1.  We have audited the attached Balance Sheet of Jindal Steel & Power
 Limited, as at 31st march, 2011, the Profit & 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.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. These 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 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 (Auditors'' Report) order, 2003 as
 amended by the Companies (Auditors'' Report) (Amendment) order, 2004
 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 as we
 considered appropriate and according to the information and
 explanations given to us, 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 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) 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;
 
 (iii) the Balance Sheet, Profit & Loss account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (iv) In our opinion and read with note no. B.3 of schedule 20 regarding
 accounting for sales tax included in sales price of products sold out
 of sales tax exempted unit under Sales Tax Subsidy Reserve account, 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;
 
 (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 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;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read with the
 Accounting Policies and 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:
 
 (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 the Cash Flow statement, of the Cash Flows for the
 year ended on that date.
 
 Annexure to Auditors'' Report Referred to in paragraph 3 of our report
 of even date
 
 1.  (a) The Company has maintained proper records
 
 showing full particulars including quantitative details and situation
 of fixed assets.
 
 (b) The Company has a phased programme of physical verification of its
 fixed assets which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets.  As part of this
 programme, the management has physically verified certain fixed assets
 during the year. discrepancies noticed on such verification as compared
 to book records, which were not material, have been properly adjusted
 in the books of account.
 
 (c) Fixed assets disposed off during the year were not substantial.
 
 2.  (a) As explained to us, physical verification has been conducted by
 the management at reasonable intervals in respect of finished goods,
 stores and spare parts and raw materials. Further, stock in the
 possession and custody of third parties and stock in transit as at 31st
 march, 2011 have been verified by the management with reference to
 confirmation or statement of account or correspondence with the third
 parties or subsequent receipts of goods.  in our opinion, the frequency
 of such verification is reasonable.
 
 (b) the procedures for the physical verification of inventories followed
 by the management are, in our opinion, reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) In our opinion, the Company is maintaining proper records of
 inventory. The discrepancies noticed on physical verification of
 inventory as compared to book records were not material and have been
 properly dealt with in the books of account.
 
 3.  (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) Since there are no such loans, comments regarding terms and
 conditions, repayment of the principal amount, interest due thereon and
 overdue amounts are not required.
 
 (c) 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.
 
 (d) Since there are no such loans, comments regarding terms and
 conditions, repayment of the principal amount, interest due thereon and
 overdue amounts are not required.
 
 4.  In our opinion and according to the information and explanations
 given to us during the course of audit, there are adequate internal
 control system commensurate with the size of the Company and the nature
 of its business with regard to purchase of inventories and fixed assets
 and for the sale of goods and services. Further, on the basis of our
 examination of the books and records of the Company, carried out in
 accordance with the generally accepted auditing practices in India, we
 have neither come across nor have we been informed of any instance of a
 major weakness in the aforesaid internal control system.
 
 5.  (a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of transactions that need to be entered into the
 register maintained under section 301 of the Companies Act, 1956 have
 been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions with parties, with whom transactions
 exceeding the value of Rupees Five Lacs in respect of each party have
 been entered into during the financial year, are at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time where such market prices are available.
 
 6.  in respect of fixed deposits accepted from the public, the
 provisions of section 58A and 58AA or any other relevant provisions of
 the Companies Act, 1956 includingthe Companies (Acceptance of deposit)
 Rules, 1975 have been complied with. We have been informed that no
 order has been passed by the Company Law Board or National Company Law
 tribunal or RBi or any Court or any other Tribunal in this regard.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the cost accounting records maintained by
 the Company pursuant to the rules prescribed bythe Central Government
 for the maintenance of cost records under clause (d) of sub-section (1)
 of section 209 of the Companies Act, 1956 and are of the opinion that,
 prima facie, the prescribed accounts and records have been made and
 maintained. We are, however, not required to make a detailed
 examination of such books and records.
 
 9. (a) In our opinion and according to the information and explanations
 given to us and according to the records of the Company, undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees State Insurance, Income tax, Sales tax,
 Wealth tax, Service tax, Custom duty, Excise duty, Cess and other
 material statutory dues, wherever applicable, have been regularly
 deposited with the appropriate authorities and there are no undisputed
 statutory dues payable for a period of more than six months from the
 date they became payable as at 31st march,2011.
 
