Indian Oil Corporation Ltd

Auditors’ Report to the Shareholders

We have audited the attached Balance Sheet of Indian Oil Corporation Limitedas at 31st March, 2011 and the Profit and Loss Account and also the Cash Flow Statementfor the year ended on that date annexed thereto, in which are incorporated accounts of thebranches audited by the Branch Auditors whose reports have been considered in preparingthis report. These financial statements are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

We conducted our audit in accordance with the auditing standards generally accepted inIndia, which require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by the 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 (Auditors’ Report) Order, 2003 as amended by theCompanies (Auditors’ Report) (Amendment) Order 2004 ("the Order") issued bythe Central Government of India in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraph 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to above, we 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 the books and proper returns adequatefor the purposes of our audit have been received from the branches not visited by us;

c) The Branch Auditors’ Reports have been forwarded to us and have beenappropriately dealt with while preparing our report;

d) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account and with the audited returns fromthe branches;

e) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt 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 CompaniesAct, 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) We invite attention, without qualifying our report, to Note No. 21 regardingimpairment loss wherein, we have relied on the estimates and assumptions made by thecompany in arriving at recoverable value of assets.

h) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts, read in conjunction with the Significant AccountingPolicies (Schedule ‘Q’), Notes on Accounts (Schedule ‘R’) and otherschedules (‘S’ to ‘X’), give the information required by the CompaniesAct, 1956 in the manner so required and give a true and fair view in conformity withaccounting principles generally accepted in India:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2011;

ii. In the case of the Profit and Loss Account, of the profit for the year ended onthat date; and

iii. In the case of the Cash Flow Statement, of the cash flow for the year ended onthat date.

ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in paragraph 1 of our Report of even Date)

Based upon the information and explanations furnished to us and the books and recordsexamined by us in the normal course of our audit, we report that to the best of ourknowledge and belief :

(i) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of Fixed Assets.

The Fixed Assets of the Company, other than LPG cylinders and pressure regulators, arephysically verified by the Management in a phased programme of three years cycle which, inour opinion, is reasonable having regard to the size of the Company and the nature of itsassets. In our opinion and as per the information given by the Management, no materialdiscrepancies were noticed during such verification.

Fixed assets disposed off during the year were not substantial and, therefore, do notaffect the going concern assumption.

ii) In our opinion, physical verification of inventory has been conducted at reasonableintervals by the management.

In our opinion, the procedures of physical verification of inventory followed by themanagement are adequate in relation to the size of the Company and the nature of itsbusiness.

The Company has maintained proper records of inventory. No material discrepancies havebeen noticed on physical verification between physical stock and book records.

iii) The Company has not taken / granted any loans secured or unsecured from/tocompanies, firms or other parties covered in the register maintained under Section 301 ofthe Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business for purchase of inventory and fixed assets and sale of goods andservices. We have not observed any major weakness in the internal controls during thecourse of audit.

v) In our opinion and according to the information and explanations given to us, thereare no transactions made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 of the Companies Act, 1956 exceeding the value of Rupees fivelakhs in respect of any party during the year.

vi) In our opinion and according to the information and explanations given to us, theCompany has complied with the directives issued by the Reserve Bank of India and theprovisions of Section 58A and 58AA or any other relevant provisions of the Companies Act,1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the depositsaccepted from the public. In respect of orders passed by the court, the same have beencomplied with.

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

viii) We have broadly reviewed the books of account maintained by the company pursuantto the order made by the Central Government for the maintenance of cost records underSection 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. We have not however,made a detailed examination of these records.

ix) A) According to the information and explanations given to us and on the basis ofour examination of the books of account, the Company is generally regular in depositingwith appropriate authorities undisputed statutory dues including Provident Fund, InvestorEducation and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax,Service Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory duesapplicable to it.

According to the records examined by us and information and explanations given to us,no undisputed dues payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax,Customs Duty, Excise Duty, Investor Education And Protection Fund And Cess were inarrears, as at 31st March, 2011 for more than six months from the date they becamepayable.

B) The details of dues of Sales Tax, Service Tax, Income Tax, Customs Duty, Wealth Tax,Excise Duty and Cess, which have not been deposited on account of any dispute are given inthe Annexure to this report.

x) The Company neither has any accumulated losses as on 31st March, 2011, nor it hasincurred any cash loss during the financial year ended on that date or in the immediatelypreceding financial year.

xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to a financial institution, bank ordebenture holders.

xii) The Company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

xiii) The Company is not a chit fund or a Nidhi/Mutual benefit fund/society.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments.

xv) In our opinion, in respect of the guarantee given by the company for the loanstaken by others from a bank, the terms and conditions thereof are not, prima facie,prejudicial to the interest of the Company.

xvi) On the basis of review of utilization of funds pertaining to term loans on overallbasis and related information as made available to us, the term loans taken by the Companyhave been utilized for the purposes for which they are obtained.

xvii) On the basis of review of utilization of funds, which is based on overallexamination of the balance sheet of the Company, related information as made available tous and as represented to us by the management, funds raised on short-term basis have notbeen used for long-term investments.

xviii) The Company has not made any preferential allotment of shares during the year.

xix) The Company has created necessary securities or charge as per the debenture trustdeed in respect of debentures issued and outstanding at the year end.

xx) The Company has not raised any money by way of public issue during the financialyear.

xxi) As represented to us by the management and based on our examination of the booksand records of the Company in accordance with the generally accepted auditing practices inIndia, we have neither come across any material fraud on or by the Company noticed orreported during the year nor we have been informed of any such case by the management thatcauses the financial statements to be materially misstated.

REPORTING AS PER COMPANIES (AUDITORS' REPORT) ORDER 2003 (DISPUTED CASES)