I. We have audited the attached Balance Sheet of BOC India Limited (''the
 Company'') as at 31 December 2011 and also 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.
 
 II. We conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance 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.
 
 III.As required by the Companies (Auditor''s Report) Order, 2003, as
 amended (''Order''), issued by the Central Government of India in terms
 of subsection (4A) of Section 227 of the Companies Act, 1956, we
 enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 IV. 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 our knowledge 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 the Company so far as appears from our examination of those
 books;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 e) on the basis of written representations received from directors as
 on 31 December 2011 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on 31 December
 2011 from being appointed as a Director in terms of Section 274 (1) g)
 of the Companies Act, 1956;
 
 f) in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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:
 
 - in the case of the Balance Sheet, of the state of the affairs of the
 Company as at 31 December 2011;
 
 - in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 - in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure to the Auditors'' Report.*
 
 I. a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) The Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of three years. In our opinion, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its assets. No material discrepancies were
 noticed on such verification.
 
 c) Fixed assets disposed off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 II. a) The inventory, except goods-in-transit has been physically
 verified by the management during the year. In our opinion, the
 frequency of such verification is reasonable.
 
 b) The procedures for the physical verification of inventories followed
 by the management are reasonable and adequate in relation to the size
 of the Company and the nature of its business.
 
 c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 III. The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 IV.  In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories and fixed assets are for the Company''s
 specialised requirements and suitable alternative sources are not
 available to obtain comparable quotations, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business with regard to purchase of inventories and
 fixed assets and with regard to the sale of goods and services. We have
 not observed any major weakness in the internal control system during
 the course of the audit.
 
 V. a) In our opinion and according to the information and explanations
 given to us, the particulars of the contract or arrangement referred to
 in section 301 of the Companies Act,1956 have been entered in the
 register required to be maintained under that section.
 
 b) Under the aforesaid contract or arrangement, certain services that
 are rendered by the Company as per the specialised requirements of a
 buyer and the value of such services exceeds Rs. 5 lakhs during the
 year, suitable alternative sources are not available to obtain
 comparable quotations. However, on the basis of information and
 explanations provided, the same appear reasonable.
 
 VI. The Company has not accepted any deposits from the public during the
 year.
 
 VII. In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 VIII.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under section 209 (1) d) of the Companies
 Act, 1956 in respect of the products and are of the opinion that prima
 facie, the prescribed accounts and records have been made and
 maintained. However, we have not made a detailed examination of the
 records.
 
 IX.  a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax,
 Wealth tax, Service tax, Customs duty, Excise duty and other material
 statutory dues have generally been regularly deposited during the year
 by the Company with appropriate authorities.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees'' State Insurance, Income-tax,
 Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and
 other material statutory dues were in arrears as at 31 December 2011
 for a period of more than six months from the date they became payable.
 
 b) According to the information and explanations given to us, there are
 no dues of Customs duty and Wealth tax which have not been deposited
 with the appropriate authorities on account of any dispute.
 
 According to the information and explanations given to us, dues of
 Income-tax, Sales tax, Service tax and Excise duty which have not been
 deposited by the Company on account of any dispute are listed below:
 
                         Amount in   Period to which
 Name of the 
 Statute      Nature
              of Dues    rupees 
                         million*    amount relates     Forum where 
                                                        the dispute is
                                                        pending
 
 Central
 State Sales
 Tax Act and 
 VAT Acts    Sales Tax     2.53         1982 - 1992      High Court
 
                                        1981 - 1988
 
                         243.17         1992 - 2008      Revisional Board
 
                                        1993 - 1994
 
                                        1995 - 1997
 
                           5.49         2003 - 2006      Tribunal
 
                          18.71         2008 - 2009      Senior Joint
                                                         Commissioner 
                                                        (Appeals) of 
                                                         Commercial Taxes
 
                                        2003 - 2005
 
                          41.27         2006 - 2009      Joint
                                                         Commissioner
                                                        (Appeals) of
                                                         Commercial Taxes
 
                                        2005 - 2008
 
                          35.76         1997 - 1998      Deputy
                                                         Commissioner
                                                        (Appeals) of 
                                                         Commercial Taxes
 
                           2.05         2007 - 2008      Assistant 
                                                         Commissioner 
                                                         of Commercial
                                                         Taxes
 
                                        1998 - 1999
 
                                        2001 - 2003
 
                                        2005 - 2007
 
                          30.67         2008 - 2010      Commissioner
                                                         of Commercial 
                                                         Taxes
 
 Central 
 Excise Act, 
 1944        Excise Duty  21.72         1999 - 2009      Supreme Court
 
                           2.26         1998 - 2001      High Court
 
                         126.94**       1991 - 2011      Customs, Excise
                                                         and Service
                                                         Tax Appellate 
                                                         Tribunal
 
                           7.89         1991 - 2010      Commissioner 
                                                        (Appeals)
 
                          24.69         2007 - 2010      Commissioner 
                                                         of Central
                                                         Excise
 
                           4.14         2010 - 2011      Additional
                                                         Commissioner
 
                           2.52         2006 - 2010      Deputy 
                                                         Commissioner
 
                           4.46         2005 - 2011      Assistant 
                                                         Commissioner
 
 Finance 
 Act, 1994   Service Tax  32.40         2005 - 2008      Customs,Excise
                                                         and Service 
                                                         Tax Appellate
                                                         Tribunal
 
                           5.94         2005 - 2010      Commissioner
                                                        (Appeals)
 
                         121.48         2004 - 2010      Commissioner
                                                         of Service Tax
 
                           3.24         2004 - 2007      Additional
                                                         Commissioner
 
                           0.13         2009 - 2011      Deputy 
                                                         Commissioner
 
                           6.04         2007 - 2011      Assistant
                                                         Commissioner
 
 * Excluding the demands the proceedings of which have been set aside or
 remanded for reassessment by the appropriate authorities.
 
 ** Including disputed dues aggregating to Rs. 31.06 million in respect
 of Excise dispute, which have been stayed by respective authorities.
 
 X.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 XI.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to its
 bankers. The Company did not have any outstanding debentures during the
 year.
 
 XII.  The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 XIII.  In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi/mutual benefit
 fund/society.
 
 XIV.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 XV.  In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantees for loans taken by others from banks or financial
 institutions are not prejudicial to the interest of the Company.
 
 XVI.  Based on the information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained, though idle/surplus fund which were not required for
 immediate utilisation have been gainfully invested in fixed deposits
 with banks. The maximum amount of idle/surplus fund in fixed deposits
 during the year was Rs.  1,100.00 million. There is no outstanding
 idle/surplus fund as at the end of the year.
 
 XVII.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that the funds raised on short-term basis have not been
 used for long-term investment.
 
 XVIII.  The Company has not made any preferential allotment of shares
 to companies/firms/parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 XIX.  The Company did not have any outstanding debentures during the
 year.
 
 XX.  The Company has not raised any money by public issues during the
 year.
 
 XXI.  According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 For BSR & Co.                       Kolkata
 
 Chartered Accountants               9 February 2012
 
 Firm Registration No.: 101248W
 
 Vikram Advani, Partner
 
 Membership No.: 091765