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Auditor Report of Hindustan Petroleum Corporation Ltd.

Mar 31, 2023

TO THE MEMBERS OF HINDUSTAN PETROLEUM CORPORATION LIMITEDReport on the Audit of the Standalone Financial StatementsOpinion

We have audited the accompanying standalone financial statements of Hindustan Petroleum Corporation Limited

("the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information in which are included the standalone financial statements for the year ended on that date audited by the branch auditor of the Visakh Refinery located at Visakhapatnam (hereinafter referred to as the "standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended ("Ind AS") and accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023 and its loss, total comprehensive loss, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined, taking into consideration audit report issued by the branch auditors, the matters described below to be the key audit matters to be communicated in our report:

Sr. No.

Key Audit Matters

Auditors'' Response

Property, plant and equipment and capital work in progress

â¢ The Company is in the process of executing various projects like expansion of refineries, installation of bio-refinery and other new plants, depots, LPG bottling plants, terminals, pipelines, etc. Since these projects take a substantial period of time to get ready for intended use and due to their materiality in the context of the Balance Sheet of the Company, this is considered to be an area with significant effect on the overall audit strategy and allocation of resources in planning and completion of our audit;

Principal Audit Procedures Performed

â¢ We performed an understanding and evaluation of the system of internal control process over the projects and those included in capital work in progress, with reference to identification and testing of key controls;

â¢ Review of Board minutes relating to approvals of the projects and changes in estimates thereof;

â¢ We assessed the progress of the project and the intention and ability of the management to bring the asset to its state of intended use;

â¢ Understood, evaluated and tested the design and operating effectiveness of key controls relating to capitalisation of various costs incurred;

Sr. No.	Key Audit Matters	Auditors'' Response
	â¢ With regard to above capital projects, management has identified specific expenditure including employee costs and other overheads relating to each of the assets in the above capital projects and has applied judgement to assess if the costs incurred in relation to these assets meet the recognition criteria of Property, Plant and Equipment in accordance with Ind AS 16. This has been determined as a key audit matter due to the significance of the capital expenditure during the year as compared to the existing block of Property, Plant and Equipment, the risk that the elements of costs that are eligible for capitalisation are not appropriately capitalised in accordance with the recognition criteria provided in Ind AS 16 and the complex nature of the project.	â¢ Tested, on sample basis, the direct and indirect costs capitalised, with the underlying supporting documents to ascertain nature of costs and basis for allocation, where applicable, and evaluated whether they meet the recognition criteria provided in the Indian Accounting Standard (Ind AS) 16, Property, Plant and Equipment; â¢ Ensured adequacy of disclosures in the standalone financial statements.
2	Evaluation of uncertain indirect tax positions â¢ The Company has material uncertain indirect tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. The Company has disputes pending at various levels of tax authorities over the past several years. (Refer Note No.-53 and para (vii) (b) Annexure I of this report).	Principal Audit Procedures Performed â¢ We have evaluated and tested the appropriateness of the design and the operating effectiveness of the management''s controls over the tax litigation matters; â¢ Obtained from the management and perused details of completed tax assessments and demands for the year ended March 31, 2023; â¢ Reviewed the management''s underlying assumptions in estimating the tax provision, the possible outcome of the disputes, legal precedence and other rulings in evaluating management''s position on these uncertain tax positions; â¢ Relied upon the management judgements, industry level deliberations and estimates for possible outflow and opinion of internal experts of the Company in relation to such disputed tax positions.
3	Evaluation of disputed claims against the company under various non-tax matters and Recoverability of pre-deposits related thereto â¢ The company has disputed claims against it which are pending at various courts/forums and are at various stages in the judicial process. The company also have pre-deposits related thereto with various adjudicating authorities that are pending for/ relating to cases pending for more than 3 years. The management has exercised significant judgement in assessing the possible outflow in such matters. (Refer Note No. 53).	Principal Audit Procedures Performed â¢ Read and analyzed select key correspondences, internal/external legal opinions / consultations by management for key disputed non tax matters; â¢ Reviewed and verified other legal pronouncements wherever available in similar matters in the case of the company/other corporates; â¢ Discussed and reviewed the nature of the amounts recoverable vis-a-vis the underlying cases. We further discussed the sustainability of the cases on a sample basis and the likelihood of recoverability or otherwise upon final resolution from the respective authorities; â¢ Assessed management''s estimate of the possible outcome of the disputed cases and relied on the management judgements in such cases.

Information Other than the Financial Statements and Auditors'' Report thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Directors'' Report including Annexures to the Directors'' Report, Corporate Governance Report, Management Discussion and Analysis Report and Business Responsibility and Sustainability Report, but does not include the standalone financial statements and our auditors'' report thereon. The other information as above is expected to be made available to us after the date of this auditors'' report.

Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and those Charged with Governance for the Standalone Financial Statements

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

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

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

Auditors'' Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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

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

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

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

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

â¢ Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

a) We did not audit the financial statements and other financial information of Visakh Refinery which is considered as a branch whose financial statements reflect total assets of H 35,886.29 crore as at March 31, 2023 and total revenues of H 70,422.29 crore, net loss before tax of H 607.08 crore and total comprehensive loss of H 644.02 crore for year ended March 31, 2023, as considered in the branch''s standalone financial statements. The financial statements of the Visakh Refinery of the Company have been audited by the Branch Auditors of the Company. The Branch Auditors'' report dated April 21, 2023, has been furnished to us and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor.

b) We refer to Note No. 50 in respect of 17 unincorporated Joint Operations involved in exploration activities, of which majority are under relinquishment. The standalone financial statements include Company''s proportionate share in Assets and Liabilities as on March 31, 2023, amounting to H 6.33 crore and H 38.34 crore respectively and Income and Expenditure for the year ended March 31, 2023, H 2.01 crore and H 4.14 crore respectively which have been included based on unaudited financial information. Our opinion in respect thereof is solely based on the management certified information.

We have placed reliance on technical/commercial evaluation by the management in respect of categorization of wells, allocation of cost incurred on them, liability for decommissioning costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.

c) The Standalone Financial Statements of the Company for the year ended March 31,2022, were audited by the joint auditors, one of which is predecessor audit firm and have issued their unmodified opinion vide their Report dated May 19, 2022.

