been used for making long-term investments.

(xviii) According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act 1956.

(xix) The Company has created securities / charge as per the debenture trust deed in respect of debentures issued and outstanding at the year end.

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

(xxi) According to the information and explanations given to us and representations obtained from the management and based on our examination in the normal course of audit, we report no material fraud on or by the Company, has been noticed or reported during the year under audit.

For and on behalf of For and on behalf of

Om Agarwal& Co. B.K. Khare & Co.

Chartered Accountants Chartered Accountants

FR No:000971C FR No:105102W

K. C. Gupta Devdatta Mainkar

Partner Partner

Membership No: 072936 Membership No: 109795

Place : New Delhi

Date : 29th May 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of Hindustan Petroleum Corporation Limited as at March 31, 2011, and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto in which are incorporated Accounts of the Branch audited by the Branch Auditor. 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 the auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 (together ‘the Order'), issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we give in the Annexure, a statement on the matters specifed in paragraph 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of the 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 these books, and proper returns, adequate for the purposes of our audit, have been received from the branch not visited by us;

(c) The Branch Auditors' report, made available to us, has been appropriately dealt with while preparing our report;

(d) The balance sheet, Profit and loss account and cash fow statement dealt with by this report are in agreement with the books of account and with the audited returns from the branch;

(e) The balance sheet, Profit and loss account and cash fow 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;

(f) Disclosure in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 is not required for Government Companies as per Notifcation No. GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs.

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

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

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

(iii) in the case of the cash fow statement, of the cash fows for the year ended on that date.

Annexure to the Auditors' Report (Referred to in Paragraph 3 of our Report of even date)

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fxed assets except for items likes pipes, valves, meters, instruments and other similar items peculiar to a continuous process industry.

(b) As explained to us, the Company, having regard to the size and nature of its business, has adopted a practice of carrying out physical verifcation of its fxed assets, except LPG cylinders and fxed assets of the erstwhile Kosan Gas Company Undertaking, not handed over, on a staggered basis, over a period of five years in the case of furniture, fxtures and Office equipment and over a period of three years in the case of Plant and Machinery and other assets. We were informed that discrepancies noticed on such verifcation were not material as compared to the book records and have been properly dealt with in the books of account. The existence of fxed assets situated at the residence of employees has, however, been ascertained on a self-declaration basis.

(c) Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

2. (a) As explained to us, the inventories were physically verifed during the year by the Management at reasonable intervals. In the case of materials lying with third parties, certificates confrming stocks held have been received from them.

(b) In our opinion and according to the information and explanations given to us, the 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) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventory. We were informed that discrepancies noticed on physical verifcation, as compared to the book records, were not material and have been properly dealt with in the books of account.

3. Based on the audit procedures applied by us and according to the information and explanations given to us, the Company has neither granted nor taken loans, secured or unsecured to or from companies, frms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, sub clauses (b), (c), (d), (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, and having regard to the explanations that some of the items are of a specialized nature, in respect of which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inventory and fxed assets and for the sale of goods and services.

5. In our opinion and according to the information and explanations given to us, there are no contracts and arrangements referred to in Section 301 of the Companies Act, 1956 entered into during the year that need to be entered in the register maintained under that Section. Accordingly, sub clause (b) of sub-para (v) of para 4 of the Order is not applicable to the Company for the current year.

6. In our opinion, and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A and Section 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under with regard to deposits accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209 (1) (d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained and are being made. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has, during the year, been generally regular in depositing with the appropriate authorities, undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess were in arrears, as at March 31, 2011, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, dues relating to Income tax, Sales tax, Custom duty, Service tax, Excise duty which have not been deposited on account of disputes with the related authorities, have been refected in the table below:

