@

S.K. BAKLIWAL & CO.Chartered Accountants

4-B, Second Floor, S- 2,Behind Rai Choudhary Hospital,

Yudhistar Marg, C-Scheme, Jaipur-302001Tel.: 2221879, 2221698 @ Mob: 9414074032

Fax: 0141-2221698E-mail: bakliwalindia@yahoo.co.in

To the Members of HPCL RAJASTHAN REFINERY LTD

Report on the Financial Statements1. We have audited the accompanying financial statements of HPCLRAJASTHAN REFINERY LTD (the Company), which comprise the BalanceSheet as at March 31, 2014 the Statement of Profit and Loss for the year thenended, and a summary of significant accounting policies and other explanatoryinformation, which we have signed under reference to this report.

Management's Responsibility for the Financial Statements

2.The Company's Management is responsible for the preparation of thesefinancial statements that give a true and fair view of the financial position,financial performance Company in accordance with the Accounting Standardsreferred to in sub-section (3C) of Section 211 of 'The Companies Act, 1956' ofIndia (the "Act"). This responsibility includes the design, implementation andmaintenance of internal control relevant to the preparation and presentation of

the financial statements that give a true and fair view and are free from materialmisstatement, whether due to fraud or error.

Auditor's Responsibility

3.Our responsibility is to express an opinion on these financial statements basedon our audit. We conducted our audit in accordance with the Standards onAuditing issued by the Institute of Chartered Accountants of India. ThoseStandards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement.

Auditor's Opinion4. An audit involves performing procedures to obtain audit evidence, about theamounts and disclosures in the financial statements. The procedures selecteddepend on the auditor's judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditors consider internal control relevantto the Companies preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of the entity's

internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of the accounting estimates

made by Management, as well as evaluating the overall presentation of thefinancial statements.

Page 1 of 5

5.We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

Opinion

6.1n our opinion, and to the best of our information and according to theexplanations given to us, the accompanying financial statements give theinformation required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted inIndia:(i) in the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31, 2014;(ii) in the case of the Statement of Profit and Loss, of the profit for the year endedon that date.

(iii) In case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

Emphasis of Matter

Without qualifying our opinion we draw attention to:

(i) Note No. 7(ii)of Financial Statement regarding non subscription of sharecapital by the subscriber of Memorandum & Article of Associationaccordingly.

Report on other Legal and Regulatory Requirements

7.As required by 'The Companies (Auditor's Report) Order, 2003, as amended by'The Companies (Auditor Report) (Amendment) Order, 2004', issued by theCentral Government of India in terms of sub-section (4A) of Section 227 of theAct (here in after referred to as the "Order"), and on the basis of such checks ofthe books and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of theOrder.

8.As required by Section 227(3) of the Act, we report that:

(a)We have obtained all the information and explanations which, to the best ofour knowledge and belief, were necessary for the purpose 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;

Page 2 of 5

(c)The Balance Sheet, Statement of Profit dealt with by this Report is inagreement with the books of account;

(d)In our opinion, the Balance Sheet, Statement of Profit and Loss dealt with bythis report comply with the Accounting Standards referred to in sub-section (3C)of Section 211 of the Act, 1956;

(e)Disclosure in terms of clause (g) of Sub-Section (1) of Section 274 of theCompanies Act, 1956 is not required for Government Companies as perNotification No. GSR 829(E) dated October 21, 2003 issued by the Department ofCompany Affairs.

Place: JaipurDated: 21-5-2014

For S.K. Bakliwal & Co.f ~\ Chartered Accountants

(S.K. Bakliwal)Partner (Memb. No.070585)FRN001383C

Page 3 of 5

ANNEXURESTATEMENTS REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OFEVEN DATE TO THE MEMBERS OF HPCL RAJASTHAN REFINERY LTD.ONTHE ACCOUNTS FOR THE Period ENDED 31st MARCH, 2014.