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, 2020 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in "Annexure I" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required under section 143(5) of the Act, based on our audit as aforesaid, we give in the Annexure II, a report on the directions including additional directions issued by the Comptroller and Auditor General of India, action taken thereon and its impact on the accounts and standalone financial statements of the company.

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

c) The report dated April 21, 2023, on the accounts of the Visakh Refinery of the Company, issued under section 143(8) of the Act by the Branch Auditors upon their audit of the books of accounts of Visakh Refinery has been forwarded to us and have been properly dealt with by us in preparing our report in the manner considered necessary by us;

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

e) In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Act read with Companies (Indian Accounting Standard) Rules, 2015 as amended;

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 of the directors of the Company is disqualified in terms of provisions contained in the said section;

g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure III";

h) With respect to the other matters to be included in the Auditors'' Report in accordance with the requirements of section 197(16) of the Act, as amended we report that:

As per Notification number G.S.R. 463 (E) dated June 5, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act regarding remuneration to directors is not applicable to the Government Company; and hence we are not required to report as to whether the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements (Refer Note No.53 of 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 (Refer Note No.54 to the standalone financial statements);

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

Mar 31, 2022

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Hindustan Petroleum Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information in which are included the standalone financial statements for the year ended on that date audited by the branch auditor of the Visakh Refinery Located at Visakhapatnam (hereinafter referred to as the "standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2022 and its profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report:

Sr.

No.

Key Audit Matters

Auditors'' Response

Property, plant and equipment and capital work in progress

â¢ The Company is in the process of executing various projects like expansion of refineries, installation of new plants, depots, LPG bottling plants, terminals, pipelines etc. Since these projects take a substantial period of time to get ready for intended use and due to their materiality in the context of the Balance Sheet of the Company, this is considered to be an area with significant effect on the overall audit strategy and allocation of resources in planning and completion our audit;

Principal Audit Procedures Performed

â¢ We assessed the progress of the project and the intention and ability of the management to carry forward and bring the asset to its state of intended use.

â¢ Review of Board minutes relating to approvals of the projects and changes in estimates thereof.

Sr. No.	Key Audit Matters	Auditors'' Response
	â¢ With regard to above capital projects, management has identified specific expenditure including employee costs and other overheads relating to each of the assets in the above capital projects and has applied judgement to assess if the costs incurred in relation to these assets meet the recognition criteria of Property, Plant and Equipment in accordance with Ind AS 16. This has been determined as a key audit matter due to the significance of the capital expenditure during the year and the risk that the elements of costs that are eligible for capitalization are not appropriately capitalised in accordance with the recognition criteria provided in Ind AS 16.	â¢ Understood, evaluated and tested the design and operating effectiveness of key controls relating to capitalisation of various costs incurred; â¢ Tested the direct and indirect costs capitalised, on a sample basis, with the underlying supporting documents to ascertain nature of costs and basis for allocation, where applicable, and evaluated whether they meet the recognition criteria provided in the Indian Accounting Standard (Ind AS) 16, Property, Plant and Equipment; â¢ Ensured adequacy of disclosures in the standalone financial statements.
2	Evaluation of uncertain indirect tax positions â¢ The Company has material uncertain indirect tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. The Company has disputes pending at various levels of tax authorities over the past several years. (Refer Note No.53 and para (vii) (b) Annexure I of this report).	Principal Audit Procedures Performed â¢ We have evaluated the appropriateness of the design and tested the operating effectiveness of the management''s controls over the tax litigation matters; â¢ Obtained from the management and perused details of completed tax assessments and demands for the year ended March 31,2022; â¢ Reviewed the management''s underlying assumptions in estimating the tax provision, the possible outcome of the disputes, legal precedence and other rulings in evaluating management''s position on these uncertain tax positions; â¢ Relied upon the management judgements, industry level deliberations and estimates for possible outflow and opinion of internal experts of the Company in relation to such disputed tax positions;
3	Evaluation of disputed claims against the company under various non-tax matters and Recoverability of pre-deposits related thereto The company has disputed claims against it which are pending at various courts/forums and are at various stages in the judicial process. The company also have pre-deposits related thereto with various adjudicating authorities that are pending for/relating to cases pending for more than 3 years. The management has exercised significant judgement in assessing the possible outflow in such matters. (Refer Note No. 53).	Principal Audit Procedures Performed â¢ Read and analyzed select key correspondences, internal/external legal opinions / consultations by management for key disputed non tax matters. â¢ Reviewed and verified other legal pronouncements wherever available in similar matters in the case of the company/other corporates. â¢ Discussed and reviewed the nature of the amounts recoverable vis-a-vis the underlying cases. We further discussed the sustainability of the cases on a sample basis and the likelihood of recoverability or otherwise upon final resolution from the respective authorities. â¢ Assessed management''s estimate of the possible outcome of the disputed cases and relied on the management judgements in such cases.

Information other than the Financial Statements and Auditors'' Report thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Directors'' Report including Annexures to the Directors'' Report, Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements and our auditors'' report thereon. The other information as above is expected to be made available to us after the date of this auditors'' report.

Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and those Charged with Governance for the Standalone Financial Statements

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

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

Auditors'' Responsibilities for the Audit of the Standalone Financial Statements

As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

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

Other Matters

a) We did not audit the financial statements and other financial information of Visakh Refinery which is considered as a branch whose financial statements reflect total assets of H 35,757.06 Crore as at March 31, 2022 and total revenues of H 57,464.87 Crore, total net profit before tax of H 1,905.61 Crore and total comprehensive income of H 1,926.98 Crore for year ended March 31,2022, as considered in the branch''s standalone financial statements. The financial statements of the Visakh Refinery of the Company have been audited by the Branch Auditors of the Company. The Branch Auditors'' report dated April 29, 2022, has been furnished to us and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor.

b) We refer to Note No. 50 in respect of 17 unincorporated Joint Operations involved in exploration activities, of which majority are under relinquishment. The standalone financial statements include Company''s proportionate share in Assets and Liabilities as on March 31,2022, amounting to H 6.34 Crore and H 35.36 Crore, and Income and Expenditure for the year ended March 31,2022, H 1.86 Crore and H 8.68 Crore respectively which have been included based on unaudited financial information. Our opinion in respect thereof is solely based on the management certified information.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

2. As required under section 143(5) of the Act, based on our audit as aforesaid, we give in the "Annexure II", a report on the directions including additional directions issued by the Comptroller and Auditor General of India, action taken thereon and its impact on the accounts and standalone financial statements of the company.

