1.  We have audited the attached Balance Sheet of BHARAT 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
 issued by the Central Government of India and further as per
 requirement of Companies (Auditor''s Report) (Amendment) Order, 2004
 in terms of sub-section (4A) of the section 227 of the Companies Act,
 1956 we enclose 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 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 Statement of Profit and Loss 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 Statement of Profit and Loss
 and the Cash Flow Statement comply with the Accounting Standards
 referred to in sub-section (3C) of section 211 of the Companies Act,
 1956 to the extent applicable to the company.
 
 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 Note 21 of
 Financial Statements regarding recoverability from a Public Sector
 Undertaking (PSU) making significant losses, based on the assurances
 given by the PSU.
 
 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 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.
 
 (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 2012)
 
 1.  Fixed Assets
 
 a) The Company has maintained proper records showing full particulars
 including the 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 plant.
 
 b) As per the information and explanation given to us, the company has
 generally physically verified its fixed assets during the previous
 year, other than LPG cylinders with customers, in accordance with the
 verification programme and the frequency of verification is reasonable
 having regard to the size of the company and the nature of its assets.
 The company has identified certain discrepancies on such verifications
 which are under reconciliation and consequent adjustment, which in view
 of management would not be material.
 
 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.
 
 2.  Inventories
 
 a) The management during the year under audit carried out the physical
 verification of inventories (except those lying with third parties and
 in transit) at regular intervals. In respect of inventories lying with
 third parties, these have generally been confirmed by them and the
 inventory in transit has been verified with subsequent receipts.
 
 b) Taking into consideration the nature of business, we are of the
 opinion that the procedure of physical verification and frequency of
 such verification is reasonable and adequate in relation to the size of
 the company and the nature of its business.
 
 c) The Company is maintaining proper stock of inventory. The
 discrepancies noticed on verification between the physical stocks and
 records were not material in relation to the operation of the company
 and the same have been properly dealt with in the books of account.
 
 3.  Secured or Unsecured Loans Granted or Taken
 
 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.
 
 4.  Internal Control
 
 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, there is generally 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.
 
 5.  Transactions under Section 301
 
 a) According to the information and explanation given to us and as
 verified by 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.
 
 6.  Public Deposits
 
 According to the information and explanation given to us, the Company
 has not accepted any deposits from the public.
 
 7.  Internal Audit System
 
 The Company has an internal audit system which is carried out by the
 inhouse department and also by outsourced firms for certain areas. In
 our view, the same is generally commensurate with the size and the
 nature of its business.
 
 8.  Cost Records
 
 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.
 
 9.  Statutory Dues
 
 The company has been generally regular in depositing its undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees State Insurance Fund, Income Tax, Sales Tax,
 Value Added Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty,
 Cess and any other statutory dues as applicable with the appropriate
 authorities during the year. According to the information and
 explanation given to us, no material undisputed amounts payable in
 respect of Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance Fund, Income Tax, Sales Tax, Value Added Tax,
 Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other
 statutory dues were in arrears as at 31.3.2012 for a period of more
 than six months from the date they became payable.
 
 The details of disputed dues of sales tax, income tax, customs duty,
 wealth tax, service tax, excise duty, cess, etc.  which have not been
 deposited, are given in Annexure I.
 
 10.  The company does not have any accumulated losses at the end of the
 financial year and it has not incurred any cash losses during the
 financial year covered by our audit and in the immediately preceding
 financial year.
 
 11.  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.
 
 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 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. Therefore, the provisions of clause 13 of Para 4 of
 the Companies (Auditor''s Report) Order are not applicable to the
 Company.
 
 14.  According to the information and explanations given to us and as
 verified by us, the Company is not dealing or trading in shares,
 securities, debentures and other investments. 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.
 
 15.  The Company has given guarantees for loans taken by others from
 banks or financial institutions, aggregating to Rs. 1818.30 Crores
 where the terms and conditions, in our opinion, are not prima facie
 prejudicial to the interest of the Company.
 
 16.  In our opinion, the term loans obtained during the year, prima
 facie, have been applied for the purpose for which the loans were
 raised.
 
 17.  According to the information and explanation given to us and on an
 overall examination of the Balance Sheet and Cash Flow Statement of the
 Company, we report that funds raised on short-term basis have not been
 used for long-term investment.
 
 18.  According to the information and explanations given to us and
 verified by us, the Company has not made any preferential allotment of
 shares during the year to parties and companies covered in the Register
 maintained under section 301 of Companies Act, 1956.
 
 19.  According to the information and explanations given to us, the
 Company has not issued any debentures during the year.
 
 20.  The company has not raised any money by public issues during the
 year.
 
 21.  As represented to us by the management and based on our
 examination in the course of our audit, except for the instances at (a)
 and (b) below, no material fraud on or by the Company has been noticed
 or reported during the year.
 
 a) The company has identified a fraud at Budge Budge where there was a
 shortage in the products lying with a repacker. The cost price of the
 products is Rs. 69.93 lacs and the sale value of the same is Rs. 124
 lacs.  The amount is still pending recovery.
 
 b) The company has identified another fraud made by an advocate
 relating to misappropriation of compensation amount deposited for land
 acquisition at Bijwasan Installation and other court cases, amounting
 to Rs. 188.40 lacs, which has since been recovered.
 
 For and on behalf of         For and on behalf of
 
 T R CHADHA & Co.             K. VARGHESE & Co.
 
 Chartered Accountants        Chartered Accountants
 
 FR No: 006711N               FR No:004525S
 
 Sd/-                         Sd/-
 
 KASHYAP VAIDYA               K.VARGHESE
 
 Partner                      Partner
 
 Membership No: 37623         Membership No: 20674
 
 Mumbai
 
 Dated: 25th May 2012