(I) The company has not purchased any fixed assets therefore the clauserelating to maintenance of records and physical verification of fixedassets is not applicable.

(II) The company has not so far made any purchase and does not possessany inventory therefore reporting requirements regarding inventory arenot applicable to the company.

(III) (a)The company has not granted /taken any loans secured or unsecuredto any company, firm, or other party covered in the register maintainedunder section 301 of the Companies Act, 1956.

In view of clause (I) (a) above, the clauses (I) (b), (I) (c) and (I) (d)of sub-para 4 of the order are not applicable.

(IV) The company has not started its operations and has not made anypurchases so far therefore reporting requirements regarding adequacy ofinternal control procedure are not applicable to the company.

(V) (a) According to the information's and explanations given to us, duringthe year under audit there have been no contracts or agreements whichneed to be entered in the register maintained under section 301 of theCompanies Act, 1956.

(b) In view of clause (iii) (a) above, the clause (iii) (b) is not applicable.

(VI) The company has not accepted any deposits within the meaning ofsection 58And 58AAof the act & rules framed there under.

(VII) Considering the status of the business of the company as at 31.03.14the clause 7,8,9,10,11. (Paragraph 4&5 of the (Company's Auditor'sReport) order 2003 are not applicable to the company.

(VIII) According to the information and explanations given to us, company hasnot granted loans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

(IX) The company is not a chit fund or a nidhi/ mutual benefit fund/ society.Therefore, the provisions of clause 4 (xiii) of the Companies ( Auditor'sReport) Order,2003 are not applicable to the company.

Page 4 of 5

(X) The company is not dealing in or trading in shares, securities, debenturesand other investments. Accordingly, the provisions of clause 4(xiv) ofthe companies (auditor's report) order, 2003 are not applicable to the

company.

(XI) Company has not given any guarantees for loans taken by others frombanks or financial institutions.

(XII) No term loans has been availed by the company during the year.

(XIII)According to the information and explanations given to us, the companyhas not raised fund on short-term basis. No long term funds have beenused to finance short-term assets except permanent working capital.

(XIV) According to the information and explanations given to us, the companyhas not made preferential allotment of shares during the year.

(XV) According to the information and explanations given to us, during theyear not issued any debentures.

(XVI) No money raised by the means of public issue by the company.

(XVII)During the course of examination of books of account and records of the

Company, carried out in accordance with the generally accepted auditingpractices in India, and according to the information's and explanations

given to us, we have not come across any fraud on or by the Company,

noticed or reported during the year, nor have we been informed of such

case by the Management.

Place: Jaipur For S.K. Bakliwal & Co.Dated:21-5-2014 Chartered Accountants

(S.K. Bakliwal)Partner (Memb. No.070585)FRN001383C

Page 5 of 5

mi s ^ 0 i 'i Mi mjmw-s' '' www-

I.

1a)b)

II.

HPCL RAJASTHAN REFINERY LIMITED( A Joint Venture of Hindustan Petroleum Corporation Ltd. and Government of Rajasthan )

BALANCE SHEET AS ON 31st MARCH, 2014

EQUITY AND LIABILITIES:

Shareholders' fundsShare capitalReserves and surplus

Current Liabilitiesi) Other loans and advancesii) Other current liabilities

ASSETS:

Non-Current AssetsFixed Assets:Capital work-in-progress

Current AssetsCash and cash equivalents

12

34

TOTAL

6

TOTAL

Amount in Rupees

5,00,000(2,00,88,881)

22,29,94,74920,000

20,34,25,868

20,29,25,768

5,00,100

20,34,25,868

Misc. Notes forming part ofAccountsStatement of Significant

Accounting Policies

As per our Report of Even DateFor S. K. Bakliwal & Co.Chartered AccountantsRegistration No. 001383C

Partner: S.K.BakliwalM No: 070585

Place: JaipurDate : 21st May, 2014

Joo/JAIPUR

^

Nishi VasudevaChairman

A. B. ThosarManager CFO&To Secretary

m g sm^?i~'"~' 's-;-f!" :<?WfM!l ,

HPCL RAJASTHAN REFINERY LIMITED(A Joint Venture of Hindustan Petroleum Corporation Ltd. and Government of Rajasthan)

STATEMENT OF PROFIT & LOSS FOR THE PERIOD ENDING 31st MARCH, 2014

I.

