We have audited the attached Balance Sheet of Mangalore Refinery and
 Petrochemicals Limited as at 31st March, 2011 the Profit and Loss
 Account and the Cash Flow Statement for the year ended on that date
 together with the schedules annexed thereto which are in agreement with
 the books of account maintained. 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 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 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 (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s Report) Amendment Order, 2004
 issued by the Government of India in terms of section 227 (4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters specifed in Paragraphs 4 and 5 of the said Order.
 
 2.  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 purpose 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 & Loss Account and Cash Flow Statement
 dealt with this report are in agreement with books of account
 maintained.
 
 iv) In our opinion, the Balance Sheet and Profit and Loss Account and
 Cash Flow Statement dealt with by this report read with the notes
 thereon are in Compliance with the Accounting Standards referred to in
 sub-section (3C) of section 211 of the Companies Act, 1956 to the
 extent applicable.
 
 v) Being a Government Company provision of clause (g) of Sub-section
 (1) of Section 274 of the Companies Act, 1956, is not applicable as per
 Notification no GSR 829(E) dated October 21, 2003 issued by the
 Department of Company Affairs.
 
 vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 significant accounting policies and other notes on accounts attached
 thereto, 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 of the
 Company for the year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR AUDIT REPORT OF EVEN DATE ON
 THE ACCOUNTS OF MANGALORE REFINERY AND PETROCHEMICALS LIMITED FOR THE
 YEAR ENDED 31st MARCH, 2011
 
 1. (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. No material discrepancies have been
 noticed on such verification.
 
 (c) The Company has not disposed off substantial part of fixed assets
 during the year.
 
 2 (a) We are informed that the inventories of stores and spares are
 physically verified by the management on a continuing basis as per a
 programme of perpetual inventory. Inventories of other items have been
 physically verified at the year end, the frequency of which, in our
 opinion is reasonable, having regard to the size of the Company and
 nature of its business.
 
 (b) In our opinion and according to the explanation given to us, 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 as informed to us, discrepancies
 noticed on physical verification by the management, which are reported
 to be not material, same have been properly dealt with in the books of
 account of the Company.
 
 3.  (a) 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.
 
 (b) 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.
 
 4.  In our opinion and according to the information and explanations
 given to us, internal control procedures are fairly adequate,
 commensurate with the size of the Company and nature of its business
 for the purchase of inventory and fixed assets and with regard to the
 sale of goods. During the course of our audit no major weakness has
 been noticed in the internal control systems.
 
 5.  According to the information and explanations given to us, Company
 has not entered into any transactions that need to be entered in a
 register maintained pursuant to section 301 of the Companies Act, 1956.
 
 6.  The Company has not accepted any deposits from the public during
 the year and hence the directives issued by the Reserve Bank of India
 and the provisions of sections 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 and the rules framed thereunder
 are not applicable.
 
 7.  The Company has an internal audit system which is commensurate with
 its size and nature of its business.
 
 8.  We have broadly reviewed the records maintained by the Company
 pursuant to the order by the Central Government under Section 209 (1)
 (d) of the Companies Act, 1956 for maintenance of Cost records in
 respect of the products of the Company and are of the opinion that
 prima facie, the prescribed accounts and records have been made and
 maintained.
 
 However, we are not required to and have not carried out any detailed
 examination of such records.
 
 9. (a) The Company has been generally regular in depositing undisputed
 statutory dues including Provident Fund, Employee''s State Insurance,
 Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess,
 Investor Education and Protection Fund, Service Tax and other statutory
 dues with the appropriate authorities during the year. There are no
 arrears of undisputed statutory dues of material nature outstanding for
 a period of more than 6 months from the date on which they became
 payable.
 
 (b) According to the information and explanations given to us and as
 per our verification of records of the Company, the following disputed
 amounts of tax not provided for in the accounts of the Company and not
 deposited with appropriate authorities as at 31st March, 2011.
 
