We have audited the attached balance sheet of HINDALCO INDUSTRIES
 LIMITED as at 31st March, 2011 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
 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 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.
 
 As required by the Companies (Auditor''s report) Order, 2003, as amended
 by the Companies (Auditor''s Report) (Amendment) Order, 2004 issued by
 the Central Government of India in terms of sub-section (4A) of Section
 227 of the Companies Act, 1956, we enclose as Annexure, a statement on
 the matters specified in the paragraphs 4 and 5 of the said order.
 
 Further to our comments in the Annexure referred above, we report that:
 
 1) 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;
 
 2) 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;
 
 3) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 4) 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 sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 5) On the basis of the 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 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 Companies Act, 1956;
 
 6) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 significant accounting policies in Schedule 19 and notes appearing
 thereon give the information required by the Companies Act, 1956 (as
 amended) 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 as at 31st March, 2011;
 
 (b) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 (c) In the case of Cash Flow Statement, of the Cash Flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 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
 according to a phased program designated to cover all items over a
 period of three years which in our opinion is, reasonable having regard
 to size of the Company and the nature of its assets. Pursuant to the
 program, certain fixed assets have been physically verified by the
 management during the year and no material discrepancies between book
 record and physical inventory has been noticed.
 
 (c) No substantial part of fixed assets has been disposed of during the
 year, which has bearing on the going concern assumption.
 
 II.  (a) Physical verification of inventory, (except stocks in transit
 and stocks lying with third parties, confirmation for which has been
 obtained) have been conducted at reasonable intervals during the year
 by the management/ outside agencies.
 
 (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 nature of its business.
 
 (c) The Company has maintained proper records of inventory. 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 listed 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 listed in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 IV.  On the basis of checks carried out during the course of audit and
 as per explanations given to us, we are of the opinion that there are
 adequate internal control procedures commensurate with the size of the
 Company and the nature of its business; for the purchase of inventory
 and fixed assets and for the sale of goods and services. During the
 course of our audit, no major weakness has been noticed or reported in
 the internal controls.
 
 V.  In our opinion and according to the information and explanations
 given to us, there are no contracts or arrangements referred to in
 Section 301 of the Companies Act, 1956, particulars of which needs to
 be entered into register maintained under Section 301 of the Act.
 Accordingly, clause 4(v)(b) of the Order is not applicable.
 
 VI.  The Directives issued by the Reserve Bank of India and the
 provisions of Sections 58A and 58AA and other relevant provisions of
 the Companies Act, 1956 and the rules framed there-under have been
 complied with in respect of deposits accepted from the public. We have
 been informed that, no order has been passed by Company Law Board or
 National Company Law Tribunal or Reserve Bank of India or any other
 Court or Tribunal in this regard.
 
 VII.  The Company has an internal audit system, which in our opinion is
 commensurate with the size and nature of the business.
 
 VIII. The Company has maintained proper cost records as prescribed by
 Central Government under Section 209 (1) (d) of the Companies Act, 1956
 for the products of the Company but no detailed examination of such
 records has been carried out by us.
 
 IX.  (a) According to the information and explanations given to us and
 on the basis of our examination of the books of account, the Company is
 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, Cess and other statutory dues with the
 appropriate authorities. According to the information and explanations
 given to us no undisputed statutory dues as above were outstanding as
 at 31st March, 2011 for a period of more than 6 months from the date
 they became payable.
 
 (b) According to the information and explanations given to us, the dues
 of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty,
 Service Tax and Cess which have not been deposited on account of any
 dispute and the forum where the dispute is pending as on 31st March
 2011 are as under:
 
 Name of the     Nature of      Amount  Period to which 
                                        the amount 
                                        relates          Forum where the
                                                         disputes
 Statue          Dues          (Rs. in
                                Crores)                  are pending
 
 Central Sales 
 Tax Act         Sales Tax       11.66    1986-1987, 
                                          1989-1990, 
                                          1990-1991,     High Court
 and Local 
 Sales Tax Act                          1992-1993, 1995
                                       -1996, 2001-2002
                                          2003-2004
 
                                  7.98   1998-1999 to 
                                         2000-2001,
                                         2002-2003 to    Tribunal
                                         2008-2009
 
                                 32.55   1991-1992,
                                         1994-1995, 
                                         1996-1997 to    Asst 
                                                         Commissioner/
                                         2007-2008       Commissioner/
                                                         Revisionery
                                                         Authorities 
                                                         Level
 
 The Central 
 Excise        Excise Duty      168.32   2000-2001 to 
                                         2007-2008       Supreme Court
 Act, 1944
 