II.

III. (I+II)

ParticularsREVENUE:

I. Revenue from operations

II. Other income

III Total Revenue (I+II)

EXPENSES:

Depreciation/Depletion and Amortization expenses:Preliminary expenses

IV Total expenses

V. Profit/(Loss) before exceptional and extraordinary items and tax (III-IV)

VI. Exceptional items

VII. Profit/(Loss) before extraordinary items and tax (V - VI)

VIII.Extraordinary items

IX. Profit/(Loss) before tax (VII-VIII)

X Tax expenses(1)Current tax(2)Deferred tax

XI Profit/(Loss) for the year from continuing operations (IX-X)

XII Profit/(loss) from discontinuing operations (before tax)

XIII Tax expenses of discontinuing operations

XIV Profit/(loss) from discontinuing operations (after tax)(XII-XIII)

XV Profit (loss) for the period (xi-xiv)

XVIEarnings per equity share of Rs. 10 each(1)Basic(2)Diluted

Note No. Amount in Rupees

2,00,88,881

2,00,88,881

(2,00,88,881)

(2,00,88,881)

(2,00,88,881)

(2,00,88,881)

(2,00,88,881)

(401.78)(401.78)

As per our Report of Even DateFor S. K. Bakliwal & Co.Chartered AccountantsRegistration No. 001383C

Nishi VasudevaChairman

K. V. RaoDirector

Partner : S.K. BakliwalM No: 070585

Place: JaipurDate : 21st May, 2014

fc/af

A. B. ThosarManager

uAN^Sajrma

CFO & Co. Secretary

s@-&S DAC &

T-r .?y^p Sf5 E^3S S-jam<3!r--'f @@@~3SSBgjS! -

HPCL RAJASTHAN REFINERY LIMITED( A Joint Venture of Hindustan Petroleum Corporation Ltd. and Government of Rajasthan )

NOTES FORMING PART OF THE FINANCIAL STATEMENTS AS ON 31.03.2014

Amount in Rupee:NOTE 1: SHARE CAPITAL

a) Authorised :4,00,00,00,000 Equity Shares of Rs. 10 each

b) Subscribed :

10,00,00,000 Equity Shares of Rs. 10 each

c) i) Subscribed, Issued & Fully Paid Up:50,000 Equity Shares of Rs.10 each fully paid up

ii) Subscribed but not paid up:9,99,50,000 Equity Shares of Rs.10 each fully paid up

a)

b)

c)

40,00,00,00,000

1,00,00,00,000

5,00,000

99,95,00,000

Nos.

50,000

50,000

iii) Shares outstanding:

Outstanding at the beginning of the yearIssued & Fully paid during the yearBought back during the yearOutstanding at the end of the year

iv) Shareholding more than 5% shares:Shareholding more than 5% shares

HPCLGoR

NOTE 2: RESERVES & SURPLUSLoss as per Statement of Profit & Loss

NOTE 3: OTHER LOANS & ADVANCESHindustan Petroleum Corpn. Ltd. (HPCL)

NOTE 4: OTHER CURRENT LIABILITIESProvision for Professional Fees

NOTE 5: CAPITAL WORK IN PROGRESSPre-Project expenses incurred and accounted for pending allocation:

NOTE 6: CASH & CASH EQUIVALENTSState Bank of Bikaner & Jaipur-Current A/c

NOTE 7: MISC. NOTES FORMING PART OF ACCOUNTS

Equity shares of Rs.10 eachRs.