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;

c) The report dated April 29, 2022, on the accounts of the Visakh Refinery of the Company, issued under section 143(8) of the Act by the Branch Auditors upon their audit of the books of accounts of Visakh Refinery has been forwarded to us and have been properly dealt with by us in preparing our report in the manner considered necessary by us;

f) As per notification no. G.S.R 463(E) datedJune 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 of the directors of the Company is disqualified in terms of provisions contained in the said section;

h) With respect to the other matters to be included in the Auditors'' Report in accordance with the requirements of section 197(16) of the Act, as amended we report that:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements (Refer Note No.53 of the standalone financial statements);

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

iv. a) The Management has represented that, to the best of its knowledge and belief, no funds have been

advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b) The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

As stated in Note No. 48 to the financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

For R. Devendra Kumar & Associates For C N K & Associates LLP

Chartered Accountants Chartered Accountants

FRN:114207W FRN:101961W/W- 100036

sd/- sd/-

Anand Golas Vijay Mehta

Partner Partner

Membership No. 400322 Membership No. 106533

UDIN: 22400322AJGCNP4079 UDIN: 22106533AJGBLP8643

Place: Mumbai Date: May 19, 2022

Mar 31, 2021

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Indian Accounting Standard (âInd ASâ) financial statements of Hindustan Petroleum Corporation Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash flows for the year ended on that date, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as âthe standalone financial statementsâ), in which are included the Ind-AS financial statements for the year ended on that date audited by the branch auditor of the Visakh Refinery Located at Visakhapatnam.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (âthe Actâ) 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 31,2021, its profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

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

Emphasis of Matter

We invite attention to the following :

a) Note No 59 regarding provision for impairment made during the year of '' 390.67 Crore (cumulative as of year ended '' 618.07 Crore) towards loans given to consumers under Prime Minister Ujjwala Yojna (PMUY) of the total outstanding loans of '' 1,882.25 Crore. The above impairment has been computed based on the estimates of default as assessed by the management. Further, during the year, the management has performed re-measurement of the gross carrying value and accounted re-measurement loss amounting to '' 450.62 Crore.

b) Note No. 69 regarding provision towards diminution in value of investments made by Provident Fund Trust and Post Retirement Medical Benefit Fund Trust to the extent of '' 170.10 Crore & '' 69.65 Crore respectively arising out of the default over interest obligations and probable principal amounting to '' 243 Crore & '' 99.50 Crore respectively in the case of Non-convertible Debentures of certain companies which includes IL&FS & DHFL, basis best available estimate of the management. The estimate is dependent upon the outcome of matters pending with judicial authorities and recognition of Company''s claim in these matters.

c) Note No 62 regarding the outbreak of COVID-19 pandemic and the assessment made by the management on its business and financials for the year ended March 31,2021, this assessment and the outcome of the pandemic is as made by the management and is highly dependent on the circumstances as they evolve in the subsequent periods.

Our opinion is not modified in respect of above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report:

1. Evaluation of uncertain indirect tax positions

The Company has material uncertain indirect tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. The Company has disputes pending at various levels of tax authorities over the past several years. As on March 31,2021, the company has total such disputed demands amounting to '' 10,493.99 Crore (Refer Note No. 2.16 and para (vii) (b) Annexure I of this report.)

Auditorsâ Responses Principal Audit Procedures

â¢ We have evaluated the appropriateness of the design and tested the operating effectiveness of the management''s controls over the tax litigation matters.

â¢ Perused details of completed tax assessments and demands for the year ended March 31, 2021 from management.

â¢ We reviewed the management''s underlying assumptions in estimating the tax provision and the possible outcome of the disputes. The legal precedence and other rulings were considered in evaluating management''s position on these uncertain tax positions.

â¢ Further we have relied upon the management judgements, industry level deliberations and estimates for possible outflow and opinion of internal experts of the Company in relations to such disputed tax positions.

2. Evaluation of Direct Tax position

The Company has open direct tax positions including matters under dispute for different assessment years and the matters are at different stages with Tax Authorities/Courts. The Company has opted for Vivad Se Vishwas Scheme (VSVS) for which a tax liability of '' 776.66 Crore has been assessed by the management for which necessary declarations have been filed with the Income Tax Department and have been accepted. The proceedings are not yet concluded. [Refer Note No. 44(e)]

Auditorsâ Responses Principal Audit Procedures

â¢ Obtained details of completed tax assessments and demands up-to the year ended March 31, 2021 from management.

â¢ Additionally, we considered the effect of the outcomes of the Appellate Orders received during the year in respect of uncertain tax positions to evaluate whether any change was required to management''s position on these uncertainties.

â¢ We have reviewed the management data compiled to offer the disputed liabilities towards VSVS scheme and the basis at which these are considered as eligible for settlement under the scheme.

â¢ We have reviewed the declarations filed with the Income Tax Department in respect of matters being declared under VSVS and also reviewed the confirmations received from the department in respect thereof.

â¢ We have verified the orders from tax and appellate authorities for the previous years and relied on management judgments in evaluating the tax provisions for the Current Financial Year.

3. Recoverability of pre-deposits relating to tax and non tax matters and balances with Customs and Excise

As at March 31, 2021, the Company has non-current assets i.e. pre-deposits pertaining to various tax and non-tax matters namely VAT, excise duty, custom duty etc. with adjudicating authorities amounting to '' 388.59 Crore that are pending for/relating to cases pending for more than 3 years and there are receivables from Customs and Excise department amounting to '' 109.39 Crore pending for more than 3 years, for which there are no balance confirmations from the respective authorities available on records.

Auditorsâ Responses Principal Audit Procedures

â¢ We have evaluated the appropriateness of the design for recording and tracking the recoverability of pre-deposits pertaining to the old tax and non-tax cases.

