1 . We have audited the attached balance sheet of Cairn India Limited
 (''the Company'') as at March 31, 2012 and also the statement of profit
 and loss 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
 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 (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. Our comments in the said Annexure
 are restricted to the operations of the Company and do not cover the
 unincorporated joint ventures where any third party is the operator.
 
 4.  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, statement of profit and loss and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 iv.  In our opinion, the balance sheet, statement of profit and loss
 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, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2012 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, 2012;
 
 b) in the case of the statement of profit and loss, of the profit 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 3 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 fixed
 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 fixed 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.
 
 (iii) (a) According to the information and explanations given to us,
 the Company has not granted any loans, secured or unsecured to
 companies, firms 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.
 
 (b) According to information and explanations given to us, the Company
 has not taken any loans, secured or unsecured, from companies, firms 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 fixed assets and for the sale of services.
 During the course of our audit, we have not observed any major weakness
 or continuing failure to correct any major weakness in the 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) 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 of the Company and the 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, wealth-tax, service
 tax, customs duty, cess and other material statutory dues applicable to
 it.  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, wealth-tax, service 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, wealth tax, service 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''s accumulated losses at the end of the financial year
 are less than fifty per cent of its net worth and it has not incurred
 cash losses in the current financial year. In the immediately preceding
 financial year, the Company had incurred cash losses.
 
 (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 debenture holders.
 The Company did not have any outstanding dues in respect of a financial
 institution or bank during the year.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced before 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 Companies (Auditor''s Report) Order, 2003 (as amended)
 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 Companies (Auditor''s Report) Order,
 2003 (as amended) 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 has neither raised any money by way of public issue of
 shares/debentures during the current year nor did it have any amount of
 unutilized money raised by way of public issue of shares/debentures at
 the beginning of the current 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 year.
 
 ForS.R. BATLIBOI & CO.
 
 Chartered Accountants
 
 Firm Registration Number : 301003E
 
 per Raj Agrawal
 
 Partner
 
 Membership Number: 82028
 
 Place: Gurgaon
 
 Dat. April 20, 2012