STATUTE FORUM WHERE AMOUNT IN RS./ PERIOD TO WHICH DISPUTE IS PENDING CRORES THE AMOUNT RELATES

Income Tax CIT (Appeals) 0.54 Various Years pertaining to 2009 to 2011 0.54

Central Excise CESTAT 489.08 Various Years pertaining to 1992 to 2009

Commissioner Appeal 2.78 Various Years pertaining to 1998 to 2009

High Court 0.25 Pertaining to 2004

RA 0.21 Various Years pertaining to 1999 to 2006 492.31

Customs CCEA 1.99 Various Years pertaining to 2003 to 2005

CESTAT 64.72 Various Years pertaining to 1992 to 2006 Total 66.71

Service Tax CCEA 0.05 Various Years pertaining to 2004 to 2006

CESTAT 127.22 Various Years pertaining to 2002 to 2009 127.26

Sales Tax Board of revenue 0.03 Various Years pertaining to 1985 to 1987

Rajasthan Kar Board 2.22 Various Years pertaining to 1999 to 2001

STAT 789.15 Various Years pertaining to 1985 to 2008

High Court 480.18 Various Years pertaining to 1979 to 2007

Supreme Court 158.94 Various Years pertaining to 2002 to 2004

Commissioner/DCCT/ ADC/ 6183.58 Various Years pertaining to 1976 to 2009

JCCT/ACCT

7614.09

Grand Total 8300.91

10. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the financial year immediately preceding such financial year.

11. According to the information and explanations given to us, and based on checks carried out by us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. 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.

13. In our opinion and according to information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore the provisions of sub-para (xiii) of para 4 of the Order are not applicable to the Company.

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

15. In our opinion and according to information and explanations provided to us, the Company has not given guarantees for loans taken by others from banks and financial institutions.

16. In our opinion and according to information and explanations given to us, the term loans taken during the year, prima facie, have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us, and based on our overall examination of Balance Sheet and considering investment in "Oil Bonds" issued by the Government of India towards under-recoveries on sale of sensitive petroleum products as short term application of funds, funds raised on short- term basis have, prima facie, not been used for making long-term investments.

18. According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has created necessary securities or charge as per the debenture trust deed in respect of debentures issued and outstanding at the year end.

20. The Company has not raised any money by way of public issue during the financial year.

21. According to the information and explanations given to us and based on audit procedures performed and representations obtained from the management, we report that no material fraud on or by the Company, has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co. For Om Agarwal & Co.

Chartered Accountants Chartered Accountants

Firm No. : 109208w Firm No. : 000971c

G. Sankar Thalendra Sharma

Partner Partner

Membership No.46050 Membership No. 079236

Place: New Delhi

Date: 26th May 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Hindustan Petroleum Corporation Limited as at March 31, 2010, and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto in which are incorporated Accounts of the Branch audited by the Branch Auditor. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by Companies (Auditors Report) (Amendment) Order, 2004 (together ‘the Order), issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Companies Act,1956, we give in the Annexure, a statement on the matters specified in paragraph 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of the 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 these books, and proper returns, adequate for the purposes of our audit, have been received from the branch not visited by us;

(c) The Branch Auditors report, made available to us, has been appropriately dealt with while preparing our report;

(d) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account and with the audited returns from the branch;

(e) 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;

(f) Disclosure in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 is not required for Government Companies as per Notification No. GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs.

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

(i) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010;

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

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

Annexure to the Auditors Report (Referred to in Paragraph 3 of our Report of even date)

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets except for items likes pipes, valves, meters, instruments and other similar items peculiar to a continuous process industry.

(b) As explained to us, the Company, having regard to the size and nature of its business, has adopted a practice of carrying out physical verification of its fixed assets, except LPG cylinders and fixed assets of the erstwhile Kosan Gas Company undertaking, not handed over, on a staggered basis, over a period of five years in the case of furniture, fixtures and office equipment and over a period of three years in the case of Plant and Machinery and other assets. We were informed that discrepancies noticed on such verification were not material as compared to the book records and have been properly dealt with in the books of account. The existence of fixed assets situated at the residence of employees has, however, been ascertained on a self-declaration basis.

(c) Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.

2. (a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. In the case of materials lying with third parties, certificates confirming stocks held have been received from them.

(b) In our opinion and according to the information and explanations given to us, 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) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventory. We were informed that discrepancies noticed on physical verification, as compared to the book records, were not material and have been properly dealt with in the books of account.

3. Based on the audit procedures applied by us and according to the information and explanations given to us, the Company has neither granted nor taken loans, secured or unsecured to or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, sub clauses (b), (c), (d), (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, and having regard to the explanations that some of the items are of a specialized nature, in respect of which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

5. In our opinion and according to the information and explanations given to us, there are no contracts and arrangements referred to in Section 301 of the Companies Act, 1956 entered into during the year that need to be entered in the register maintained under that Section. Accordingly, sub clause (b) of sub-para (v) of para 4 of the Order is not applicable to the Company for the current year.