â¢ We have discussed and reviewed the nature of the amounts recoverable vis-a-vis the underlying cases. We further discussed the sustainability of the cases on a sample basis and the likelihood of recoverability or otherwise upon final resolution from the respective authorities.

â¢ We enquired with the management about these cases vis-a-vis the current position and the efforts taken by the management to recover the deposits placed or obtaining the balance confirmations from the respective authorities.

â¢ We have also advised the management to approach and continue to pursue with the Custom Authorities for early settlement of receivable claims pending for earlier years. (Refer Note No. 10.1).

â¢ Further, we have relied on the management estimations and judgements with reference to inherent uncertainties involved while determining the outcome of these cases.

4. Evaluation of disputed claims against the company under various non-tax matters

The company has disputed claims against it which are pending at various courts/forums and are at various stages in the judicial process. The management has exercised significant judgement in assessing the possible outflow in such matters and accordingly an amount of '' 1,280.60 Crore has been disclosed for which the company is contingently liable while possibility of any outflow in matters having claims amounting to '' 483.89 Crore has been considered remote. (Refer Note No. 52).

Auditorsâ Responses Principal Audit Procedures

â¢ Read and analysed select key correspondences, internal/external legal opinions/consultations by management for key disputed non tax matters.

â¢ Reviewed and verified other legal pronouncements wherever available in similar matters in the case of the company/other corporates.

â¢ Discussed with appropriate senior management and evaluated management''s underlying key assumptions in estimating the provisions.

â¢ Assessed management''s estimate of the possible outcome of the disputed cases and relied on the management judgements in such cases.

5. Assessment for impairment of Investment in Wholly Owned Subsidiary and various financial assistance provided to them

The Company has wholly owned subsidiaries named âHPCL Biofuels Ltd'' (HBL) and Prize Petroleum Corporation Ltd (PPCL). PPCL has a wholly owned subsidiary named Prize Petroleum International Pte Ltd (the step down subsidiary) (PPIPL), incorporated in Singapore.

i) HPCL Biofuels Ltd. (HBL)

Since its inception, HBL has not been able to break-even based on which this project was approved. There has been a significant erosion in the net worth of the subsidiary.

Based on this, management assessed that the recoverable amount of the Company''s investment exceeded its carrying value and an impairment assessment has been carried out by the management and accordingly as against the carrying value of '' 748.94 Crore, an amount of '' 572.16 Crore ('' 50.00 Crore during the year) has been considered as impaired.

The above assessment includes significant estimations pertaining to projections of cash flows arising from the continuing use of its assets in the entity. (Refer Note no. 56)

Auditorsâ Responses Principal Audit Procedures

â¢ We reviewed the process followed by the Company to asses the valuation of investment, with respect to the transactions that took place during the year.

â¢ We analysed the impairment test s performed by the management, and verified that the criterion used to perform these test are consistent with those established in applicable reporting regulations.;

â¢ In estimating the impairment of investments we have reviewed that the management has followed the discounting of future cash flows of the revenue streams of HBL from its Cash Generating Unit using a pre tax discount rate.;

â¢ We considered the adequacy of disclosures in the Financial Statements in respect of this matter.

ii) Prize Petroleum International Pte. Ltd.

The Company has an equity investment of '' 248.97 Crore in its 100% subsidiary, Prize Petroleum Company Limited. The management has carried out impairment assessment for the investment and a total amount of '' 162.98 Crore stands provided for towards the investment. The assessment has been made by the management based on future cash flow assumptions. HPCL has also given Corporate guarantee on behalf of PPIPL for obtaining borrowings from a consortium of banks. Due to uncertainty in the exploration and production of oil and gas with reference to its reserves and gas prices, there is a possibility of the corporate guarantee being invoked and a provision of '' 318.00 Crore has been made in the accounts towards such probable obligation based on management assumptions as estimates. (Refer Note No. 57 & 58).

Auditorsâ Responses Principal Audit Procedures

â¢ We reviewed the process followed by the Company to assess the valuation of investments and the consistency of such process over the years.

â¢ We analysed impairment tests performed by the management and verified that the criteria used to perform these tests are consistent with those established in applicable reporting regulations and relied on management estimates.

â¢ In estimating the impairment of investments, we have reviewed that management has followed the discounting of future cash flows of the revenue streams of PPCL.

â¢ We reviewed the management estimates and assumptions, especially on Production Profile Scenarios and Gas Prices, in respect of impairment of the Corporate Guarantee, in case of Prize Petroleum International Pte Ltd.

â¢ Further, we made enquiries with the technical expert (petroleum engineer) of the subsidiary to substantiate the production profiles of the production blocks running over the future periods.

â¢ We considered the provision made by the company and adequacy of the disclosures in the financial statements in respect of this matter.

Information Other than the Standalone Financial Statements and Auditorsâ Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Directors'' Report including Annexures to Directors'' Report, Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements and our auditor''s report thereon. The Other information as above is expected to be made available to us after the date of this Auditors'' report.

Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit, or otherwise appears to be materially misstated. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Managementâs Responsibility for the Standalone Financial Statements

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

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

Auditorâs Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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

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

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

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

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

Other Matters

a) We did not audit the financial statements of one branch viz Visakh Refinery included in the standalone financial statements of the Company whose financial statements reflect total assets of '' 26,536.03 Crore as at 31^st March 2021 and the total revenue of '' 45,167.29 Crore for the year ended on that date, as considered in the Branch''s financial statements. The financial statements of this branch have been audited by the branch auditor whose report dated May 10, 2021 has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor.

b) We refer to Note no. 49 in respect of 21 unincorporated Joint Operations involved in exploration activities, of which majority are under relinquishment. The standalone financial statements include Company''s proportionate share in Assets and Liabilities as on March 31,2021, Income and Expenditure for the year ended March 31, 2021 amounting to '' 7.15 Crore and '' 36.07 Crore, '' 2.22 Crore and '' 0.90 Crore respectively. In respect of these Joint Operations, the financial information has been incorporated based on data received from the respective operators. Our opinion in respect thereof is solely based on the management certified information.

c) The Company has less than minimum number of Independent Directors required in terms of the provisions contained in the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. These financial statements have been reviewed and recommended to the Board of Directors by the Audit Committee consisting of one Independent Director and subsequently approved by the Board consisting of one Independent Director, who is also not an Independent Women Director. We have been informed that the Independent Directors are appointed by Government of India.

