Container Corporation Of India Ltd

To the Members of

Container Corporation of India Limited

We have audited the attached Balance Sheet of Container Corporation of India Limitedas at 31st March,2010, and the Profit & Loss Account and also the Cash FlowStatement of the company for the year ended on that date annexed thereto, in which areincorporated the accounts of six regions audited by respective branch auditors appointedby the Comptroller and Auditor General of India, relied upon by us and the accounts ofNorthern Region, North Central Region and Corporate Office, New Delhi audited by us. Thesefinancial statements are the responsibility of the company's management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

1) As required by the Companies (Auditor's Report) Order, 2003, as amended by theCompanies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government ofIndia in terms of section 227 (4A) of the Companies Act, 1956, and on the basis of suchexamination of the books and records of the Company as we considered appropriate and theinformation and explanations given during the course of audit and after considering thereports of branch auditors, we enclose in the Annexure a statement on the mattersspecified in Paragraphs 4 and 5 of the said Order.

2) Attention is drawn to Note Nos. 2(d) and 5 of Schedule 11. The company has madeprovision for Income Tax for the year after considering tax deduction of Rs. 25.93 croresin respect of new Inland Container Depots (Inland Ports). In earlier years the same hasnot been allowed by the tax authorities and the COD instead of giving permission to pursuethe appeal before the Hon'ble High Court has advised the company and Income tax departmentto resolve the matter administratively and revert back to it if this mechanism fails.

3) Further to our comments in the Annexure referred to in paragraph 1 above, we reportthat:

i) Sale/Lease Deeds in respect of Land & Buildings valuing Rs. 1.45 Croreare yet to be executed in favour of the company (Note no. 2, Schedule 3).

ii) Balances of Sundry Debtors, Loans & Advances, Deposits, Sundry Creditors(including Indian Railways) have not been confirmed/reconciled. (Note no. 13, Schedule11).

iii) We are unable to comment on the shortfall, if any, in the value of non-movingstock of stores & spare parts.

(Note no. 21, Schedule 11).

4) We further report that:

a) We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany so far as appears from our examination of those books and proper returns adequatefor the purpose of our audit have been received from the branch auditors in respect of theregions audited by them.

c) The reports of the branch auditors on the accounts of regions audited by them havebeen received and considered by us in preparing this report after making such adjustments,as we considered necessary.

d) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account.

e) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statementdealt with by this report comply with Accounting Standards referred to in sub-section (3C)of Section 211 of the Companies Act, 1956.

f) In terms of Department of Company Affairs GSR 829 (E) dated 21st October 2003,Government Companies are exempt from applicability of provisions of Section 274 (1) (g) ofthe Companies Act, 1956.

g) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts, (subject to our comments in paragraphs 3 (i) above(nofinancial impact) and the observations made in paragraphs 3 (ii) and (iii) above, thefinancial impact of which could not be determined), read together with SignificantAccounting Policies and Notes on Accounts, give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India-

i) in the case of Balance Sheet, of the state of affairs of the company as at 31stMarch, 2010;

ii) in the case of Profit & Loss Account, of the profit for the year ended on thatdate; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE ON THE ACCOUNTS OFCONTAINER CORPORATION OF INDIA LIMITED FOR THE YEAR ENDED 31st MARCH, 2010.

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

(b) As per the information and explanations given to us, fixed assets have beenphysically verified by the management during the year in phased manner, which in ouropinion, is reasonable having regards to the size of the company and nature of FixedAsset. The discrepancies noticed on such verification were not material.

(c) The company has disposed/written off some of its fixed assets during the year.However, in our opinion this has not affected the going concern status of the company.

(ii) (a) The inventory of the company consisting of stores and spare parts has beenphysically verified by the management on test check basis. In our opinion, the frequencyof verification is reasonable.

(b) The procedures of physical verification of inventories followed by the managementare generally reasonable and adequate in relation to the size of the company and thenature of its business.

(c) The company is maintaining proper records of inventory. The discrepancies noticedon verification between the physical stocks and the book records were not material.

(iii) (a) According to the information and explanations given to us, the company hasnot granted any loans, secured or unsecured to companies, firms or other parties coveredin the register maintained under section 301 of the Companies Act, 1956.

(b) Not applicable in view of para (a) above.

(c) Not applicable in view of para (a) above.

(d) Not applicable in view of para (a) above.

(e) The company has not taken any loans, secured or unsecured from companies, firms orother parties covered in the register maintained under section 301 of the Companies Act,1956.

(f) Not applicable in view of para (e) above.

(g) Not applicable in view of para (e) above.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control systems commensurate with the size of the company andthe nature of its business with regard to the purchase of stores and spare parts, fixedassets and for rendering services.

(v) (a) According to the information and explanations given to us, we are of theopinion that there are no contracts or arrangements that need to be entered into theregister maintained under section 301 of the Companies Act, 1956.

(b) Not applicable in view of para (a) above.

(vi) The company has not accepted any deposits from the public in terms of section 58Aand 58AA and other relevant provisions of the Companies Act, 1956.

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

(viii)As informed to us, the Central Government has not prescribed maintenance of costrecords under section 209 (1) (d) of the Companies Act, 1956, in respect of the businessof the company.

(ix) (a) The company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund, investor education and protectionfund, employee's state insurance, income tax, sales tax, wealth tax, service tax, customduty, excise duty, cess and other material statutory dues applicable to it. According tothe information and explanations given to us, the undisputed amounts payable in respectof outstanding statutory dues that were in arrears, as at 31st March,2010 for a period ofmore than six months from the date they became payable are given below:

In addition the company has made provision for property tax payable in respect of itsassets at various locations amounting to Rs. 12.31 Crore upto 31st March,2010, onestimated basis, pending commencement / completion of assessments by the appropriateauthorities.

(b) According to the information & explanations given to us, dues of income tax,sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not beendeposited on account of any dispute are given below:

(x) The company has neither accumulated losses as at the end of the financial year norhas incurred any cash losses during the financial year covered by our audit and also inthe immediately preceding financial year.

(xi) The company has not defaulted in repayment of dues to financial institution orbanks. The company has not issued any debentures.

(xii) The company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

(xiii)In our opinion, the company is not a chit fund or a nidhi mutual benefitfund/society.

(xiv)In our opinion and according to the information and explanations given to us, thecompany is not dealing in shares, securities and other investments. The investments in theshares of joint ventures & subsidiary company are held by the company in its own nameand are not traded. However, letter of allotment/Share Certificates in one jointventure Company costing Rs. 0.05 Crore are not available with the company (Note toSchedule 4).

(xv)The company has given counter indemnity to the guarantor (a joint venture partner)in relation to the guarantor providing payment guarantees to the banks for loans raised bythe joint venture company, to the extent of 26% (the shareholding of the company in jointventure) of the loan and interest outstanding. As at 31st March,2010, the amount of suchcounter indemnity works out to Rs. 167.92 Crore. In our opinion, the terms and conditionsthereof are not prima-facie prejudicial to the interests of the company.

(xvi)The company has not taken any term loans during the year.

(xvii)As the company has not raised any funds on short-term basis, this clause is notapplicable.

(xviii)The company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix)The company has not issued any debentures during the year.

(xx) As the company has not raised money by public issues during the year, this clauseis not applicable.

(xxi)As per the information and explanations given to us, no fraud on or by the companyhas been noticed or reported during the year.