We have audited the attached Balance Sheet as at 31st March, 2011 and
 the Profit and Loss Account along with the Cash Flow Statement for the
 year ended on that date of Energy Development Company Limited. 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 misstatements. 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
 (the Order) issued by the Central Government in exercise of the
 powers conferred by Section 227(4A) of the Companies Act, 1956,(the
 Act) and according to the information and explanations given to us and
 on the basis of such checks as we considered appropriate, we report
 that:
 
 i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) Fixed assets have been physically verified by the management during
 the year, which in our opinion is reasonable having regard to the size
 of the Company and nature of its business. No material discrepancies in
 respect of the assets verified during the year were noticed.
 
 (c) The Company has not disposed off any substantial part of the fixed
 assets during the year.
 
 ii) (a) The inventory has been physically verified during the year by
 the management at reasonable intervals.
 
 (b) The procedure 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 inventories and
 discrepancies noticed on the physical verification of inventory, as
 explained, were not material as compared to the book records.
 
 iii) (a) According to information and explanations given to us the
 company has given unsecured loans to four companies listed in the
 register maintained under Section 301 of the Act. The maximum amount
 involved during the year was Rs.661,933,713 and the year-end balance of
 such loans was Rs. 291,828,213.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 on which the unsecured loans as mentioned in (a) above were prima facie
 not prejudicial to the interest of the Company.
 
 (c) According to the information and explanations given to us, the
 principal amount and interest in respect of loan granted as mentioned
 in (a) above are repayable on demand. These loans are being repaid as
 and when recalled.
 
 (d) As informed to us, having regard to terms and conditions of the
 loan as mentioned above, there is no overdue amount outstanding in
 respect of such loan and interest there on.
 
 (e) According to the information and explanations given to us, the
 company had taken unsecured loan from two companies covered in the
 register maintained under Section 301 of the Act. The maximum amount
 involved during the year was Rs.229,950,000 and the year-end balance
 was Rs.229,850,000.
 
 (f) In our opinion, the rate of interest and other terms and conditions
 of such loan are not prima facie prejudicial to the interest of the
 Company.
 
 (g) According to the information and explanations given to us, the
 company has been regular in repayment of the principal amount and
 interest thereon as applicable.
 
 iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchases of inventory, fixed assets and sale
 of goods. During the course of our audit, we have not observed any
 continuing failure to correct weaknesses in the internal controls.
 
 v) (a) According to the information and explanations provided by the
 management, particulars of the contracts or arrangement referred to in
 Section 301 of the Act have been entered in the register required to be
 maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered into the register maintained under Section 301 of
 the Act and exceeding five lacs in respect of any party during the
 year, have been made at prices which are reasonable having regard to
 the prevailing market prices at the relevant time.
 
 vi) The Company has not accepted any deposits from the public under
 Section 58A, 58AA or any other relevant provision of the Act and the
 rules framed there under.
 
 vii) Internal audit of the Company has been carried out by firms of
 Chartered Accountants. In our opinion the internal audit system in
 respect of the areas covered during the year is commensurate with the
 size and nature of the business of the Company.
 
 viii) We have broadly reviewed the cost records and accounts prescribed
 by the Central Government under section 209(1) (d) of the Act and are
 of the opinion that prima-facie, such records have been maintained by
 the Company. However, we have not carried out any detailed examination
 of such accounts and records.
 
 ix) (a) According to the information and explanations given to us, the
 Company is generally regular in depositing with the appropriate
 authorities undisputed statutory dues including Provident Fund,
 Investor Education & Protection Fund, Employees'' State Insurance,
 Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and
 other material statutory dues applicable to it. According to the
 information and explanations given to us, there are no undisputed
 amounts payable in respect of aforesaid dues for a period of more than
 six months from the date they became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise
 Duty and Cess that have not been deposited with the appropriate
 authorities on account of any dispute.
 
 x) The Company does not have any accumulated losses as at the end of
 the financial year. The Company has not incurred any cash losses during
 the financial year covered by our audit and in the immediately
 preceding financial year.
 
 xi) In our opinion and on the basis of information and explanations
 given by the management, the Company has not defaulted in the repayment
 of dues to banks. The Company has not borrowed from any financial
 institutions and there were no debenture holders during the year.
 
 xii) According to the information and explanations given to us and
 based on the documents and records produced 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.
 
 xiii) In our opinion, the Company is not a chit fund or a nidhi mutual
 benefit fund/society. Accordingly, the provisions of clause 4(xiii) of
 the Order are not applicable to the Company.
 
 xiv) In- our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments.  Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable to the
 Company.
 
 xv) According to the 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 information and explanations given to us, the
 Company has not availed fresh term loans during the current financial
 year.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet, keeping in view that the
 unsecured loan taken by the Company and unsecured loan given to
 subsidiaries are related to long term capital projects and these will
 be repaid/refunded on long term basis, no short-term funds have been
 utilized for the long term investment during the year.
 
 xviii)The Company has not made preferential allotment of shares to the
 parties and companies covered in the register maintained under Section
 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the
 Order are not applicable to the Company.
 
 xix) The Company has not issued any debentures during the year.
 Accordingly, the provisions of clause 4(xix) of the Order are not
 applicable to the Company.
 
 xx) The Company has not raised money by public issue during the year.
 
 xxi) During the course of our examination of the books of account
 carried out in accordance with generally accepted auditing practices in
 India, we have neither come across any incidence of fraud on or by the
 Company nor have we been informed of any such case by the management.
 
 2.  Further to the 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) The Balance Sheet, the Profit and Loss Account and the Cash Flow
 statement are in agreement with the books of account;
 
 iii) Proper books of account as required by law have been kept by the
 Company so far as it appears from our examination of the books of
 account;
 
 iv) In our opinion, the Profit and Loss Account and the Balance Sheet
 of the Company comply with the accounting standards referred to in
 Sub-Section 3(C) of Section 211 of the Act;
 
 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 of the Company 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 Act;
 
 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
 notes thereon, give the information required by the Act in the manner
 so required and read together with the other notes thereon, give a true
 and fair view :
 
 (a) in case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 (b) in case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (c) in case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
                                                      For Lodha & Co.
 
                                               Chartered Accountants
 
                                  Firm ICA1 Registration No: 301051E
 
                                                       Sd/- H. S.Jha
 
 Place: Kolkata                                              Partner
 
 Date : 25th July, 2011                       Membership No. : 55854