Our opinion is not modified in respect of these matters.

1. As required by the Companies (Auditor''s Report) Order, 2016 (âthe 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 under section 143(5) of the Act, based on our audit as aforesaid, we give in the Annexure II, a report on the directions including additional directions issued by the Comptroller and Auditor General of India (C&AG''), action taken thereon and its impact on the accounts and standalone financial statements of the company.

3. As required by Section 143(3) of the Act, based on our audit, 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.

c) The report on the accounts, dated May 10, 2021 of the Visakh refinery of the Company audited under section 143(8) of the Act by the branch auditors has been provided to us and has been properly dealt with by us in preparing this report.

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

e) In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements comply with the Indian Accounting Standard specified under section 133 of the Act, read with Companies (Indian Accounting Standard) Rules, 2015 as amended.

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 of the directors of the Company are disqualified in terms of provisions contained in the said section;

g) With respect to the adequacy of the internal financial controls with reference to financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure IIIâ.

h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended: 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 and hence we are not required to report as to whether the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements -Refer Note No. 52 to the standalone financial statements read with Para 1,2 and 4 of Key Audit Matters here in above.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note No.53 to the standalone financial statements.

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

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Mar 31, 2019

Independent Auditors'' Report

TO THE MEMBERS OF HINDUSTAN PETROLEUM CORPORATION LIMITED Report on the Audit of the Standalone Ind AS Financial Statements Opinion

We have audited the accompanying standalone Ind AS financial statements of Hindustan Petroleum Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to the financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements"), in which are included the Ind-AS financial statements for the year ended on that date audited by the branch auditor of the Visakh Refinery Located at Visakhapatnam.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

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

Emphasis of Matter

We invite attention to Note No. 62 regarding provision for impairment made to the extent of Rs,95.70 crores towards loans given to consumers under Prime Minister Ujjwala Yojana (PMUY) out of the total outstanding loans of Rs,1,93742 crores, the above impairment has been computed based on the estimates of default as assessed by the management.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report:

1. Evaluation of uncertain direct and indirect tax positions

The Company has material uncertain direct and indirect tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. The Company has disputes pending at various levels of tax authorities over the past several years. As on March 31,2019, the company has total such disputed demands amounting to Rs,8,820.35 crores ( Refer Note No. 2.16 and para (vii) (b) Annexure I of this report.)

Auditors'' Responses

Principal Audit Procedures

- We have evaluated the appropriateness of the design and tested the operating effectiveness of the management''s controls over the tax litigation matters.

- Obtained details of completed tax assessments and demands for the year ended March 31, 2019 from management.

- We reviewed the management''s underlying assumptions in estimating the tax provision and the possible outcome of the disputes. The legal precedences and other rulings were considered in evaluating management''s position on these uncertain tax positions.

- Additionally, we considered the effect of the outcomes of the Appellate Orders received during the year in respect of uncertain tax positions as at April 1, 2018 to evaluate whether any change was required to management''s position on these uncertainties.

- We have verified the orders from tax and appellate authorities for the previous years and relied on management judgments in evaluating the tax provisions for the Current Financial Year.

- Further we have relied upon the management judgments and estimates for possible outflow and opinion of internal experts of the company in relations to such disputed tax positions.

2. Recoverability of pre-deposits relating to tax and non tax matters

As at March 31, 2019, the Company has non-current assets i.e. pre-deposits pertaining to various tax and non-tax matters namely VAT ,excise duty, custom duty etc. with adjudicating authorities amounting to Rs,596.40 crores that are pending for/relating to cases pending for more than 3 years and for which there are no balance confirmations from the respective authorities available on records.

Auditors'' Responses

Principal Audit Procedures

- We have evaluated the appropriateness of the design for recording and tracking the recoverability of pre-deposits pertaining to the old tax and non- tax cases.

- We have discussed and reviewed the nature of the amounts recoverable vis a vis the underlying cases. We further discussed the sustainability of the cases on a sample basis and the likelihood of recoverability or otherwise upon final resolution from the respective authorities.

- We enquired with the management about these cases vis a vis the current position and the efforts taken by the management to recover the deposits placed or obtaining the balance confirmations from the respective authorities

- Further, we have relied on the management estimations and judgmentsâ with reference to inherent uncertainties involved while determining the outcome of these cases.

3. Evaluation of disputed claims against the company under various non-tax matters

The company has disputed claims against it which are pending at various courts/forums and are various stages in the judicial process. The management has exercised significant judgment in assessing the possible outflow in such matters and accordingly an amount of Rs,581.67 crores has been disclosed for which the company is contingently liable while possibility of any outflow in matters having claims amounting to Rs,430.33 crores has been considered remote.

Auditors'' Responses

Principal Audit Procedures

- Read and analysed select key correspondences, internal/external legal opinions/ consultations by management for key disputed non tax matters;

- Reviewed and verified other legal pronouncements wherever available in similar matters in the case of the company/other corporates

- Discussed with appropriate senior management and evaluated management''s underlying key assumptions in estimating the provisions; and

- Assessed management''s estimate of the possible outcome of the disputed cases and relied on the management judgmentsâ in such cases.

4. Assessment for impairment of Investment in Wholly Owned Subsidiaries and various financial assistance provided to them

The Company has wholly owned subsidiaries named ''HPCL Biofuels Ltd'' (HBL) and Prize Petroleum Corporation Ltd (PPCL). PPCL has a wholly owned subsidiary namely Prize Petroleum International Pte Ltd. (the Step-Down Subsidiary / PPIPL), incorporated in Singapore.

(i) HPCL Biofuels Ltd. (HBL)

Since its inception, HBL has not been able to break-even based on which this project was approved. There has been a significant erosion in the net worth of the subsidiary.

Based on this, management assessed that the recoverable amount of the Company''s investment exceeded its carrying value.

