1.  We have audited the attached Balance Sheet of JINDAL DRILLING AND
 INDUSTRIES LIMITED, as at 31 st March, 2011, 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 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
 ouropinion.
 
 3.  As required by the Companies (Auditors'' Report) Order, 2003 {as
 amended by the Companies (Auditors'' Report) (Amendment) Order, 2004}
 {hereinafter referred to as ''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.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 written representations received from the
 directors, as on 31st March, 2011 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2011 from being appointed as a director in terms of clause
 (g) of sub- section (1) of Section 274 of the Companies Act, 1956;
 
 (vi) Without qualifying our opinion, we draw attention to:
 
 a) note number B4(ii) of schedule number 18 of notes to accounts
 regarding outstanding dues of Rs.6586 lacs withheld by ONGC which has
 been considered good by the management based on the legal opinion
 obtained.
 
 b) note number B5(i) of schedule number 18B of notes to accounts
 regarding loan of Rs. 1087 lacs to one party which is subject to
 confirmation.
 
 (vii) 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 31 st 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 THE AUDITORS'' REPORT
 
 (As referred to in paragraph ''3'' of our report to the members of JINDAL
 DRILLING AND INDUSTRIES LIMITED on the accounts as at & for the year
 ended 31 st March 2011)
 
 1.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) In our opinion, certain fixed assets of the Company have been
 physically verified by the management according to a phased programme
 designed to cover all assets over a period of three years, which in our
 opinion is reasonable having regard to the size of the company and the
 nature of fixed assets. No material discrepancies were noticed on such
 verification as compared to the books of account.
 
 c) Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 2.  (a) The inventory has been physicallyverified bythe management
 during theyear.lnouropinion,thefrequencyofverification 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) In our opinion, the Company is maintaining proper records of
 inventory. As far as we could ascertain and according to the
 information and explanations given to us, no material discrepancies
 were noticed between the physical stock and the book records.
 
 3.  (a) As per the information and explanations given to us, the
 Company has granted unsecured loan to one company covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 8930.34 lacs and the
 year-end balance of loans granted to such parties was Rs.  8930.34
 lacs.
 
 b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not, prima facie, prejudicial to the interest of the
 company.
 
 c) The receipts of the principal amount and interest thereon is as
 stipulated.
 
 d) There is no overdue amount in respect of loan granted to such
 parties.
 
 e) 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 clauses
 4(iii) (f) and (g) of the order are not applicable.
 
 4.  In our opinion and according to the information and explanations
 given to us, there exists adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory, fixed assets and with regard to the sale of
 goods and services. During the course of our audit, we have neither
 come across nor have we been informed of any continuing failure to
 correct major weaknesses in the aforesaid internal control system of
 the Company.
 
 5.  (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of all contracts or
 arrangements that need to be entered into the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 b) As far as we could ascertain on the basis of our selective checking
 and according to the information and explanations given to us, the
 transactions made in pursuance of aforesaid contracts or arrangements
 including those exceeding the aggregate amount of rupees five lacs in
 respect of each party made during the year have been made at prices
 which are reasonable having regard to prevailing market prices at the
 relevant time.
 
 6.  The Company has not accepted any deposits from the public and
 consequently the directives issued by the Reserve Bank of India and the
 provisions of section 58A, 58AA and other relevant provisions of the
 Companies Act, 1956 and the rules framed there under are not applicable
 to the Company.
 
 7.  According to the information and explanations given to us, the
 Company has an internal audit system commensurate with the size and
 nature of its business.
 
 8.  According to information and explanations given to us, the Central
 Government has not prescribed maintenance of cost records under
 clause(d) of subsection (1)of section 209 ofthe Companies Act, 1956.
 
 9.  (a) 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, Custom Duty, Excise
 Duty, Cess and other material statutory dues applicable to it.  However
 an amount of Rs. 38,316 relating to Employees'' State Insurance in
 respect of Gurgaon Office has not been deposited due to non allotment
 of Employees'' State Insurance Sub-Code number by ESIC authorities.
 
 (b) According to the information and explanations given to us and on
 the basis of our examination ofthe books of accounts, no undisputed
 amounts payable in respect of IncomeTax, Wealth Tax, Sales Tax, Custom
 Duty, Excise Duty and Cess were in arrears at the year-end for a period
 of more than six months from the date they became payable.
 
 (c) According to the information and explanations given to us and the
 records ofthe Company examined by us, there are no dues of Sales Tax,
 Wealth Tax, Excise Duty and Cess which have not been deposited on
 account of any dispute except the following in respect of Custom Duty,
 IncomeTax and Service Tax along with the forum where the dispute is
 pending:
 
 Name of             Nature of      Amount     Financial   Forum where
 Statute             Dues          (Rs. in
                                     lacs) Year to which   dispute 
                                                           pending 
                                                  amount
                                                 relates
 
 Customs Act, 1964   Custom Duty    195.03*     1989-91    Custom 
                                                           Department
                     including
                     penalty
 
 Income Tax Act, 
 1961                IncomeTax      391.51      2006-07   Commissioner of
                                                          IncomeTax 
                                                         (Appeals)
 
 Finance Act, 1994   Service Tax    603.94      2007-08    CESTAT
 
 *net of deposit of Rs. 60 lacs
 
 10.  The Company does not have any accumulated losses. The Company has
 not incurred cash losses in the current financial year and in the
 immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to any
 financial institution or bank. The Company has not issued any
 debentures during the year.
 
 12.  In our opinion and according to the information and explanations
 given 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.
 
 13.  The Company is not a chit fund or a nidhi/ mutual benefit
 fund/society. Hence, the provisions of clause 4(xiii) ofthe Order are
 not applicable to the Company.
 
 14.  In our opinion the Company is not primarily dealing in or trading
 in shares, securities, debentures and other investments.  Accordingly,
 the provisions of clause 4(xiv) ofthe order are not applicable.
 
 15.  The Company has provided corporate guarantee amounting to US$
 42.50 million (equivalent to Rs. 18946.50 lacs) to Axis Bank Limited,
 Singapore Branch as a collateral security for providing financial
 assistance to its two Joint Venture Companies, Discovery Drilling Pte.
 Ltd., Singapore (DDPL) & Virtue Drilling Pte. Ltd., Singapore (VDPL).
 Further, the Company has pledged its 100% investment in the DDPL and
 VDPL to the lenders ofthe respective Joint Venture Companies. The terms
 and conditions ofthe aforesaid arrangements are not, prima facie,
 prejudicial to the interest ofthe Company.
 
 16.  On the basis of records made available and according to
 information and explanations given to us, the Company has applied its
 term loans for the purposes for which the loans were obtained.
 
 17.  According to the information and explanations given to us and on
 an overall examination ofthe Balance Sheet ofthe Company, we report
 that no funds raised on short term basis have been used for long term
 investment.
 
 18.  According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the register maintained under section 301 of
 the Companies Act, 1956.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  Since the Company has not raised any money during the year by way
 of public issue, the provisions of clause 4(xx) of the Order are not
 applicable to the Company.
 
 21.  Based upon the audit procedure performed for the purpose of
 reporting the true and fair view of the financial statements and on the
 basis of 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 course of our audit.
 
 
                                             ForS.S.KOTHARIMEHTA&CO.
 
                                              Chartered Accountants
 
                                           Firm''s Regn. No. 000756N
 
                                                        K.K.TULSHAN
 
 Place: Gurgaon                                             Partner
 
 Date : 3rd August, 20011                     Membership No. 085033