6. In our opinion, and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A and Section 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed thereunder with regard to deposits accepted from the public. We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209 (1) (d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained and are being made. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has, during the year, been generally regular in depositing with the appropriate authorities, undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues.

(b) According to the information and explanations given to us and on the basis of our examination of the books of account, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess were in arrears, as at March 31, 2010, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, dues relating to Income tax, Sales tax, Custom duty, Service tax, Excise duty which have not been deposited on account of disputes with the related authorities, have been reflected in the table below:

STATUTE FORUM WHERE AMOUNT IN DISPUTE IS PENDING RS. / CRORES

Income Tax Act, 1961 Appellate Tribunal 0.20

0.20

Central Excise Act, 1944 Commissioner (A) 3.75

Assistant Commissioner 3.58

CESTAT 414.63

Revisionary authority 1.56

423.52

Various Central & Board of Revenue 0.19

State Sales Tax Acts Rajasthan Kar Board 2.82

STAT 457.27

High Court 424.62

Supreme Court 159.06

Commissioner / DCCT / 4,132.25

ADC / JCCT / ACCT

5,176.21 Custom Act, 1962 CESTAT 64.72

Commissioner(A) 0.54

65.26 Service Tax CESTAT 10.26

Commissioner(A) 0.82

11.08 Grand Total 5,676.07



STATUE PERIOD TO WHICH THE AMOUNT RELATES

Income Tax Act, 1961 2006-07 Central Excise Act, 1944 1998-1999, 2000-2001, 2001-2002, 2002- 2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008 1994 -1996,1997-1998,1998-1999,1999- 2000, 2001-2002, 2002-2003, 2003-2004, 2005-2006

1993-1997, 1997-1999,1999-2000, 2000- 2001, 2001-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009

1999-2002, 2003-2004, 2004-2005, 2005- 2006

Various Central & State Sales Tax Acts 1985-1986,1986-1987 1999-2000, 2000-2001 1985-1987, 1987-1988,1988-1999, 1999- 2000, 2000-2001, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006- 2007, 2007-2008

1979-1985,1987-1997, 1998-1999, 2000- 2001, 2001-2002, 2002-2003, 2003-2004, 2006-2007

1998-1999, 2002-2003, 2003-2004, 2004- 2005

1976-1979,1986-1987,1987-1988,1992- 1993,1993-1994,1994-1995,1995- 1996,1996-1997,1997-1998,1998- 1999,1999-2000, 2000-2001, 2001-2002, 2003-2004, 2004-2005, 2005-2006, 2006- 2007, 2008-2009

Custom Act, 1962 1992-1997,1997-1998,1998-1999,1999- 2002, 2002-2003, 2003-2004, 2005-2006 2003-2004, 2004-2005

Service Tax 2002-2003, 2003-2006, 2006-2007, 2007- 2008 2004-2005, 2005-2006

10. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the financial year immediately preceding such financial year.

11. According to the information and explanations given to us, and based on checks carried out by us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. 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.

13. In our opinion and according to information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of sub-para (xiii) of para 4 of the Order are not applicable to the Company.

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

15. In our opinion and according to information and explanations provided to us, the Company has not given guarantees for loans taken by others from banks and financial institutions.

16. In our opinion and according to information and explanations given to us, the term loans taken during the year, prima facie, have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us, and based on our overall examination of Balance Sheet and considering investment in "Oil Bonds" issued by the Government of India towards under-recoveries on sale of sensitive petroleum products as short term application of funds, funds raised on short- term basis have, prima facie, not been used for making long-term investments.

18. According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has created necessary securities or charge as per the debenture trust deed in respect of debentures issued and outstanding at the year end.

20. The Company has not raised any money by way of public issue during the financial year.

21. According to information and explanations given to us and based on audit procedures performed and representations obtained from the management, we report that no material fraud on or by the Company, has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co. For Om Agarwal & Co.

Chartered Accountants Chartered Accountants

Firm No. : 109208w Firm No. : 000971c

G. Sankar Om Prakash Agarwal

Partner Partner

Membership No. 46050 Membership No. 016603

Place : New Delhi Date : 26th May 2010

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