The above assessment includes significant estimations pertaining to projections of cash flows arising from sale of sugar, ethanol and co-gen and to make several estimates and assumptions such as Minimum Sales Price, Capability of Repayment of Loans, escalation factors, interest cost, reserves and other operating costs.

(Refer Note no. 60 of the Ind AS Standalone Financial Statements)

Auditors'' Responses

Principal Audit Procedures

- We reviewed the process followed by the Company to assess the valuation of investments with respect to the transactions that took place during the year.

- We analysed impairment tests performed by the management, and verified that the criteria used to perform these tests are consistent with those established in applicable reporting regulations.

- In estimating the impairment of investments, we have reviewed that management has followed the discounting of future cash flows of the revenue streams of HBL from its Cash Generating Unit using a pretax discount rate.

- Further, we have studied the industry specific data pertaining to the products dealt by HBL (Sugar and Ethanol) available in the public domain including the industry outlook published by the credit rating agencies. This data includes Minimum Selling Prices of the sugar, estimated sugar recovery etc.

- We considered the adequacy of the disclosures in the financial statements in respect of this matter.

(ii) Prize Petroleum International Pvt Ltd.

HPCL has given corporate guarantee on behalf of PPIPL for obtaining borrowings from a consortium of banks. Due to uncertainty in the exploration and production of oil and gas with reference to its reserves and gas prices, there is a possibility of the corporate guarantee being invoked.

(Refer Note no. 61 of the Ind AS Standalone Financial Statements)

Auditors'' Responses

Principal Audit Procedures

- We reviewed the management estimates and assumptions, especially on Production Profile Scenarios and Gas Prices, in respect of impairment of the Corporate Guarantee, in case of Prize Petroleum International Pte Ltd

- Further, we made enquiries with the technical expert (petroleum engineer) of the subsidiary to substantiate the production profiles of the production blocks running over the future periods

- Further, this assessment exercise was audited by the independent auditor of PPIPL.

- We considered the adequacy of the disclosures in the financial statements in respect of this matter.

Information Other than the Standalone Financial Statements and Auditors'' Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Directors'' Report including Annexures to Directors'' Report, , Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements and our auditor''s report thereon. The Other information is expected to to be made available to us after the date of this Auditors'' report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Management''s Responsibility for the Standalone Financial Statements

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

The Board of Directors are responsible for overseeing the Company''s financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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

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

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

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

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

- Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

Other Matter

a) We did not audit the financial statements of 1 branch viz Visakh Refinery included in the stand alone financial statements of the Company whose financial statements reflect total assets of Rs,14,350.38 crores as at 31^st March 2019 and the total revenue of Rs,50,718.87 crores for the year ended on that date, as considered in the standalone financial statements of this branch have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of branches, is based solely on the report of such branch auditors.

b) We refer to note no. 49 in connection with 21 Un-incorporated Jointly Controlled Entities (''UJCEs'') involved in exploration activities, of which majority of UJCEs are under relinquishment. The standalone Ind AS financial statements include Company''s proportionate share in Assets and Liabilities as on March 31, 2019 and Income and Expenditure for the year ended on March 31, 2019 amounting to Rs,3.13 crores and Rs,14.89 crores, Rs,1.44 crores and Rs,3.78 crores respectively. In respect of these UJCEs, the audited accounts are not available with the Company. The financial information has been incorporated based on data received from the respective operators.

c) The standalone Ind AS financial statements of the Company for the year ended March 31, 2018 were audited by the joint auditors of the Company, one of which is the predecessor audit firm, and have expressed an unmodified opinion dated May 22, 2018 on such financial statements.

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, based on our audit 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.

c) The report on the accounts, dated May 17, 2019 of the Visakh refinery of the company audited under section 143(8) of the Act by the branch auditors has been provided to us and has been properly dealt with by us in preparing this report.

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

e) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2015 as amended.

h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended. 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 and hence we are not required to report as to whether the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements-Refer Note No.55 to the standalone Ind-AS Financial Statements read with Para 1 and 3 of Key Audit Matters here in above.

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.

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

i. In respect of the Company''s fixed assets :

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

b) The Property Plant and Equipment (PPE) of the Company, other than LPG cylinders and pressure regulators with customers are physically verified by the Management in a phased program of three 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) On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records , title deeds/Lease deeds for immovable properties held as Property Plant & Equipment are not available with the Company in the case of 6 properties with Gross block Rs,0.30 crores and in the case of 19 properties with Gross block Rs,2.49 crores where property tax receipts are held by the Corporation to substantiate the title to such properties. In other cases, based on verification of records on random basis, the title deeds are held in the name of the company. For the purpose of reporting under this clause, where ever title deeds of immovable properties were not available, we have relied on other substantive evidences like allotment letters, noting in municipal / revenue records conveying title to the Company over the property.

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. We are informed 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 the 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, Goods

& 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 on March 31, 2019 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:

Statute	Forum pending i.e. STAT/High Court etc.	Period to which the amount relates	Amount (Rs, in Crores)
Customs	Appellate Authority*	2007-2013	4.56
	Tribunal**	1998-2013	763
	Customs Total		12.19
Central Excise	Appellate Authority*	1994-2018	1736
	Tribunal**	1994-2018	522.41
	High Court	1994-2017	6.11
	Board of Revenue	1999-2013	0.05
	Adjudicating Authority***	2004-2014	0.81
	Central Excise Total		546.75
Sales Tax/Entry Tax	Appellate Authority*	1976-2017	2,059.32
	Tribunal**	1976-2016	4,969.63
	High Court	1979-2017	1,015.13
	Board of Revenue	1999-2014	2.75
	Adjudicating Authority***	1976-2016	18.92
	Supreme Court	2002-2004	6.68
	Sales Tax/Entry Tax Total		8,072.44
Service Tax	Appellate Authority*	2005-2018	1.38
	Tribunal**	2002-2015	92.66
	High Court	1981-2013	3.75
	Supreme Court	2004-2012	3.25
	Service Tax Total		101.04
Income tax	Tribunal**	2006-11	8793
	Income tax Total		8793
	Grand Total		8,820.35

* 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 Company, 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 Company or on the Company 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 question of reporting whether the payment of managerial remuneration by the Company 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 question 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 standalone Ind AS financial statements as required by the applicable Indian 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.

