1.  We have audited the attached Balance Sheet of INDIABULLS POWER
 LIMITED, (the Company) as at March 31, 2011, the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date, both 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 the 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 the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the 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.  As required by the Companies (Auditor''s Report) Order, 2003 (CARO)
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 (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 it appears from our examination of
 those books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (e) in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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 March 31, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5. On the basis of the written representations received from the
 Directors as on March 31, 2011 taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 March 31, 2011 from being appointed as a Director in terms of Section
 274(l)(g) of the Companies Act, 1956.
 
 ANNEXURE TO THE AUDITORS'' REPORT (Referred to in paragraph 3 of our
 report of even date)
 
 (i) Having regard to the nature of the Company''s business / activities
 / result, clauses (x), (xiii) and (xix) of CARO are not applicable.
 
 (ii) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets.
 
 (b) The fixed assets were physically verified during the year by the
 Management in accordance with a regular programme of verification
 which, in our opinion, provides for physical verification of all the
 fixed assets at reasonable intervals.  According to the information and
 explanations given to us, no material discrepancies were noticed on
 such verification.
 
 (c) None of the fixed assets were disposed off during the year.
 
 (iii) The Company did not have any inventory during the year.
 
 (iv) In respect of loans, secured or unsecured, granted by the Company
 to companies, firms or other parties covered in the Register under
 Section 301 of the Companies Act, 1956, according to the information
 and explanations given to us:
 
 (a) The Company has granted loans aggregating Rs.  27,002,580,352 to
 two Companies during the year. At the year-end, the outstanding
 balances of such loans aggregated Rs. 5,010,607,344 (2 Companies) and
 the maximum amount involved during the year was Rs. 8,427,062,531 (2
 Companies).
 
 (b) The rate of interest and other terms and conditions of such loans,
 wherever stipulated, are, in our opinion, prima facie not prejudicial
 to the interests of the Company.
 
 (c) The receipts of principal amounts and interest have been regular/as
 per stipulations.
 
 (d) There were no overdue principal and interest amounts remaining
 outstanding as at the year-end.
 
 In our opinion and according to the information and explanations given
 to us, the Company has not taken any loans secured or unsecured during
 the year from companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956. Accordingly,
 sub clauses (e), (f) & (g) of clause (iii) of the Order pertaining to
 loans taken during the year are not applicable to the Company.
 
 (v) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased are of special nature and suitable alternative sources are
 not readily available for obtaining comparable quotations, there is an
 adequate internal control system commensurate with the size of the
 Company and the nature of its business with regard to purchases of
 fixed assets and the sale of services. There were no transactions
 during the year with regard to purchase of inventory or the sale of
 goods. During the course of our audit, we have not observed any major
 weakness in such internal control system.
 
 (vi) In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to in Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transaction is in excess of Rs.5 lakhs in
 respect of any party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time except in respect of certain purchases /
 services purchased for which comparable quotations are not available
 and in respect of which we are unable to comment.
 
 (vii) According to the information and explanations given to us, the
 Company has not accepted any deposit from the public during the year.
 
 (viii) In our opinion, the internal audit functions carried out during
 the year by firm of Chartered Accountants appointed by the Management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 (ix) The Central Government of India pursuant to the Cost Accounting
 Records (Electricity Industry) Rules, 2001 (Rules) has prescribed the
 maintenance of cost records prescribed under Section 209(1) (d) of the
 Companies Act, 1956 to the Company. According to the information and
 explanations given to us, the Rules are not applicable to the Company
 for the year ended March 31, 2011, as the Company has not started
 commercial production as at the year end.  To the best of our knowledge
 and according to the information and explanations given to us, the
 Central Government has not prescribed the maintenance of cost records
 for any other product of the Company.
 
 (x) According to the information and explanations given to us in
 respect of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Income-tax, Wealth Tax, Service Tax,
 Cess and other material statutory dues applicable to it with the
 appropriate authorities. The Company has no dues towards Investor
 Education and Protection Fund, Employees'' State Insurance, Sales Tax,
 Custom Duty and Excise Duty.
 
 (b) There were no undisputed amounts payable in respect of Income-tax,
 Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory
 dues in arrears as at March 31, 2011 for a period of more than six
 months from the date they became payable.
 
 (c) There are no dues of Income-tax, Sales Tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty and Cess which have not been deposited as
 on March 31, 2011 on account of any dispute.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks and financial institutions. During the year, the Company has not
 obtained any borrowings by way of debentures.
 
 (xii) In our opinion, the Company has not granted loans and advances on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) Based on our examination of the records and evaluations of the
 related internal controls, the Company has maintained proper records of
 the transactions and contracts in respect of its dealing in other
 investments and timely entries have been made therein. The aforesaid
 investments have been held by the Company in its own name. During the
 year, the Company has not dealt in any shares, securities or
 debentures.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks and financial institutions
 are not prima facie prejudicial to the interests of the Company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained, other than temporary deployment pending
 application.
 
 (xvi) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year for long- term investment.
 
 (xvii)According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the Register maintained under Section 301 of
 the Companies Act, 1956.
 
 (xviii) The Management has disclosed the end use of money raised by
 public issues and we have verified the same.
 
 (xix) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no material fraud
 on the Company has been noticed or reported during the year.
 
 For DELOITTE HASKINS & SELLS
 
 Chartered Accountants
 
 (Registration No.ll7365W)
 
 K. A. Katki
 
 Partner
 
 (Membership No. 038568)
 
 Mumbai, April 25, 2011