5,00,000

5,00,000

Equity shares of Rs.10 eachAs of 31.03.2014

No. of shares held % of shareholding37,000 74%13,000 26%

(2,00,88,881)

22,29,94,749

20,000

20,29,25,768

5,00,100

i) This is the 1st Accounting Year after incorporation of the company. As such,, previous year's figures have not been provided.

ii) As per Memorandum of Association (MoA) and Articles of Association (AoA) of the company, total number of shares subscribed by subscribers to MoA andAoA is 10,00,00,000 equity shares of Rs. 10/- each amounting to Rs. 100,00,00,000/-. However, during the year, the actual no. of shares issued and paid up is50,000 equity shares amounting to Rs.5,00,000/-.

iii) Govt. of Rajasthan (GoR) has allotted a land measuring 12034.10 bigha at Pachpadra Village, Banner District vide letter dtd. 11.10.2013 for an amount ofRs. 191,06,06,079/-. Pending execution of lease agreement, the same has not been considered in accounts.Further, an additional amount of Rs. 1,40,57,307/- is proposed to be levied by GoR towards cost of land to be used for Re-alignment of NH-112. Representationfor exclusion of this land cost has been made to GoR. Pending finalisation of the issue, the same has not been considered in accounts.

iv) An amount of Rs.20,00,00,510/- has been paid by HPCL towards stamp duty on MoA and AoA of the company. As HPCL has not raised Debit Note on thecompany for this but has filed a refund application (for its refund to HPCL) to GoR for this amount in line with an exemption notification issued by the State Govt.in Sept., 2013, the same has not been considered in accounts.

v) Deferred Tax Asset has not been recognised in accordance with AS-22, in view of uncertainty over set off of the losses against taxable income in definitivefuture.

vi) No provision of income tax has been made as the project is under construction/erection stage and expenditure incurred are being capitalized,vii) Capital commitment of the company as of 31st March, 2013 is Rs.24,00,00,000/-.viii) No provision is made for liability, which is contingent in nature.

ix)JJeeHpenses prior to incorporation Rs. 8,93,38,357/-& after incorporation Rs. 13,36,56,392/- (total Rs.22,29,94,749/-) are inorprated in the books of companyJtaSpjiyiite)ttNote issued by HPCL. Said Debit Note is supported by a certificate dtd. 07.04.2014 issued by M/s AMS & Co., Chartered Accountants.

m

HPCL RAJASTHAN REFINERY LTD.(A Joint Venture of Hindustan Petroleum Corporation Ltd. and Government of Rajasthan)

isroTFS FORMTNO PART OF THE FINANCIAL STATEMENTS AS AT 31.03.2014

Note 8: SIGNIFICANT ACCOUNTING POLICIES

1. Basis of PreparationThe financial statements are prepared on accrual basis (except otherwise stated) under historical cost convention in accordance with Generally AcceptedAccounting Principles (GAAP), Accounting Standards referred to in the Companies (Accounting Standards) Rules, 2006 issued by the Central Governmentand the relevant provisions of the Companies Act(s), 1956 and 2013, Necessary estimates and assumptions are made for preparation of financial statementsduring the reporting period and difference between the actual and the estimates are recognised in the period in which the results materialise.

2. Significant Accounting Polices

2.1TANGIBLE ASSETSa. Tangible assets are stated at cost net of accumulated depreciation / amortization

b. Land acquired on lease for 99 years or more is treated as freehold land.

c. Technical know-how /licence fee relating to plants/ facilities are capitalized as part of cost of the underlying asset.

2.2INTANGIBLE ASSETSa. Cost of Right of Way for laying pipelines is capitalised as Intangible Asset and is amortised over a period of 99 years.

b. Technical know-how /licence fee relating to production process and process design are recognized as Intangible Assets.

c. Cost of Software directly identified with hardware is capitalised along with the cost of hardware. Application software is capitalised as Intangible Asset.