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

Sr.

No.

Areas to be examined

Observations/findings

Whether the Company has system in place to process all the accounting transactions through IT systemRs, If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.

As per the information and explanations furnished to us, the company has an Enterprise Resource Planning ERP system in the name of "JD Edwards (JDE)" to process the accounting transactions. There are large number of other applications including workflow applications and portals to address specific requirements. Most of these applications/modules have real time integration with ERP (JDE) system for smooth accounting / recording of transactions. As a part of our general review of IT controls we have carried out the review of major controls in existence in the applications with regard to integrity of data flowing to JDE. Basis our sample verification nothing significant has come to our attention that causes us to believe that there are material gaps pertaining to IT controls.

Further, we have also relied on the exercise conducted by the management with the help of consultant to check the design of internal controls, and its operating effectiveness including the IT systems and control.

Further management has conducted the system audit with the help of the consultants which has not reported any significant gaps.

Apart from above there are few other accounting process being undertaken through excel spreadsheet like inventory valuation, interest calculation of treasury funding activities, matching of open credits in the case of Trade accounts receivables, matching of suppliers accounts wherein sufficient controls for data integrity have been observed in our review of general IT controls. There is however a need of automation of such processes to ensure complete data integrity.

Whether there is any restructuring of an existing loan or cases of waiver/ write off of debts/loans/interest etc. made by a lender to the company due to the company''s inability to repay the loadâs, If yes, the financial impact may be stated.

No such instances have been noticed during the financial year 2018-19.

3.	Whether funds received/receivable	As per the information and explanations furnished to us, the funds received
	for specific schemes from Central/	/receivable by the company for specific schemes from Central/State
	State agencies were properly	agencies to the extent these are recorded in the books of accounts and
	accounted for/utilized as per its term	records produced before us, were properly accounted. We are informed
	and conditioners, List the cases of	that in the case of schemes of Central Government i.e. PMUY,DBTL,
	deviation	other subsidies, etc claims for reimbursements duly certified by Chartered Accountants are filed with Petroleum Planning and Analysis cell (PPAC) for reimbursement and hence these are not considered as Grants and no utilization certificates are filed. In the case of certain state specific scheme, utilization certificates are furnished by the company separately to the respective agencies. During the course of our test checks of the records available at Head Office of the company in respect of such claims for reimbursement recorded in the books which are approved by PPAC, nothing has come to our notice that causes us to believe that there has been any violation of terms and conditions in relation to these claims. The separate audit of these claims filed with PPAC is carried out by separate firms of Chartered Accountants.

Referred to in paragraph 3(g) under "Report on Other Legal and Regulatory Requirements" of our report of even date

Report on the Internal Financial Controls with reference to Financial Statements under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 ("the Act")

We have audited the Internal Financial Controls with reference to Financial Statements of HINDUSTAN PETROLEUM CORPORATION LIMITED (''the Company'') as of March 31, 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

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

Auditors'' Responsibility

Our audit of Internal Financial Controls with reference to Financial Statements includes assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s Internal Financial Controls with reference to Financial Statements.

Meaning of Internal Financial Controls with reference to Financial Statements

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

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

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

Opinion

In our opinion, the Company has, in all material respects, an adequate Internal Financial Controls with reference to Financial Statements and such Internal Financial Controls with reference to Financial Statements were operating effectively as on March 31, 2019, based on the criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matters

Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operating effectiveness of the Internal Financial Controls with reference to Financial Statements insofar as it relates branch office of the Company viz. Visakh Refinery audited by the branch auditor, appointed under section 143(8) of the Act is based on the report of the branch auditor which has been sent to us and has been properly dealt with by us in preparing this report.

For R. Devendra Kumar & Associates For M.P Chitale & Co.

Chartered Accountants Chartered Accountants

Firm Registration No.:114207W Firm Registration No.:101851W

Sd/- Sd/-

Devendra Kumar Gupta Anagha Thatte

Partner Partner

Membership No.009032 Membership No.: 105525

Place : New Delhi

May 20, 2019

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of HINDUSTAN PETROLEUM CORPORATION LIMITED (âthe Companyâ), which comprise the Balance Sheet as on March 31, 2018, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity 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 Ind AS financial statements of the branch office viz. Visakh Refinery, audited by the branch auditor, whose report dated May 18, 2018 has been considered in preparing this report.

Managementâs Responsibility

The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended.

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

Auditorsâ Responsibility

Our responsibility is to express an opinion on these standalone Ind AS 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS 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 Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS 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 Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS 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 on March 31, 2018, and its profit (including other comprehensive income), the changes in equity and its cash flows for the year ended on that date.

Other Matter

We refer to note no. 49 in connection with 21 Un-incorporated Jointly Controlled Entities (âUJCEsâ) involved in exploration activities, of which majority of UJCEs are under relinquishment. The standalone Ind AS financial statements include Companyâs proportionate share in Assets and Liabilities as on March 31, 2018 and Income and Expenditure for the year ended on March 31, 2018 amounting to Rs.22.62 crores and Rs.16.90 crores, Rs.10.15 crores and Rs.7.63 crores respectively. In respect of these UJCEs, the audited accounts are not available with the Company. The financial information has been incorporated based on data received from the respective operators.

