Gujarat State Petronet Ltd

To,

The Members

Gujarat State Petronet Limited

Gandhinagar

1. We have audited the attached Balance Sheet of Gujarat State Petronet limited,Gandhinagar as at 31^st March, 2011 and also the Profit & Loss Account forthe year ended on that date annexed thereto and Cash Flow Statement for the year ended onthat date. These financial statements are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. 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.

3. As required by the Companies (Auditors’ Report) Order, 2003 issued by theCentral Government of India in terms of section 227 (4A) of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 ofthe said order.

4. Further to our comments in the Annexure referred to in paragraph above, we reportthat:

a. We have obtained all information and explanations which, to the best of ourknowledge and belief were necessary for the purpose of our audit;

b. In our opinion proper books of accounts, as required by law have been kept by theCompany so far as it appears from our examination of the books;

c. The Balance Sheet and Profit & Loss Account and Cash Flow Statement dealt withby the report are in agreement with the Books of Accounts.

d. In our opinion, the Balance Sheet and Profit & Loss Account and Cash FlowStatement comply with the Accounting Standards referred to in sub section (3C) of section211 of the Companies Act, 1956.

e. As the Company is a Government Company, in terms of notification no. G.S.R. 829(E)dated 21^st October, 2003, issued by Department of Company Affairs, Ministry ofFinance, the clause (g) of subsection (1) of section 274 of the Companies Act, 1956 is notapplicable.

f. In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with the accounting policies and notes onaccounts give the information required by the Companies Act, 1956 in the manner sorequired and give a true and fair view, in conformity with the accounting principlesgenerally accepted in India.

I] In case of Balance Sheet, of the state of affairs of the Company as at 31^stMarch, 2011;

II] In case of Profit & Loss Account, of the Profit for the year ended on that dateand;

III] In case of Cash Flow Statement, of the cash flow for the year ended on that date.

(Referred to in paragraph 3 of our Report of even date on the Accounts of Gujarat StatePetronet Limited, Gandhinagar for the year ended on 31^st March, 2011)

1. a. The Company has maintained proper record showing full particulars, includingquantitative details and situation of fixed assets.

b. We are informed that during the year fixed assets were physically verified by themanagement and no material discrepancies were noticed between the books records andphysical existence of assets.

c. No substantial part of fixed assets have been disposed off during the year as wouldaffect going concern status of the company.

2. There was no stock of finished goods and raw materials; hence the points relating tophysical verification, procedure of physical verification discrepancies noticed on suchverification and valuation thereof do not arise. Further, we are informed that the stockof stores, spare parts etc. were physically verified by the management and that nomaterial discrepancies were noticed.

3. (a&b) The Company has neither granted nor taken any loans from companies, firmsor other parities listed in the Register maintained under section 301 of the CompaniesAct, 1956 or to a Company under the same management. Therefore, requirement of subclause(b),(c),(d) and (f) of clause (iii) of the order are not applicable to the Company.

4. In our opinion the Company has an adequate Internal Control System commensurate withthe size of the Company and nature of its business with regard to purchases of inventory& fixed assets and for sale of goods & services. During the course of audit, wehave not observed any major weakness in the internal controls.

5. a There are no transactions that need to be entered into register in pursuance ofsection 301 of the Act. Therefore, requirement of sub-clause (b) of clause (v) of theorder is not applicable to the Company.

6. In our opinion and according to information and explanation given to us, the Companyhas not accepted deposits from the public during the year 2010-2011 within the meaning ofsection 58A, 58AA and other relevant provisions of the Act.

7. Internal Audit of the Company is entrusted to the firm of Chartered Accountants. Thesystem is commensurate with the size and nature of the activities of the Company.

8. As informed to us the maintenance of cost records has not been prescribed by theCentral Government to the Company pursuant to Rules made by the Central Government for themaintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

9. (a) According to the information and explanation given to us, there are noundisputed dues payable in respect of Provident Fund, Investor Education & ProtectionFund, Employees State Insurance, Excise Duty, Cess and any other statutory dues which areoutstanding as at 31^st March, 2011 for a period of more than six months fromthe date they became payable.

(b) The details of service tax & income tax not deposited on account of dispute isas per the clause no. (c),(d),(e),(f) & (g) of point no.2 of the notes on accounts.

10. The Company has been registered for a period for more than five years and it has noaccumulated losses. The Company has not incurred cash losses in the period under audit andin the immediately preceding financial year Therefore, the requirement of clause (x) ofparagraph 4 of the Order is not applicable to the Company.

11. According to the records of the Company examined by us and on the basis ofinformation and explanations given to us the Company has not defaulted in repayment ofdues to a financial institution or bank or debenture holders.

12. As per the information and according to the explanations given to us the Companyhas not granted any loans & advances on the basis of security by way of pledge ofother securities, and therefore requirement of clause (xii) of pars 4 of the order is notapplicable to the Company.

13. The Company is not a Chit Fund, Nidhi or Mutual Benefit Society. Hence, therequirement of clause (xiii) of paragraph 4 of the order is not applicable to the Company.

14. According to the information and explanation given to us, the Company is notdealing in shares, securities, debentures and other investments and therefore requirementof clause (xiv) of pars 4 of the order is not applicable to the Company.

15. The Company has not given any guarantee for loans taken by the others from banks orfinancial institutions.

16. The term loans obtained were applied for the purpose for which the loans wereobtained.

17. No funds raised for short term requirements have been used for long-terminvestment.

18. During the year under audit, the Company has not made any preferential allotment ofshares to parties and companies covered in the Register maintained under section 301 ofthe Act.

19. During the year under audit, Company has not issued any debenture and thereforerequirement of clause (xix) of the order is not applicable to the Company.

20. During the year under audit, Company has not raised any money by way of publicissue and therefore the requirement of clause (xx) of paragraph 4 of the order is notapplicable to the Company.

21. According the information and explanation given to us, a fraud on or by the Companyhas not been noticed or reported during the period under audit.