 Name of the 
 Statue       Nature of 
              the dues     Total 
                          Amount  Paid and 
                                     or     Balance 
                                              Amt   Period to 
                                                     which   Forum where
                                                             dispute is
                                                             pending
                           (Rs. 
                        Millions) Provided  Outstan
                                              -ding   the 
                                                     amount 
                                                     relates
                                   (Rs. 
                                  Millions)   (Rs. 
                                           Millions)(financial 
                                                     year)
 
 The    
 Karnataka    
 Sales        Sales Tax
              /Entry    
              Tax/      1,972.95  1,132.31  840.64   1993-94 
                                                       to
                                                     2007-08 Commercial
                                                             Tax 
                                                             Appellate
 Tax Act,    
 1957/Central Interest 
              and 
              Penalty                                        Authorities/
 Sales Tax 
 Act, 1956/ 
 The                                                         Hon''ble High
                                                             Court of 
                                                             Karnataka.
 Karnataka 
 Tax on 
 Entry of
 Goods Act 
 1979                                                        Entry tax –
                                                             Before Govt
                                                             of Karnataka
                                                             for 
                                                             conciliation
                                                             and 
                                                             settlement.
 
 Income Tax 
 Act, 1961    Income Tax
              /Interest/   373.90  251.41  122.49    2002-03 
                                                       to 
                                                     2006-07 Income Tax
                                                             Appellate 
                                                             Authorities
              Penalty
 
 Central 
 Excise Act, 
 1944         Central 
              Excise Duty/ 360.26   36.08  324.18    1996-97 
                                                       to 
                                                      2010-11 Central
                                                              Excise
                                                              Appellate
              Service Tax
              /Interest/                                      Authorities
                                                             /Ministry  
                                                              of Finance,
              Penalty                                         Government
                                                              of India.
 
 The Customs 
 Act, 1962    Customs 
              Duty         130.19     Nil   130.19   2004-05 
                                                         to 
                                                     2009-10  Customs
                                                              Appellate
                                                             Authorities.
 
 10.  There are no accumulated losses at the end of the financial year.
 The Company has not incurred cash losses during the year and in the
 immediately preceding financial year.
 
 11.  According to information and explanations given to us and as per
 our verification of the records of the Company, the Company has not
 defaulted in repayment of dues to the financial institutions and banks.
 
 12.  The Company has not granted any loans or advances on the basis of
 security by way of pledge of share, debenture and other securities.
 
 13.  Since the Company is not a Chit Fund/Nidhi/Mutual Beneft
 Fund/Society, the relative reporting requirements are not applicable.
 
 14.  The Company was dealing in Mutual Fund investments during the
 year.  Proper records of the transactions and contracts have been
 maintained and timely entries have been made. The said investments have
 been held by the Company in its own name.
 
 15.  According to the information and explanations given to us and as
 per the verification of the records of the Company, the terms and
 conditions of the guarantee given by the Company, for the loans taken
 by New Mangalore Port Trust from banks and financial institutions, are
 not prejudicial to the interest of the Company. Except for the above,
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16.  According to the information and explanations given to us, the
 Company has not availed any fresh term loans during the year.
 
 17.  According to the information and explanations given to us and as
 per the verification of the records of the Company, on an overall basis,
 the Company has not utilized short-term funds for long term purposes.
 
 18.  The Company has not made any preferential allotment of share to
 the parties and companies covered in the register maintained under
 section 301 of the Act.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  According to the information and explanations given to us and as
 per the verification of the records of the Company, no fraud either on
 or by the Company, having a material financial impact, has been noticed
 or reported during the year.
 
 
 For S. R. R. K. SHARMA ASSOCIATES       For MAHARAJ N.R.SURESH & CO
 
 Chartered Accountants                         Chartered Accountants
 
 (ICAI Registration No. 003790S)      (ICAI Registration No. 001931S)
 
 C.A.S.R.R.K.Sharma                                C.A. JAYADEVAN N R
 
 Partner                                                      Partner
 
 Membership No. 18088                            Membership No. 23838
 
 Place: New Delhi
 
 Date: 20th May, 2011.