1.  We have audited the attached Balance Sheet of Indraprastha Gas
 Limited (the Company”) as at 31 March, 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 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 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 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 (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 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 31 March, 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 written representations received from the
 Directors, as on 31 March, 2011 taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 March, 2011
 from being appointed as a director in terms of Section 274(1)(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 Companys business, clauses
 (xiii), (xiv), (xix) and (xx) of paragraph 4 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.  According to the information and explanations given to us, the
 Company has a phased programme of physical verification of its fixed
 assets by which all fixed assets, other than underground gas
 distribution systems which are not physically verifiable, are verified
 over a period of two years. The fixed assets were verified in
 accordance with this programme. In our opinion, the frequency of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its business. According to the information
 and explanations given to us, no material discrepancies were noticed on
 such verification.
 
 c.  The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (iii) In respect of its inventory:
 
 a.  Inventory comprises Gas and Stores and spares. According to the
 information and explanations given to us, inventory of stores and
 spares has been physically verified during the year by the Management.
 In our opinion, the frequency of verification of stores and spares is
 reasonable. According to the information and explanations given to us,
 the stock of gas in pipeline cannot be physically verified and is
 estimated on volumetric basis.
 
 b.  In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 c.  In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and discrepancies noted between physical inventory and book
 records were not material having regard to the size of the operations
 of the Company and the same have been properly dealt with in the books
 of account.
 
 (iv) The Company has neither granted nor taken any loans, secured or
 unsecured, to/from companies, firms or other parties listed in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 (v) In our opinion and according to the information and explanations
 given to us, 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 inventory and fixed assets and the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness in such internal control system.
 
 (vi) Based on the examination of the books of account and related
 records and according to the information and explanations given to us,
 there are no contracts or arrangements with companies, firms or other
 parties which need to be entered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (vii) According to the information and explanations given to us, the
 Company has not accepted any deposits from the public during the year
 as defined under the provisions of Section 58A and 58AA of the
 Companies Act, 1956 and the rules framed there under.
 
 (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) We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the rules made by the Central Government for
 maintenance of cost records under Section 209(1)(d) of the Companies
 Act, 1956 in respect of its products and are of the opinion that prima
 facie, the prescribed accounts and records have been made and
 maintained. However, we have not made a detailed examination of the
 records with a view to determine whether they are accurate or complete.
 
 (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
 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 with the appropriate authorities. There
 are no undisputed amounts payable in respect of these statutory dues
 which have remained outstanding as at 31 March, 2011 for a period of
 more than six months from the date they became payable. We were
 informed that the operations of the Company during the year did not
 give rise to any liability for Wealth Tax.
 
 b.  The dues of Income Tax and Sales Tax, which have not been deposited
 by the company on account of various disputes are as follows:
 
 Name of      Nature of   Amount    Amount paid   Period to   Forum where
 statute         dues   demanded  under protest   which the   the dispute