1.  We have audited the attached Balance Sheet of Castrol India Limited
 as at December 31, 2010 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 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 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 (as
 amended) 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.
 
 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, 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 December 31, 2010, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 December 31, 2010 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 December 31, 2010;
 
 b) in the case of the profit and loss account, 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:
 Castrol India Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed to us, no
 material discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal 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) As informed 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, provisions of clause 4(iii) (b), (c) and (d) of the
 Companies (Auditors Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (e) As informed 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, provisions of clause 4(iii) (f) and (g) of the Companies
 (Auditors Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 (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 goods and
 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.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Act that need to be
 entered into the register maintained under Section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time except in
 respect of certain transactions, where because of the unique and
 specialized nature of the items involved and absence of any comparable
 prices, we are unable to comment whether the transactions were made at
 the prevailing market prices at the relevant time.
 
 (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) 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
 accounts and records have been made and maintained.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, or employees state insurance,
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess have generally been regularly deposited with the
 appropriate authorities.
 
 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.
 
 (b) 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,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other undisputed statutory dues were, outstanding, at the year end, for
 a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of Statute          Nature of Dispute            Amount
                                                     (Rs. Crores)
 
 Local Sales Tax Act,  Non-submission of declaration   87.58
 VAT Act and Central   forms, disallowance of set-
 Sales Tax Act         off claim, disputes about
                       classification/rate of tax,
                       disallowance of credit notes and
                       rebates.
 
 Central Excise Act,   Valuation including admissibility28.20
 1944                  of discounts/deductions [PME] in
                       provisional assessments, Modvat/
                       Cenvat Credit, Classification,
                       Other Miscellaneous Issues.
 
 Customs Act, 1962    Dispute regarding basis to levy   6.83
                     duty - whether on invoice quantity
                      or actual quantity unloaded in
                       shore tank and on demurrage,
                      duty on FG imports on account of
                         royalty.
 
 Service Tax,       Service tax on Royalty, on storage 34.07
 Chapter V of the     tanks, objections to credit of
 Finance Act, 1994     service tax availed and credit of
                        service tax on secondary freight.
 
 
 Name of Statue          Period to which     Forum where
                         amount relates      dispute is pending
 
 Local Sales Tax Act,
 VAT Act and Central
 Sales Tax Act            1987 to 2008       Assistant/Deputy
                                             Commissioner,
                                             Tribunal, High Court.
 
 Central Excise Act,
 1944                     1987 to 2009       Assistant/Deputy
                                             Commissioner,
                                             Commissioner (A),
                                             CESTAT, High Court
                                             & Supreme Court.
 
 Customs Act, 1962        1997 to 2006       Deputy
                                             Commissioner.
 
 Service Tax,
 Chapter V of the
 Finance Act, 1994        1997 to 2009       Assistant/Deputy
                                             Commissioner,
                                             Commissioner (A),
                                             CESTAT, High Court, 
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and 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 bank. The Company has
 no outstanding dues in respect of financial institution 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 Companies (Auditors Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (xiv) In respect of dealing/trading in shares, securities, debentures
 and other investments, in our opinion and according to the information
 and explanations given to us, proper records have been maintained of
 the transactions and contracts and timely entries have been made
 therein. The shares, securities, debentures and other investments have
 been held by the Company, in its own name.
 
 (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) The Company did not have any term loans outstanding during the
 year.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet and cash flow statement 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
 during the year to parties or companies 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 through public issue during
 the year. Accordingly, the provisions of clause 4(xx) of the Companies
 (Auditors Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 (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 material 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 Ravi Bansal
 
 Partner
 
 Membership No.: 49365
 
 Place : Mumbai
 
 Date   : February 22, 2011