2.3CONSTRUCTION PERIOD EXPENSES OF PROJECTa. Related expenditure (including temporary facilities and crop compensation expenses) incurred during construction period of project are shown underthe head 'Capital Work in Progress'.

b. Financing cost incurred during the construction period on loans specifically borrowed and utilised for projects is capitalised. Financing cost includesexchange rate variation in relation to borrowings denominated in foreign currency.

2.4DEPRECIATION / AMORTIZATIONa. Depreciation on Fixed Assets is provided on the Straight Line method, in the manner and at the rates prescribed under Schedule XIV to the CompaniesAct, 1956 (Schedule II to the Companies Act, 2013 when notified) and is charged pro rata on a monthly basis on assets, from / up to and inclusive of themonth of capitalisation / sale, disposal or deletion during the year.

b. All assets costing up to R 5000/- are fully depreciated in the year of capitalisation.

c. Premium on leasehold land is amortised over the period of lease.

d. Machinery Spares, which can be used only in connection with an item of fixed asset and the use of which is expected to be irregular, are depreciatedover a period not exceeding the useful life of the principal item of fixed asset.

e. Intangible Assets other than cost of right of way are amortized on a straight line basis over a period often years or life of the underlying plant/facilityor the asset's licensed period of usage, whichever is the earliest.

2.5FOREIGN CURRENCY TRANSACTIONSa. Foreign Currency transactions during the year are recorded at the exchange rates prevailing on the date of transactions.

b. All foreign currency assets, liabilities and forward contracts are restated at the rates prevailing at the year end.

c. All exchange differences for the Project are dealt with in Financial Statements under the head 'Capital Work in Progress' including those covered byforward contracts, where the premium / discount arising from such contracts are recognised over the period of contracts.

2.6PROVISIONSA provision is recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settlethe obligation in respect of which a reliable estimate can be made.

2.7CONTINGENT LIABILITIES AND CAPITAL COMMITMENTSContingent Liabilities are considered only for items exceeding R 5.00 lakhs in each case. Contingent Liabilities in respect of show cause notices areconsidered only when converted into demands. Capital Commitments are considered only for items exceeding R 1 lakh in each case.

2.8ACCOUNTING/CLASSIFICATION OF TRANSACTIONS IN FINANCIAL STATEMENTSa. Insurance claims are accounted on acceptance basis.

b. All other claims/entitlements are accounted on the merits of each case/realisation.

">>

^ f '^^^ iS^i ''' .

HPCL RAJASTHAN REFINERY LIMITED

(A Joint Venture of Hindustan Petroleum Corporation Ltd. and Government of Rajasthan)

CASH FLOW STATEMENT FOR THE PERIOD ENDING 31st MARCH, 2014

fe,

ParticularsA. Cash Flow From Operating Activities

Net Profit/(Loss) before Tax & Extraordinary itemsChange in current liabilitiesNet Cash from Operating activities

B. Cash Flow From Investing ActivitiesCapital work in progress

Net Cash from Investing Activities

C. Cash Flow From Financing ActivitiesAmount received towards Share CapitalExpenses financed by Promoter (HPCL)

Net Cash from Financing activities

NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AS ON 18th SEPT., 2014 (OPENING)

CASH AND CASH EQUIVALENTS AS ON 31st MARCH, 2014 (CLOSING)

NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS

Amount in Rupees

5,00,100

5,00,100

As per our Report of Even DateFor S. K. Bakliwal & Co.

Chartered AccountantsRegistration No. 001383C

Nishi VasudevaChairman

Partner: S.K. BakliwalM No: 070585

Place: JaipurDate : 21st May, 2014

A. B. ThosaiManager . Secretary

(A)

(B)

(C)

(A+B+C)

(2,00,88,881)20,000

(2,00,68,881)

20,29,25,768(20,29,25,768)

5,00,00022,29,94,749

22,34,94,749

5,00,100