Gujarat Industries Power Co.

1.  We have audited the attached Balance Sheet of Gujarat Industries
 Power Company Limited as at 31 st March, 2009 and also the Profit and
 Loss Account and the Cash Flow Statement for the year ended on that
 date, annexed thereto.  These financial statements are the
 responsibility of the Companys 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 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 (Auditors Report) Order, 2003, issued
 by the Central Government 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 necessary and appropriate, and
 according to information and explanations given to us, we enclose in
 the Annexure a statement on the matters specified in paragraph 4 and 5
 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, 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 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;
 
 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 & Loss Account 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, to the extent applicable;
 
 e.  on the basis of the written representations received from the
 directors of the Company, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 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 accounts read together with the
 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 31 st March, 2009;
 
 (ii) in the case of Profit and Loss Account, of the Profit of the
 Company for the year ended on that date;
 
 (iii) in the case of Cash Flow Statement, of the Cash Flow for the year
 ended on that date.
 
                                               For K. C. Mehta & Co.
                                               Chartered Accountants
                                                               Sd/-
                                                        Milin Mehta
 Place: Vadodara                                            Partner
 Date : 22nd June, 2009                      (Membership No. 38665)
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (referred to in paragraph (3) thereof)
 
 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 as per the phased programme of physical verification of fixed
 assets. As informed to us, the programme is such that all the fixed
 assets will get physically verified in three years time. In our
 opinion, the same is reasonable having regard to the size of the
 Company and the nature of its fixed assets. No material discrepancies
 were noticed on such verification.
 
 c) The Company has not disposed off a substantial part of its fixed
 assets during the year and therefore, do not affect the going concern
 assumption.
 
 ii. a) The inventory has been physically verified by the management at
 the year end.
 
 b) In our opinion and according to the information and explanations
 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 nature of its business.
 
 c) The Company has maintained proper records of its inventories. No
 material discrepancies were noticed on physical verification of
 inventory as compared to book records.
 
 iii. The Company has neither granted any loans nor taken any loans,
 secured or unsecured, to or from companies, firms or other parties
 listed in the, register maintained under Section 301 of the Companies
 Act, 1956. Therefore, the provisions of clause (iii) of the Order are
 not applicable to the Company.
 
 iv. In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 are of a special nature and their prices cannot be compared with
 alternative quotations, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory, fixed assets and for 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 controls.
 
 v. In our opinion and according to the information and explanations
 given to us, there are no transactions made by the company in pursuance
 of contracts or arrangements required to be entered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 vi. In our opinion and according to information and explanations given
 to us, the Company has complied with the provisions of Section 58A,
 58AAor any other relevant provisions of the Companies Act, 1956 and
 the Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. As informed to us, no Order has been
 passed by the Company Law Board or National Company Law Tribunal or
 Reserve Bank of India or any court or any other tribunal.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 viii. We have broadly reviewed the books of accounts and records
 maintained by the company pursuant to the Order made by the Central
 Government for the maintenance of cost records u/s 209 (1) (d) of the
 act and are of the opinion that prima-facie the prescribed accounts and
 records have been made and maintained.  We have not, however made a
 detailed examination of the records.
 
 ix. a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, employees state insurance,
 income tax, sales tax, service tax, custom duty, excise duty, cess and
 other material statutory dues applicable to it.  According to the
 information and explanations given to us, no undisputed amounts payable
 in respect of statutory dues were in arrears as at 31st March, 2009 for
 a period of more than six months from the dates they become payable.
 
 b) According to the information and explanations given to us, there are
 no dues of customs duty, wealth tax, service tax, excise duty and cess
 which have not been deposited on account of any dispute.
 
 In respect of Stamp Duty and Income tax as at 31st March, 2009 which
 have not been deposited on account of any dispute, the details are as
 under:
 
 Particulars                Forum where the dispute is pending
 
 StampDuty                   Dy.Collector,
                             Stamp Duty 
                             Valuation Office, Vadodara
 Income Tax                  Commissioner of
                             Income Tax of
                             Appeals,
                             Vadodara
 Income Tax                  Commissioner of
                             Income Tax of
                             Appeals,
                             Vadodara
 
 Period to       Amount
 which the       (Rs. in
 amount          lakhs)
                  relates
 
 1996-97        452.60
 A.Y.2003-04      6.40
 A.Y.2000-01      9.20
 
 x. In our opinion, the Company has no accumulated losses.  The-Company
 has not incurred cash losses during the financial year covered by our
 audit and during the immediately preceding financial year.
 
 xi. In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to the
 financial institution or bank.
 
 xii. In our opinion and according to the information and explanations
 given to us, the Company has not granted any loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities and therefore, the provisions of clause (xii) of the Order
 are not applicable to the Company.
 
 xiii. In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 (xiii) of the Order are not applicable to the Company.
 
 xiv. In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. The Company is investing
 surplus funds in
 
 marketable securities and bonds. According to the information and
 explanations given to us, proper records have been maintained of the
 transactions and contracts and timely entries have made therein. The
 investments in marketable securities and bonds have been held by the
 Company in its own name.
 
 xv. According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institution and therefore, the provisions of clause (xv)
 of the Order are not applicable to the Company.
 
 xvi. In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purpose for which
 they were raised.
 
 xvii. According to the information and explanations given to us and on
 overall examination of the Balance Sheet of the Company, we report that
 the funds raised on short-term basis have not been used for long term
 investment.
 
 xviii.According to the information and explanations given to us, during
 the period covered by our audit report, the company has not made any
 preferential allotment of shares to the parties and companies covered
 in the register maintained under section 301 of the Companies Act,
 1956.
 
 xix. According to the information and explanations given to us, during
 the period of audit the Company has not issued any secured debentures.
 
 xx. The Company has not raised any money by public issue during the
 year and therefore, the provisions of clause (xx) of the Order are not
 aDplicable to the Company.
 
 xxi. According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
                                           For K. C. Mehta & Co.
                                           Chartered Accountants
                                                           Sd/-
                                                    Milin Mehta
 
 Place: Vadodara                                        Partner
 Date : 22nd June, 2009                  (Membership No. 38665)