1.  We have audited the accompanying balance sheet of Cairn India
 Limited (''the Company'') as at March 31, 2011 and also the profit and
 loss account and the cash flow statement 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 auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the fi
 nancial 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.  The accompanying financial statements include Company''s share of
 net assets, expenses and cash flows aggregating to INR 3,864 thousand,
 INR 193,242 thousand and INR 4,252 thousand respectively in the
 unincorporated joint ventures not operated by the Company or its
 subsidiaries, the accounts of which have been audited by the auditors
 of the respective unincorporated joint ventures and relied upon by us.
 
 4.  As required by the Companies (Auditor''s Report) Order, 2003 (as
 amended) (''the Order'') issued by the Central Government of India in
 terms of sub-section (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. In respect of clauses (ii),
 (ix)(a), (ix)(b), (ix)(c) and (xxi), our comments are restricted to the
 operations of the Company and does not cover the unincorporated joint
 ventures where any third party is the operator.
 
 5.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i.  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;
 
 ii.  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;
 
 iii.  The balance sheet, profit and loss account and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 iv.  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;
 
 v.  On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 vi.  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;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 b) in the case of the profit and loss account, of the loss for the
 year ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 Annexure referred to in paragraph 4 of our report of even date
 Re: Cairn India Limited (''the Company'')
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fi xed
 assets.
 
 (b) Fixed assets have been physically verified by the management
 during the year and no material discrepancies were identified on such
 verification.
 
 (c) There was no disposal of a substantial part of fi xed assets during
 the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) The procedures of physical verification of inventory 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 and no
 material discrepancies were noticed on physical verification carried
 out at the end of the year.
 
 (iii) (a-d) According to the information and explanations given to us,
 the Company has not granted any loans, secured or unsecured to
 companies, fi rms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956. Accordingly, the
 provisions of clause 4(iii)(a) to (d) of the Order are not applicable
 to the Company and hence not commented upon.
 
 (e-g) According to information and explanations given to us, the
 Company has not taken any loans, secured or unsecured, from companies,
 fi rms or other parties covered in the register maintained under
 section 301 of the Companies Act, 1956. Accordingly, the provisions of
 clause 4(iii)(e) to (g) of the Order are not applicable to the Company
 and hence not commented upon.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory and fi xed assets and for the sale of services.
 During the course of our audit, no major weakness has been noticed in
 the internal control system in respect of these areas. During the
 course of our audit, we have not observed any continuing failure to
 correct major weakness in internal control system of the Company in
 respect of these areas. Since none of the oil and gas blocks in which
 the Company has interests has started any commercial production, there
 has not been any sale of goods.
 
 (v) (a-b) In our opinion, there are no contracts or arrangements that
 need to be entered in the register maintained under Section 301 of the
 Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of
 the Order is not applicable to the Company and hence not commented
 upon.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) Since none of the oil and gas blocks in which the Company has
 interests has started any production, in our opinion, the provisions of
 clause 4(viii) of the Order are not applicable to the Company.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, income-tax, service tax,
 customs duty, wealth tax, cess and other material statutory dues
 applicable to it. Further, since the Central Government has till date
 not prescribed the amount of cess payable under section 441 A of the
 Companies Act, 1956, we are not in a position to comment upon the
 regularity or otherwise of the Company in depositing the same. The
 provisions relating to employees'' state insurance, sales tax and excise
 duty are not applicable to the Company.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, income-tax, service tax, wealth tax,
 customs duty, cess and other material statutory dues were outstanding,
 at the year end, for a period of more than six months from the date
 they became payable. The provisions relating to employees'' state
 insurance, sales tax and excise duty are not applicable to the Company.
 
 (c) According to the information and explanations given to us, there
 are no dues of income tax, service tax, wealth tax, customs duty and
 cess which have not been deposited on account of any dispute. The
 provisions relating to sales tax and excise duty are not applicable to
 the Company.
 
 (x) The Company has been registered for a period of less than five
 years and hence we are not required to comment on whether or not the
 accumulated losses at the end of the financial year is fi fty per cent
 or more of its net worth and whether it has incurred cash losses in
 such financial year and in the immediately preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced 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.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Order are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable to the
 Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (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.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) The Company has unsecured debentures outstanding during the year
 on which no security or charge is required to be created.
 
 (xx) The Company neither raised any monies through public issuies
 during the year nor did it have any unutilised amount of monies raised
 by public issues at the beginning of the year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as
 per the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 
 For S.R. Batliboi & Co.
 
 Firm Registration No. : 301003E
 
 Chartered Accountants
 
 per Raj Agrawal
 
 Partner
 
 Membership No.:82028