1.  We have audited the attached Balance Sheet of PETRONET LNG LIMITED
 as at 31st March, 2011 and also the Profit and Loss Account and Cash
 Flow Statement of the Company 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 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.
 
 3.  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
 those books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of Account;
 
 (d) 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 section 211 (3C) of the Companies Act, 1956 to
 the extent applicable;
 
 (e) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, we report that none of
 the directors are prima facie, disqualified as on 31.03.2011 from being
 appointed as directors of the Company under section 274(1)(g) of the
 Companies Act, 1956.
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements 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 :
 
 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 cash flow statement, of the cash flows for the year ended on
 that date.
 
 4.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended) issued by the Department of Company Affairs, Govt. of India in
 terms of Section 227 (4A) of the Companies Act, 1956, and on the basis
 of such checks of the books and records of the Company as we considered
 appropriate and according to the information and explanations given to
 us, we further report on the matters specified in the paragraphs 4 and
 5 of the said Order as under :
 
 i a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) The management has physically verified most of the fixed assets at
 the year end, the frequency of which, in our opinion, is reasonable. No
 material discrepancies were noticed on such verification.
 
 c) Since there is no substantial disposal of fixed assets during the
 year, the preparation of financial statements on a going concern basis
 is not affected on this account.
 
 ii a) The stock of raw materials and stores have been physically
 verified by the management at regular intervals. In our opinion, the
 frequency of verification is reasonable.
 
 b) In our opinion, 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) In our opinion, the Company is maintaining proper records of
 inventory and no material discrepancies were noticed on physical
 verification.
 
 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. Therefore, the provisions
 of clause 4(iii)(a) to (d) of the Companies (Auditors Report) Order are
 not applicable.  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.
 Therefore, the provisions of clause 4(iii)(e) to (g) of the Companies
 (Auditors Report) Order are not applicable.
 
 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 the nature of its business, for the
 purchase of inventory, fixed assets and for the sale of goods and
 services. During the course of our audit, we have neither come across
 nor have been informed of any continuing failure to correct major
 weaknesses in internal control system of the Company.
 
 v According to the information given to us, there are no contracts or
 arrangements during the year that need to be entered into a register in
 pursuance of section 301 of the Companies Act, 1956.
 
 vi The Company has not accepted deposits from the public within the
 provisions of sections 58A and 58AA or any other relevant provisions
 and the Rules framed there under.
 
 vii An outside agency has carried out internal audit during the year.
 In our opinion, the internal audit system of the Company is
 commensurate with the size and nature of its business.
 
 viii We have broadly reviewed the books of accounts maintained by the
 Company, pursuant to rules made by the Central Government for the
 maintenance of cost records under clause (d) of sub-section (1) of
 section 209 of the Companies Act, 1956 and are of the opinion that
 prima facie, the prescribed accounts and records have been maintained.
 We have not, however, made a detailed examination of the records with a
 view to determine whether they are accurate and complete.
 
 ix a) According to the information and explanations given to us and
 records of the Company examined by us, in our opinion, the Company has
 been generally regular in depositing undisputed statutory dues
 including Provident Fund, Income-tax, Sales-tax, Wealth Tax, Service
 Tax, Custom Duty, and any other statutory dues with the appropriate
 authorities. There were no arrears of undisputed statutory dues as at
 31st March, 2011, which were outstanding for a period of more than six
 months from the date they became payable. We are informed that there is
 no liability towards Investor Education and Protection Fund, Employees’
 State Insurance, Cess and Excise Duty for the year under audit.
 
 b) There are no disputed dues which have remained unpaid as on 31st
 March, 2011 in respect of sales tax / income tax / custom duty / wealth
 tax / service tax.  x The Company has no accumulated losses as at 31st
 March 2011 and has not incurred cash losses during the financial year
 covered by our audit or in the immediately preceding financial year.
 
 xi On the basis of the verification of records and information and
 explanations given to us, the Company has not defaulted in repayment of
 dues to financial institutions or banks. There are no debentures
 outstanding in the books of accounts at any time during the year.
 
 xii The Company has not granted 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 / nidhi / mutual benefit fund /
 society. Therefore, the provisions of clause 4(xiii) of the Companies
 (Auditors Report) Order are not applicable.
 
 xiv The Company is not dealing or trading in shares, securities,
 debentures and other investments. Therefore, the provisions of clause
 4(xiv) of the Companies (Auditors Report) Order are not applicable.
 
 xv According to information and explanations given to us, the Company
 has not given any guarantee for loans taken by others from banks or
 financial institutions.
 
 xvi According to the records of the Company, term loans taken during
 the year have been applied for the purpose for which they were obtained
 except that an amount of Rs. 249.15 crores pending utilization is
 temporarily held in short term investment.
 
 xvii According to information and explanations given to us, the cash
 flow statement examined by us and on overall examination of the balance
 sheet of the Company, we report that funds raised on short term basis
 have not been used for long term investments.
 
 xviii During the year, the Company has not made any preferential
 allotment of shares to parties and companies covered in the Register
 maintained under section 301 of the Act.
 
 xix As the Company has no outstanding debentures during the year,
 question of creating securities or charge does not arise.
 
 xx The Company has not raised any money through public issue of
 securities during the year and therefore, verification of the end use
 of money does not arise.
 
 xxi Based on the audit procedure performed and the representation
 obtained from the management, we report that no case of fraud on or by
 the Company has been noticed or reported during the year under audit.
 
                                         For V. Sankar Aiyar & Co.
 
                                             Chartered Accountants
 
                                       ICAI Firm Regn. No. 109208W
 
                                                      (Ajay Gupta)
 Place : New Delhi                                        Partner
 
 Date : 26th April, 2011                     Membership No. 90104