                                274.20   1994-1995, 
                                         2000-2001, 
                                         2008-2009 to    High Court
                                         2010-2011
 
                                 30.37   1988-1990 to 
                                         1991-1992,
                                         1993-1994,      Tribunal
                                         2000-2001 to 
                                         2010-2011
 
                                  3.09   2000-2001 to 
                                         2009-2010       Asst
                                                         Commissioner/
                                                         Commissioner/
                                                         Revisionery
                                                         Authorities 
                                                         Level
 
 The Service 
 Tax            Service Tax      19.62   1997-1998 to 
                                         1999-2000, 
                                         2004-2005 to    Tribunal
 under the 
 Finance                                 2010-2011
 Act, 1994
 
                                  7.20   2001-2002, 
                                         2005-2006,
                                         2006-2007,      Asst 
                                                         Commissioner/
                                         2008-2009 to 
                                         2010-2011       Commissioner/
                                                         Revisionery
                                                         Authorities
                                                         Level
 
 The Custom 
 Act , 1962    Customs Act      18.32   2003-2004 to 
                                        2006-2007        Asst 
                                                         Commissioner/
                                                         Commissioner
                                                         /Revisionery
                                                         Authorities 
                                                         Level
 
 Adhosanrachna Chhattisgarh      0.13   2005-2006 to 
                                        2010-2011        Supreme Court
 Vikas Evam    Development and
 Parayavaran 
 Upkar         Environment Cess
 Adhiniyam,
 2005
 
 Shakti Nagar 
 Special       Cess on Coal      6.30   1997-1998 to
                                        2010-2011        Supreme Court
 Area 
 Development
 Authority
 
 Income Tax 
 Act 1961      Income Tax       14.56   1996-1997        ITAT
 
 X.  The Company does not have any accumulated losses and has not
 incurred cash losses in the current financial year and in the
 immediately preceding financial year.
 
 XI.  The Company has not defaulted in repayment of dues to Financial
 Institutions or Banks or Debenture holders.
 
 XII.  According to the information and explanations given to us, the
 Company has not granted any loans or advances on the basis of security
 by way of pledge of Shares, Debentures and other Securities.
 
 XIII. The Company is not a chit fund or a nidhi/mutual benefit fund/
 society.
 
 XIV.  The Company is not in the business of dealing or trading in
 shares. The Company has maintained proper records of transactions and
 contracts in respect of Shares, Securities, Debentures and other
 Investments and timely entries have been made therein. The Shares,
 Securities, Debentures and other Investments have been held by the
 Company, in its own name except to the extent of exemption, granted
 under Section 49 of the Companies Act, 1956.
 
 XV.  In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 corporate guarantees for loans taken by its Subsidiaries and Joint
 Ventures from Banks and Financial Institutions (including foreign
 banks) are not prima facie prejudicial to the interest of the Company.
 
 XVI. Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained though unutilized funds which were not required for
 immediate use for capital expenditure have been temporarily invested in
 mutual funds / bank deposit.
 
 XVII.According to the information and explanations given to us and on
 the basis of our overall examination of the Balance Sheet and Cash Flow
 Statement, we report that no funds raised on short term basis have been
 used for long term investment of the Company.
 
 XVIII.During the year under audit, the Company has not made any
 preferential allotment of Shares to parties and Companies covered under
 register maintained under Section 301 of the Companies Act, 1956.
 
 XIX. During the year under audit, the Company has neither issued any
 debentures nor was any debentures outstanding at the year end.
 
 XX.  The Company has not raised any money by Public Issues during the
 year.
 
 XXI. During the course of our examination of the books and records of
 the Company, carried out in accordance with the Generally Accepted
 Auditing Practice in India, and according to the information and
 explanations given to us, we report that following fraud has been
 detected during the year.
 
 Duty Entitlement Pass Book and Vishesh Krishi Gram Udyog Yojna
 licenses for Rs 48.43 crore, purchased by the Company from market and
 used for payment of custom duty on import of raw material, were
 purportedly claimed to be fake and are being investigated by
 Directorate of Revenue Intelligence (DRI) Ahmedabad. The Company has
 voluntarily paid entire amount to the Custom Authorities with interest
 of Rs. 10.11 crore. The total amount paid Rs. 58.54 crore has been
 charged to Profit & Loss Account during the year. The Company has
 initiated legal action against the seller.
 
                                                     For SINGHI & CO.,
  
 Camp: Mumbai                                   Chartered Accountants
 
 Dated: The 30th day of May, 2011        Firm Registration No.302049E
 
                                                         RAJIV SINGHI
 
 1-B, Old Post Office Street,                                (Partner)
 
 Kolkata-700 001                                 Membership No. 53518