1.  We have audited the attached Balance Sheet of BHARAT PETROLEUM
 CORPORATION LIMITED as at 31st March 2011 and the Profit and Loss
 Account 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 (''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) 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.
 
 c) The Balance Sheet and the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account.
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the 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 as per Notification No. GSR
 829(E) dated October 21, 2003 issued by the Department of Company
 Affairs.
 
 f) Without qualifying our opinion, we invite attention to :
 
 i) Note 4 of Schedule X – Part B, 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) Notes 6 and 7 of Schedule X – Part B, Notes to Accounts, regarding
 the provision for post retirement benefit schemes and related impact on
 provision for current tax, where the Company''s position is supported by
 legal advice and based on reasonable certainty of obtaining necessary
 approvals from tax authorities.
 
 g) 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, 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 Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 (Referred to in Paragraph (3) of our report of even date on the
 accounts of BHARAT PETROLEUM CORPORATION LIMITED for the year ended
 31st March 2011.)
 
 (i) In respect of fixed assets
 
 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 plants.
 
 b) The Company has carried out physical verification of fixed assets,
 other than LPG cylinders with customers, in accordance with the
 verification programme and the frequency of verification is reasonable.
 According to information and explanations given to us, no material
 discrepancies have been reported on such verification.
 
 c) In our opinion, the disposals of fixed assets during the year are
 not of a significant value and do not affect the going concern
 assumption.
 
 (ii) In respect of inventories:
 
 a) The inventories of finished goods, stores, spares parts and raw
 materials, except those lying with third parties and in transit, have
 been verified by the management at reasonable intervals. In respect of
 inventories lying with third parties, these have been confirmed by them
 and the inventory in transit has been verified with subsequent
 receipts.
 
 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 were generally 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 and no material discrepancies were noticed on physical
 verification as compared to the records of inventories.
 
 (iii) Based on the audit procedures applied by us and according to the
 information and explanations given to us, the company has not granted
 or taken any loans, secured or unsecured to / from companies, firms or
 other parties covered in the register maintained under section 301 of
 the Companies Act, 1956. Therefore, the provisions of sub-clause (b) to
 (d), (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, having regard to the explanation that some of the items
 purchased are of a special nature and suitable alternative sources do
 not exist for obtaining comparable quotations, there is an 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. During the course
 of our audit, we have not observed any continuing failure to correct
 major weaknesses in the internal control system.
 
 (v) In respect of transactions entered in the register maintained under
 section 301 of the Companies Act, 1956:
 
 a) In our opinion and according to the information and explanation
 given to us, there were no transactions exceeding the value of Rs. five
 lakhs in case of any party that need to be entered in the Register
 maintained in pursuance of section 301 of the Companies Act, 1956.
 
 b) As there are no transactions exceeding the value of Rs. five lakhs
 in case of any party that need to be entered in the Register maintained
 pursuant to section 301 of the Companies Act, 1956, sub-clause (b) of
 sub-para (v) of Para 4 of the Order regarding reasonability of price at
 which such transactions have been entered is not applicable.
 
 (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, the provisions of section 58A and 58AA of the
 Companies Act, 1956 and the rules framed there under.
 
 (vii) In our opinion, the company has an adequate internal audit system
 commensurate with the size and the nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956 and are of the opinion that prima facie the prescribed
 records have been kept and maintained. We have not made a detailed
 examination of these records.
 
 (ix) According to the information and explanations given to us, in
 respect of statutory and other dues:
 
 a) According to the records of the Company, the company has been
 generally regular in depositing undisputed statutory dues including
 Provident fund, Investor Education and Protection Fund, Employees''
 State Insurance Fund, Income tax, Sales tax, Wealth tax, Service tax,
 Custom duty, Excise duty, cess and any other statutory dues, with
 appropriate authorities during the year. According to the information
 and explanations given to us, no undisputed amounts payable in respect
 of Income tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and
 Excise Duty were outstanding, at the year end for a period of more than
 six months from the date they became payable.
 
 b) The details of disputed dues of sales tax, income tax, customs duty,
 wealth tax, service tax, excise duty, cess, which have not been
 deposited, are given in Annexure I.
 
 (x) The company does not have any accumulated losses at the end of the
 financial year. The Company has not incurred any cash losses during the
 financial year covered by our audit and in the immediately preceding
 financial year.
 
 (xi) According to the information and explanations given to us and
 based on the documents and records produced before us, the Company has
 not defaulted in repayment of dues to Financial Institutions / Banks.
 
 (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 and other securities.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the nature of activities of the Company does not attract
 any special statute applicable to chit fund and nidhi/ mutual benefit
 fund/ societies.
 
 (xiv) (a) The Company does not deal or trade in shares, securities,
 debentures and other investments.
 
 (b) The shares, securities, debentures and other investments are held
 by the Company in its own name except to the extent of the exemption
 granted under section 49 of the Companies Act, 1956.
 
 (xv) The Company has given guarantees for loans taken by others from
 banks or financial institutions, aggregating to Rs.1608.76 crores where
 the terms and conditions, according to the information and explanations
 given to us, and in our opinion, are not prima facie prejudicial to the
 interests of the Company.
 
 (xvi) In our opinion, the term loans obtained during the year, prima
 facie, have been applied for the purpose for which the loans were
 raised.
 
