We have audited the attached Balance Sheet of Indian Oil Corporation
 Limited as at 31st March, 2011 and the Profit and Loss Account and also
 the Cash Flow Statement for the year ended on that date annexed
 thereto, in which are incorporated accounts of the branches audited by
 the Branch Auditors whose reports have been considered in preparing
 this report. 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.
 
 We conducted our audit in accordance with the auditing standards
 generally accepted in India, which 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 1.  As required by the Companies (Auditors'' Report) Order, 2003 as
 amended by the Companies ( Auditors'' Report ) ( Amendment ) Order 2004
 ( 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 paragraph 4 and
 5 of the said Order.
 
 2.  Further to our comments in the Annexure referred to above, we
 report that:
 
 a) 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;
 
 b) 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 the books
 and proper returns adequate for the purposes of our audit have been
 received from the branches not visited by us;
 
 c) The Branch Auditors'' Reports have been forwarded to us and have been
 appropriately dealt with while preparing our report;
 
 d) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account
 and with the audited returns from the branches;
 
 e) 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;
 
 f) 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;
 
 g) We invite attention, without qualifying our report, to Note No. 21
 regarding impairment loss wherein, we have relied on the estimates and
 assumptions made by the company in arriving at recoverable value of
 assets.
 
 h) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts, read in conjunction
 with the Significant Accounting Policies (Schedule ‘Q''), Notes on
 Accounts (Schedule ‘R'') and other schedules (‘S'' to ‘X''), give the
 information required by the Companies Act, 1956 in the manner so
 required and give a true and fair view in conformity with accounting
 principles generally accepted in India:
 
 i.  In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 ii.  In the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 iii. In the case of the Cash Flow Statement, of the cash flow for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 (Referred to in paragraph 1 of our Report of even Date)
 
 Based upon the information and explanations furnished to us and the
 books and records examined by us in the normal course of our audit, we
 report that to the best of our knowledge and belief :
 
 (i) The Company has generally maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets.
 
 The Fixed Assets of the Company, other than LPG cylinders and pressure
 regulators, are physically verified by the Management in a phased
 programme of three years cycle which, in our opinion, is reasonable
 having regard to the size of the Company and the nature of its assets.
 In our opinion and as per the information given by the Management, no
 material discrepancies were noticed during such verification.
 
 Fixed assets disposed off during the year were not substantial and,
 therefore, do not affect the going concern assumption.
 
 ii) In our opinion, physical verification of inventory has been
 conducted at reasonable intervals by the management.
 
 In our opinion, the procedures of physical verification of inventory
 followed by the management are adequate in relation to the size of the
 Company and the nature of its business.
 
 The Company has maintained proper records of inventory. No material
 discrepancies have been noticed on physical verification between
 physical stock and book records.
 
 iii) The Company has not taken / granted any loans secured or unsecured
 from/to companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 iv) In our opinion and according to the information and explanations
 given to us there are adequate internal control procedures commensurate
 with the size of the Company and the nature of its business for
 purchase of inventory and fixed assets and sale of goods and services.
 We have not observed any major weakness in the internal controls during
 the course of audit.
 
 v) In our opinion and according to the information and explanations
 given to us, there are no transactions made in pursuance of contracts
 or arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 exceeding the value of Rupees five lakhs in
 respect of any party during the year.
 
 vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by the
 Reserve Bank of India and the provisions of Section 58A and 58AA or any
 other relevant provisions of the Companies Act, 1956 and the Companies
 (Acceptance of Deposits) Rules, 1975 with regard to the deposits
 accepted from the public. In respect of orders passed by the court, the
 same have been complied with.
 
 vii) In our opinion, the company has an internal audit system
 commensurate with its size and the nature of its business.
 
 viii) We have broadly reviewed the books of account maintained by the
 company pursuant to the order 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. We have not
 however, made a detailed examination of these records.
 
 ix) A) According to the information and explanations given to us and on
 the basis of our examination of the books of account, the Company is
 generally regular in depositing with appropriate authorities undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax,
 Service Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other
 material statutory dues applicable to it.
 
 According to the records examined by us and information and
 explanations given to us, no undisputed dues payable in respect of
 Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise
 Duty, Investor Education And Protection Fund And Cess were in arrears,
 as at 31st March, 2011 for more than six months from the date they
 became payable.
 
 B) The details of dues of Sales Tax, Service Tax, Income Tax, Customs
 Duty, Wealth Tax, Excise Duty and Cess, which have not been deposited
 on account of any dispute are given in the Annexure to this report.
 
 x) The Company neither has any accumulated losses as on 31st March,
 2011, nor it has incurred any cash loss during the financial year ended
 on that date or 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, bank or debenture holders.
 
 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.
 
 xiii) The Company is not a chit fund or a Nidhi/Mutual benefit
 fund/society.
 
 xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments.
 
 xv) In our opinion, in respect of the guarantee given by the company
 for the loans taken by others from a bank, the terms and conditions
 thereof are not, prima facie, prejudicial to the interest of the
 Company.
 
 xvi) On the basis of review of utilization of funds pertaining to term
 loans on overall basis and related information as made available to us,
 the term loans taken by the Company have been utilized for the purposes
 for which they are obtained.
 
 xvii) On the basis of review of utilization of funds, which is based on
 overall examination of the balance sheet of the Company, related
 information as made available to us and as represented to us by the
 management, funds raised on short-term basis have not been used for
 long-term investments.
 
 xviii) The Company has not made any preferential allotment of shares
 during the year.
 
 xix) The Company has created necessary securities or charge as per the
 debenture trust deed in respect of debentures issued and outstanding at
 the year end.
 
 xx) The Company has not raised any money by way of public issue during
 the financial year.
 
 xxi) As represented to us by the management and based on our
 examination of the books and records of the Company in accordance with
 the generally accepted auditing practices in India, we have neither
 come across any material fraud on or by the Company noticed or reported
 during the year nor we have been informed of any such case by the
 management that causes the financial statements to be materially
 misstated.
 
                                             For V.K.DHINGRA & CO.
 
                                             Chartered Accountants
 
                                           (Firm Regn. No. 000250N)
 
                                                      Sd/-
 
                                              (CA. Lalit Ahuja)
 
                                                   Partner
 
                                                M. No. 085842
 
                                         For PKF SRIDHAR & SANTHANAM
 
                                             Chartered Accountants
 
                                           (Firm Regn. No. 003990S)
 
                                                      Sd/-
 
                                            (CA. V. Kothandaraman)
 
                                                   Partner
 
                                                M. No. 025973
 
                                           For B.M. CHATRATH & CO.
 
                                            Chartered Accountants
 
                                           (Firm Regn. No. 301011E)
 
                                                      Sd/-
 
                                                (CA. P. R. Paul)
 
                                                    Partner
 
                                                 M. No.051675
 
 
 Place : New Delhi
 
 Date : May 30, 2011