1.  We have audited the attached Balance Sheet of Mangalore Refinery
 and Petrochemicals Limited, as at 31st March, 2012, the Statement of
 Profit and Loss 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 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 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.
 
 Further to our comments in the Annexure referred under 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, Statement of Profit and Loss and Cash Flow
 statement dealt with by this report are in agreement with the books of
 account.
 
 iv.  In our opinion, the Balance Sheet, Statement of Profit and Loss
 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 and without qualifying our opinion reference is
 drawn to note no 30.05 on AS-17 Segment Reporting.
 
 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
 Ministry of Corporate 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 notes thereon 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 asat31stMarch,2012;
 
 b.  in the case of the Statement of Profit and Loss, 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.
 
 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. No material discrepancies have
 been noticed on such verification.
 
 c) In our opinion and according to the explanations given to us, the
 Company has not disposed off substantial part of fixed assets, during
 the year and the Going Concern Concept of the Company has not been
 affected.
 
 (ii) a) We are informed that the inventories of stores and spares are
 physically verified, during the year, by the management on a continuing
 basis as per 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. The
 discrepancies noticed on verification by the Management between the
 physical stock and book records have been properly dealt with in the
 books of account and were not material.
 
 (iii) (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.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the company and nature of its business, with regard to
 the 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 of the company.
 
 (v) According to the information and explanation given to us
 
 (a) particulars of contracts or arrangements referred to in Section 301
 of the Companies Act,1956 have been entered into and the register
 required to be maintained under that Section.
 
 (b) transactions made in pursuance of such contracts or arrangements
 have been made at prices which are reasonable having regard to the
 prevailing market price at the relevant time.
 
 (vi) According to the information and explanations given to us, 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
 provisions of sections 58A, 58AA or any other relevant provisions of
 the Companies Act, 1956 and the rules framed there under are not
 applicable.
 
 (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 Cost Records maintained by the
 Company pursuant to the Companies (Cost Accounting Records) Rules. 2011
 prescribed by the Central Government under section 209 (1) (d) of the
 Companies Act 1956, for maintenance of Cost Records and we are of the
 opinion that prima facie the prescribed accounts and records have been
 made and maintained.
 
 (ix) a) According to the information and explanations given to us and
 as per the records of the company, the Company has been generally
 regular in depositing undisputed statutory dues including Provident
 Fund, Investor Education and Protection Fund, Employee''s State
 Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
 Duty, Excise Duty 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 disputed amounts of tax
 which are not deposited with appropriate authorities as at 31st March
 2012, are as follows:
 
 Name of 
 the Statue   Nature of 
              the Dues   Total Amount   Period to which  Forum where 
                                                         the dispute 
                                                         is pending
                        (Rs. Millions)  the amount 
                                        relates         (Financial Year)
 
 The 
 Karnataka 
 Sales Tax 
 Act,1957/
 Central 
 Sales tax 
 Act,        Sales Tax/
             Entry Tax/      321.49     1993-94 to 
                                        1998-99         Assessment are
                                                        pending before
                                                        the
 1956/The 
 Karnataka 
 Tax on 
 Entry of 
 Goods Act, 
 1979.      Interest and
            Penalty                                     Assessing 
                                                        Authorities
 
 Income 
 Tax Act,
 1961       Income Tax/
            Interest/        122.48      2005-06        Income Tax
                                                        Appellate 
                                                        Authority and
 
            Penalty                                     Commissioner of
                                                        Income Tax
                                                        (Appeals)
 
 Central 
 Excise 
 Act, 1944  Central 
            Excise Duty/     461.09     1996-97 to 
                                        2011-12
                                                        Central Excise
                                                        Appellate 
                                                        Authorities/
            Service Tax/ 
            Interest/                                   Ministry of 
                                                        Finance, 
                                                        Government of
            Penalty                                     India.
 
 The 
 Customs 
 Act,1962   Customs 
            Duty/Interest/   647.54     1998-99 to 
                                        2009-10         Customs Appel
                                                        late Authorities.
            Penalty
 
 (x) The Company has no accumulated losses at at 31st March 2012.The
 Company has not incurred cash losses during the year and in the
 immediately preceding Financial Year.
 
 (xi) 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.
 
 (xii) The Company has not granted any loans or advances on the basis of
 the security by way of pledge of share, debenture and other securities.
 
 (xiii) Since the company is not a Chit Fund/ Nidhi/ Mutual Benefit
 Fund/ Society, the related reporting requirements are not applicable.
 
 (xiv) The Company was dealing in Mutual Fund Investments during the
 Year. Proper Records of Transactions and Contracts have been maintained
 and timely entries have been made. The said investments have been held
 bythe company in its own name.
 
 (xv) According to the information and explanations given to us, the
 terms and conditions of the Guarantees 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, the Company has not given any guarantee, for
 loans taken by others, from banks or financial institutions.
 
 (xvi) According to the information and explanations given to us, the
 company has availed term loans during the year and the same have been
 applied for the purpose for which the Loans were obtained except Rs.640
 Million availed at the end of the year invested in deposits with banks.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the Financial Statements of the Company we
 report that the funds raised on short term basis have not been utilized
 for long term investment.
 
 (xviii) During the year the Company has not made any preferential
 allotment of shares.
 
 (xix) The Company has no outstanding debentures at the end of the year.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (xxi) According to the information and explanation given to us, no
 fraud on or by the Company has been noticed or reported during the
 year.
 
 For MAHARAJ N.R.SURESH & Co          For GOPALAIYER AND SUBRAMANIAN
 
 Chartered Accountants                Chartered Accountants
 
 Firm Registration No.: 001931S       Firm Registration No.: 000960S
 
 CANR SURESH                          CA S. SUNDAR
 
 Partner                              Partner
 
 Membership No. 021661                Membership No. 202725
 
 New Delhi: 23rd May, 2012