 (xvii) According to the information and explanations given to us, based
 on an overall examination of the Balance Sheet and Cash Flows of the
 Company, we report that the Company has not utilized funds raised on
 short-term basis for long-term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties covered in the register maintained under section 301 of the
 Companies Act 1956.
 
 (xix) The Company has created security / charge on the debentures
 issued during the year.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) As represented to us by the management and based on our
 examination in the course of our audit, except for the instance at (a)
 below, no material fraud on or by the Company has been noticed or
 reported during the year.
 
 a) The Company''s bank had debited Rs. 29.03 Lacs related to forged
 cheques and subsequently reversed the amount based on the Company''s
 clarifications. There was no financial loss due to this instance.
 
                                                 (Amount in Rs Crores)
 
 
 Nature of Statute / 
 Nature             Period Block    Forum where Dispute is pending
 of Dues
                                 Supreme   High   Appellate  Appellate  
                                 Court     Court  Tribunal*  Authority**
 
 Customs Act, 1962 
 (Customs             1995-2000                    57.32
 Duty Including 
 Penalty &
 Interest, wherever 
 applicable)          2000-2005                    17.35        0.50
 
                      2005-2010                                 0.01
 
 Customs Duty Total                 -        -     74.66        0.51
 
 Central Excise Act,  
 1944                 1985 to  
                      1990                                      0.14
 (Excise Duty 
 Including
 Penalty & Interest, 
 wherever             1990 to 1995                              0.43
 applicable)
                      1995 to 2000                 27.93        0.56
 
                      2000 to 2005 507.99         282.17       87.25
 
                      2005 to 2011  53.08         328.63       43.96
 
 Excise Duty Total                 561.06   -     638.73      132.34
 
 Sales Tax/ VAT 
 Legislations        1980 to 1985          0.04
 (Sales Tax 
 Including Penalty &
 Interest, wherever 
 applicable)         1985 to 1990    0.75  4.10     0.01       21.97
 
                     1990 to 1995         33.37     2.45       12.95
 
                     1995 to 2000         27.96   200.73      889.65
 
                     2000 to 2005    0.23 354.85    7.94    1,847.37
 
                     2005 to 2011          26.21   55.69       58.44
 
 Sales Tax Total                     0.98 446.52  266.83    2,830.37
 
 Income Tax Act, 
 1961               1990 to 1995            6.73    0.22
 (Income Tax 
 including
 
 Penalty & 
 Interest, 
 wherever           1995 to 2000            0.26    0.48        1.35
 applicable)
 
                    2000 to 2005                    5.51          -
 
                    2005 to 2011                                0.03
 
 Income Tax Total                      -    6.99    6.21        1.38
 
 Finance Act, 1994  2000 to 2005                                0.36 
 
 (Service Tax)      2005 to 2011                    1.62        0.94
 
 Service Tax Total                     -       -    1.62        1.31
 
 Grand Total                       562.04  453.51 988.06    2,965.90
 
 
 Nature of the
 Statue / Nature
 of Dues           Adjudicating      Joint     Board of    Grand Total
                   Authority***     Secretary, Revenue
                                      MDF
 
 Customs Excise Act, 
 1944                   3.25                                  60.57
 
                        0.32                                  18.16
 
                                                               0.01
 
 Custom Duty Toatl      3.57           -           -          78.74
 
                                                               0.14
 
                                                               0.43
 
                                                              28.50
 
                       84.20           0.21                  961.81
 
                       10.68                                 436.34
 
 Excise Total          94.88           0.21        -       1,427.22
                          
                                                               0.04
 
                        6.17                      0.02        33.02
 
                                                              48.77
 
                       10.26                     13.88     1,142.47
 
                      344.13                               2,554.53
 
                       28.46                                 168.80
 
                      389.02           -         13.89     3,947.62
 
                        -                            -         6.95  
 
                        -              -             -         2.09 
 
                        -              -             -         5.51 
 
                        -              -             -         0.03
 
                        -              -             -        14.58
 
                       0.17                                    0.54
  
                                                               2.57
 
                       0.17            -             -         3.11
 
                     487.64           0.21       13.89     5,471.26
 
 * Appellate Tribunal includes Sales Tax Tribunal, CESTAT and ITAT.
 
 ** Apellate Authority includes Commissioner Appeals, Assistant
 Commissioner Appeals, Deputy Commissioner Appeals, Joint Commissioner
 Appeals and Deputy Commissioner Commercial Taxes Appeals.
 
 *** Adjudicating Authority includes Collector of Sales Tax, Sales Tax
 Officer and Deputy Commissioner Sales Tax, Joint / Deputy/ Additional
 Commissioner of Commercial Taxes
 
 For and on behalf of                      For and on behalf of
 
 B.K.KHARE AND CO.                         K.VARGHESE AND CO.
 
 Chartered Accountants                     Chartered Accountants
 
 FR No: 105102W                            FR No:004525S
 
 
 Sd/-                                          Sd/-
 
 Padmini Khare Kaicker                     K.Varghese
 
 Partner                                   Partner
 
 Membership No: 44784                      Membership No: 20674
 
 Delhi                                     Delhi
 
 Dated: 30th May 2011                      Dated: : 30th May 2011