Bharat Petroleum Corporation

1.  We have audited the attached Balance Sheet of BHARAT PETROLEUM
 CORPORATION LIMITED as at 31 st March 2009 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 Companys 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 (Auditors 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 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 Note No. 10
 of Schedule X - 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.
 
 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, 2009;
 
 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.
 
 (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 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 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 provision 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. 611 crore (USD 120
 Million) 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 presented to us by the management and based on our examination
 in the normal course of audit, no material frauds on or by the Company
 have been noticed or reported during the year.
 
 
                                 For and on behalf of B. K. KHARE AND CO.
                                                   Chartered Accountants
 
                                                                   Sd/-
                                                 PADMINI KHARE KAICKER
                                                              Partner
                                                         M. No. 44784
 Place :Mumbai 
 Dated : May 29, 2009