Chennai Petroleum Corporation

1.  We have audited the attached balance sheet of Chennai Petroleum
 Corporation Limited, as at 31st March 2009, the profit and loss account
 and also 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 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 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-I, a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure-I 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 accounts 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) Disclosure in terms of clause (g) of sub section (1) of section 274
 of the Companies Act, 1956 is not required for Government Companies as
 per Notification No.GSR 829(E) dated October 21, 2003 issued by the
 Department of Company Affairs.
 
 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 principle
 generally accepted in India.
 
 (a) in the case of the balance sheet, of the state of affairs of the
 company as at 31st March 2009
 
 (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 the cash flow statement, of the cash flows for the
 year ended on that date.
 
 Annexure to auditors report
 
 Annexure to auditors report Referred to in paragraph 3 of our report
 of even date
 
 (i) (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) All the 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.
 
 (c) During the year, no substantial part of the fixed assets of the
 company were disposed off.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of 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 have been appropriately dealt with in the books of
 account.
 
 (iii) We are informed that there is no company, firm or party to be
 listed in the Register referred to in Section 301 of the Companies Act,
 1956 and hence we have no comments to offer in respect of clauses 4
 (iii) (a), 4 (iii) (b), 4 (iii) (c), 4 (iii) (d), 4 (iii) (e), 4 (iii)
 (f) and 4 (iii) (g) of the Companies (Auditors Report) Order, 2003.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the company and the nature of its business with regard
 to purchases of inventory, fixed assets and with regard to the sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control system.
 
 (v) We are informed that there is no company, firm or party to be
 listed in the Register referred to in Section 301 of the Companies Act,
 1956 and hence we have no comments to offer in respect of clauses 4 (v)
 (a) and 4 (v) (b) of the Companies (Auditors Report) Order, 2003.
 
 (vi) The company has not accepted any deposits from the public and
 hence we have no comments to offer in respect of clause 4 (vi) of the
 Companies (Auditors Report) Order, 2003.
 
 (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 we are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained.
 
 (ix) (a) The company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, income tax, sales tax, wealth
 tax, service tax, custom duty, excise duty, cess and other material
 statutory dues applicable to it. We are informed that no employee of
 the company is covered by Employees State Insurance Scheme
 
 (b) The company, in the absence of suitable notification by the Central
 Government specifying the applicable rate of cess under section 441A of
 the Companies Act, 1956 on turnover payable by the company, towards
 Rehabilitation and Revival Fund, the company has neither paid nor
 provided for cess.
 
 (c) The details of disputed dues of Income tax, Sales tax, Wealth tax,
 Service tax, Customs duty, Excise duty and Cess, which have not been
 deposited, are given in Annexure - II to our report.
 
 (x) The company does not have any accumulated losses as on 31st March
 2009. The company has incurred cash losses during the financial year
 covered by our audit and not 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 a
 financial institution or banks.
 
 (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
 and hence we have no comments to offer in respect of clause 4 (xii) of
 the Companies (Auditors Report) Order, 2003.
 
 (xiii) The company is not a chit fund or a nidhi mutual benefit
 fund/society. Therefore, the provisions of clauses 4(xiii) of the
 Companies (Auditors Report) Order, 2003 are not applicable to the
 company.
 
 (xiv) 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 (Auditors Report) Order, 2003 are not
 applicable to the company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the company has not given any guarantees for loans taken
 by others from banks or financial institutions and hence we have no
 comments to offer in respect of clause 4 (xv) of the Companies
 (Auditors Report) Order, 2003.
 
 (xvi) In our opinion, the term loans have been applied for the purpose
 for which they were raised.
 
 (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 issued shares during the year and hence we
 have no comments to offer in respect of clause 4 (xviii) of the
 Companies (Auditors Report) Order, 2003.
 
 (xix) The company has not issued any debentures during the year nor
 there is any outstanding as on 31st March 2009 and hence we have no
 comments to offer in respect of clause 4 (xix) of the Companies
 (Auditors Report) Order, 2003.
 
 (xx) The company has not raised money by public issues in the recent
 past and hence we have no comments to offer in respect of clause 4 (xx)
 of the Companies (Auditors Report) Order, 2003.
 
 (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.
 
 Statement of Disputed Dues Annexure - II
 
                                                 Disputed
                          Nature of the           Amounts
 Name of the Statute             dues              (Rs in
 
 Lakhs)
 
 TamilNadu General        Sales Tax Dues         1092.50 
 Sales Tax Act
 
 TamilNadu General        Sales Tax Dues         1012.83 
 Sales Tax Act
 
 Central Sales Tax Act    Sales Tax Dues        28367.00
 
 TamilNadu General        Sales Tax Dues            5.30 
 Sales Tax Act
 
 Andhra Pradesh             Value Added           1731.81 
 Value Added Tax Act        Tax Dues
 
 Kamataka Tax on           Entry Tax Dues          379.53 
 Entry of Goods Act
 
 Central Sales Tax Act    Sales Tax Dues           165.18
 
 Central Excise Act         Excise Dues             56.62
 
 Central Excise Act         Excise Dues            128.64
 
 Central Excise Act         Excise Dues             98.78
 
 Central Excise Act         Excise Dues             46.32
 
 Income Tax Act              Income Tax            388.66 
                             Dues
 
 Amount paid        Period to
 under protest /     which the      Forum where the
 Predeposit          amount         dispute is pending
 (Rs. in lakhs)      relates
 
 -                   1987-88         Madras High Court
 
 -                   1988-89         Madras High Court
 
 -                   1992-93         Madras High Court
 
 -                   1992-93         TN State Appellate Tribunal
 
 626.20              Apr 2005        Dy. Commisioner
                       to              (Commercial Taxes),
                     Aug 2007          (Appeals)
 
 189.76              Sep 2007        Asst. Commisioner
                         to            (Commercial Taxes) 
                      Nov 2007
 
 -                    1991-92        TN State Appellate Tribunal
 
 -                    Aug 2003       Customs Excise and
                       to            Service Tax Appellate
                      May 2004       Tribunal
 
 -                    Feb 2004       Customs Excise and
                          to         Service Tax Appellate
                      Aug 2004       Tribunal
 
 -                    Jan 2005       Customs Excise and
                      to             Service Tax
                      Jun 2005        Appellate Tribunal
 
 -                    Jan 2005        Commissioner
                        to              (Appeals) Feb 2005
                      AY 2006-07      Commissioner (Appeals)
 
    for M. THOMAS & CO.            for SREEDHAR, SURESH & RAJAGOPALAN 
 Chartered Accountants                 Chartered Accountants
 
 (A. ROZARIO)                                (V. SURESH)
 Partner                                      Partner
 Membership No. 21230                  Membership No. 26525
 
 Place : New Delhi 
 Date : May 28, 2009