The standalone Ind AS financial statements of the Company for the year ended March 31, 2017 were auditedby the joint auditors of the Company, one of which is the predecessor audit firm, and have expressed an unmodified opinion dated May 26, 2017 on such financial statements.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), 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 (including other comprehensive income), the Statement of changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

e) In our opinion, the attached standalone Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standard) Rules, 2015 as amended;

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 of the Company are disqualified in terms of provisions contained in the said section;

g) With respect to the adequacy of the Internal Financial Controls with reference to Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure III; and

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 55 to the standalone Ind AS 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 âReport on Other Legal and Regulatory Requirementsâ of our report of even date

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

(b) The Property Plant and Equipment 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 Property Plant and Equipment, 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 as on	Net Block as on	Remarks
	Cases	March 31, 2018	March 31, 2018
Freehold Land	3	0.02	0.02	Title deeds / other evidence not available for verification
Leasehold Land	1	0.01	-	Lease deed / other evidence not available for verification

For the purpose of reporting under this clause, where ever title deeds of immovable properties were not available, we have relied on substantive evidences such as property tax payment receipts, noting in municipal records conveying title to the Company over the property

(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. We are informed 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 Companyâs 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 the 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, Employeesâ State Insurance, Income-tax, Sales Tax, Service Tax, Goods & 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 on March 31, 2018 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:

Statute	Forum pending	Period to which amount relates	Amount (Rs. in Crores)
Customs	Appellate Authority¹ Tribunal² Total	2007-2013 1998-2013	2.15 9.64 11.79
Central Excise	Appellate Authority*	1994-2017	17.74
	Tribunal**	1994-2017	353.56
	Adjudicating Authority³	2004-2014	26.39
	Revision Authority	1999-2012	1.10
	High Court	1994-2014	4.76
	Total		403.55
Sales Tax/Entry Tax	Board of Revenue	1999-2014	5.05
	Appellate Authority*	1976-2016	1,685.32
	Tribunal**	1976-2015	2,592.87
	Adjudicating Authority***	1976-2015	1,679.52
	High Court	1979-2015	956.96
	Objection Hearing Authority	2008-2012	17.89
	Supreme Court	2002-2004	6.68
	Total		6,944.29
Service Tax	Appellate Authority*	2005-2015	1.59
	Tribunal**	2002-2015	75.91
	High Court	1981 - 2013	3.75
	Total		81.25
Income tax	Tribunal**	2006-2011	0.17
	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 Company, 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 Company or on the Company 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 question of reporting whether the payment of managerial remuneration by the Company 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 question 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 standalone Ind AS financial statements as required by the applicable Indian 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.

For G. M. Kapadia & Co. For M. P. Chitale & Co.

Chartered Accountants Chartered Accountants

Firm Registration No.:104767W Firm Registration No.: 101851W

Sd/- Sd/-

Atul Shah Anagha Thatte

Partner Partner

Membership No.: 039569 Membership No.: 105525

Place : New Delhi

Dated : May 22, 2018

Mar 31, 2017

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of HINDUSTAN PETROLEUM CORPORATION LIMITED (âthe Companyâ), which comprise the Balance Sheet as on March 31, 2017, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information in which, is incorporated Ind AS financial statements of Visakh Refinery, audited by the branch auditor, whose report dated May 22, 2017 has been considered in preparing this report.

Managementâs Responsibility for the Standalone Ind AS Financial Statements

Auditorsâ Responsibility

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 on March 31, 2017, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Other Matter

We refer to note no. 56 in connection with 21 Un-incorporated Jointly Controlled Entities (UJCEs) involved in exploration activities, of which majority of UJCEs are under relinquishment. The attached standalone Ind AS financial statements include Companyâs proportionate share in Assets and Liabilities, Income and Expenditure amounting to Rs.20.02 crores and Rs.12.29 crores, Rs.Nil crores and Rs.15.25 crores respectively, as on March 31, 2017. In respect of these UJCEs, the audited accounts are not available with the Company. The financial information has been incorporated based on un-audited Ind AS 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

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 (including other comprehensive income), the Cash Flow Statement and the Statement of changes in Equity dealt with by this Report are in agreement with the books of account;

(e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standard) (Amendment) Rules, 2016;

(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 Auditorâs Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 as amended by the Companies (Audit and Auditors) Rules, 2017, 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 standalone Ind AS financial statements - Refer Note 68 to the standalone Ind AS 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;

(iii) There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company except minor delay involving sum of Rs.3,430, which has been regularized post the date of balance sheet; and

(iv) The Company has provided requisite disclosures in the standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8^th November, 2016 to 30^th December, 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the management - Refer Note 72 to the standalone Ind AS financial statements.

Annexure I - referred to in paragraph 1 under âReport on Other Legal and Regulatory Requirementsâ of our report of even date

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

Rs. / Crores

Particulars	No. Of Cases	Gross Block as on March 31, 2017	Net Block as on March 31, 2017	Remarks
Freehold Land	3	0.02	0.02	Title Deeds not available for verification

For the purpose of reporting under this clause, the title deeds of immovable properties were not available but substantial evidence like property tax payment receipts, noting in municipal records conveying the title of the Corporation over the property have not been considered.

(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 Companyâs 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, Employeesâ 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 on March 31, 2017 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:

Statute	Forum pending	Amount in Crores	Period to which amount relates
Customs	Tribunal**	12.45	1998 to 2011
	Appellate Authority*	2.47	2007 to 2013
	Total	14.92
Central Excise	Tribunal**	344.60	1994 to 2015
	Adjudicating Authority ***	25.28	2004 to 2014
	Revision Authority	1.09	1999 to 2012
	High Court	4.21	1994 to 2008
	Appellate Authority*	15.26	1996 to 2016
	Total	390.43
Sales tax/ Entry tax	Board of Revenue	4.99	1999 to 2014
	Appellate Authority*	1,809.73	1976 to 2015
	Adjudicating Authority ***	4,100.62	1985 to 2014
	Supreme Court	6.68	2002 to 2004
	High Court	854.25	1979 to 2014
	Objection Hearing Authority	17.89	2008 to 2012
	Tribunal**	2,775.63	1985 to 2014
	Total	9,569.79
Service Tax	Appellate Authority*	1.16	2005 to 2015
	Tribunal**	78.81	2002 to 2015
	High Court	3.75	1981 to 2013
	Total	83.72
Income Tax	Tribunal** Total	0.17 0.17	2006 to 2011

* 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

(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 except suspected irregularity detected by the management of Rs.5.60 Crores involving employees of the Corporation. The management has taken appropriate steps and the matter is under investigation.

(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 question 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 question 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 Ind AS financial statements as required by the applicable Indian 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.

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

Chartered Accountants Chartered Accountants

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

Sd/- Sd/-

Rajen Ashar A.K. Pradhan

Partner Partner

Membership No.: 048243 Membership No.: 032156

Place: New Delhi

Dated : 26^th May 2017

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 Â 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 Ãthe 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 Ãthe 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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