1.  We have audited the attached balance sheet of Chennai Petroleum
 Corporation Limited, as at 31st March 2011, 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 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 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 (Auditor''s 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. GSR829(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 principles
 generally accepted in India;
 
 (a) in the case of the balance sheet, of the state of affairs of the
 company as at 31st March 2011
 
 (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 the cash flow statement, of the cash flows for the
 year ended on that date.
 
 Annexure to auditors'' report
 
 Annexure to auditor''s 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 (Auditor''s 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 (Auditor''s 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 (Auditor''s 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
 2011. The company has not incurred cash losses during the financial
 year covered by our audit.
 
 (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 (Auditor''s 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 (Auditor''s 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 (Auditor''s 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
 (Auditor''s 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 (Auditor''s Report) Order, 2003.
 
 (xix) The company has not issued any debentures during the year nor
 there is any outstanding as on 31st March 2011 and hence we have no
 comments to offer in respect of clause 4 (xix) of the Companies
 (Auditor''s 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 (Auditor''s Report) Order, 2003.
 
 (xxi) As represented to us by the management and based on our
 examination in the normal course of audit, no fraud on or by the
 company has been noticed or reported during the year.
 
 Statement of Disputed Dues Annexure - II
 
                          Disputed  Amount paid  Period to
                Nature of
                the       Amounts   under 
                                    protest /    which the  Forum where
                                                            the
 Name of the
 Statute        dues      ( Rs. in   Predeposit    amount    dispute is
                                                            pending
                           Lakhs)    (Rs. in 
                                      Lakhs)     relates
 
 TamilNadu 
 General       Sales Tax 
               Dues         5.30          -      1992-93   TN State
                                                           Appellate
 Sales Tax Act                                             Tribunal
 
 Andhra 
 Pradesh       Value 
               Added     1731.81     626.20    Apr 2005 to AP State
                                                           Appellate
 Value Added 
 Tax Act       Tax Dues                        Aug 2007    Tribunal
 
 Central Sales 
 Tax Act       Sales Tax 
               Dues      165.18           -    1991-92     TN State
                                                           Appellate
                                                           Tribunal
 
 Central 
 Excise Act    Excise 
               Dues       56.62           -   Aug 2003 to  Customs 
                                                           Excise and
                                              May 2004     Service Tax
                                                           Appellate
                                                           Tribunal
 
 Central 
 Excise Act    Excise 
               Dues       98.78           -   Jan 2005 to  Customs 
                                                           Excise and
                                              Jun 2005     Service Tax
                                                           Appellate
                                                           Tribunal
 
 Central 
 Excise Act    Excise 
               Dues       46.32        6.50   Jan 2005 to  Customs
                                                           Excise and
                                              Feb 2005     Service Tax 
                                                           Appellate
                                                           Tribunal
 
 Income 
 Tax Act       Income 
               Tax        99.12           -   AY 2006-07   Commissioner
                                                            of
               Dues                                        Income Tax 
                                                          (Appeals)
 
 Income 
 Tax Act       Income 
               Tax     24566.20    19644.73   AY 2008-09   Commissioner
                                                              of
               Dues                                        Income Tax 
                                                           (Appeals)
 
 
 
 
                                  for SREEDHAR, SURESH & RAJAGOPALAN
 
                                        Chartered Accountants
 
                                             V. SURESH
 
                                               Partner
   
                                         Membership No. 26525
 
                                              FRN: 003957S
 
                                           for M. THOMAS & CO.
 
                                          Chartered Accountants
 
                                                A. ROZARIO
 
                                                  Partner
 
                                           Membership No. 21230
 
                                                FRN: 004408S
 
 Place : Chennai
 
 Date : May 24, 2011