 (b) According to the information and explanations given to us and as
 per the books and records examined by us, there are no dues of Custom
 duty and Wealth tax which have not been deposited on account of any
 dispute, except the following in respect of disputed Excise duty, Sales
 tax, Service tax, Cess, Entry tax and Income tax :
 
 Name of the Statute             Nature of dues             Amount
                                                        (Rs. in Lacs)
 
 Central Excise and Salt Act,    Excise duty                155.00
 1944
 
                                                             63.68
 
                                                         24,506.22
                                                            253.88
 
                                                             10.38
 
 Central Sales  tax Act/Local    Entry Tax                 3455.99
 Sales Tax Act / Entry Tax
 
                                 Entry Tax                    0.88
 
 Central Sales  tax Act/Local    State Sales Tax             20.21
 Sales Tax Act/Entry Tax
 
 Central Sales  tax Act/Local    Central Sales               44.05
 Sales Tax Act/Entry Tax         Tax
 
                                                             71.93
 
 Chhattisgarh State Govt. Law    Energy                   10406.66
                                 development
                                 Cess
 
 Business & other                Cess                      6922.00 
 Construction Workers
 Welfare Cess Act, 1996
 
 Income Tax Act, 1961            Income Tax              11,103.17
 
                                                          7,617.38
 
 
 Name of the Statue        Forum where dispute is            Amount
                            pending                       deposited
                                                        (Rs. in Lacs)
 
 Central Excise and Salt Act,
 1944                      Chhatisgarh High Court,          100.00
 
                                         Bilaspur
 
                           Appellate Commissioner,            NIL
 
                                           Raipur
 
                                    CESTAT, Delhi           113.08
 
                           Chattisgarh High Court,            NIL
 
                                         Bilaspur
 
                        Madhya Pradesh High court,            NIL
                                         Jabalpur
 
 Central Sales  tax Act/Local
 Sales Tax Act / Entry Tax    Deputy Commissioner,         1152.00
 
                          Commercial Tax (Appeals)
                                        ,Rourkela
 
                              Deputy Commissioner             0.36
                                 , Commercial Tax
                                (Appeals),Cuttack
 
 Central Sales  tax Act/Local
 Sales Tax Act/Entry Tax      Deputy Commissioner,            3.79
                         Commercial Tax (Appeals),
                                          Cuttack
 
 Central Sales  tax Act/Local
 Sales Tax Act/Entry Tax        Orissa High Court,
                                          Cuttack            44.05
 
                              Deputy Commissioner,           28.72
                          Commercial Tax, Cuttack
 
 Chhattisgarh State Govt. 
 Law                      Honorable Supreme Court             NIL
 
 Business & other
 Construction Workers
 Welfare Cess Act, 1996 Orissa High Court,Cuttack             5.00
 
 Income Tax Act, 1961        Income Tax Appellate           121.97
                             Tribunal, New Delhi
 
                       Commissioner of Income Tax             NIL
                                (Appeals), Rohtak
 
 10.  The Company does not have accumulated losses as at the end of the
 financial year. there are no cash losses during the financial year under
 report and in the immediately preceding financial year.
 
 11.  According to the information and explanations given to us and as
 per the books and records examined by us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders.
 
 12.  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.
 
 13.  The Company does not fall within the category of Chit fund / Nidhi
 / mutual benefit fund / Society and hence the related reporting
 requirements of the order are not applicable.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments and hence the related reporting requirements of the
 order are not applicable.
 
 15.  The Company has given guarantees against loans taken by others
 from banks and financial institutions; the terms and conditions of such
 guarantees are not, prima facie, prejudicial to the interest of the
 Company.
 
 16.  In our opinion and according to the information and explanations
 given to us, the term loans raised during the year by the Company have
 been applied for the purpose for which the said loans were obtained,
 where the lenders have stipulated such end use.
 
 17. According to the information and explanations given to us and as
 per the books and records examined by us, on an overall examination of
 the Balance Sheet of the Company, the funds raised by the Company on
 short-term basis have not been applied for long-term purposes.
 
 18.  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.
 
 19.  According to the information and explanations given to us and on
 the basis of the records examined by us, the Company has created
 necessary securities for the debentures issued in earlier years.
 
 20.  The Company has not raised any money by way of public issue during
 the year.
 
 21.  during the course of our examination of the books and records of
 the Company carried out in accordance with the generally accepted
 auditing practices in India, we have neither come across any instance
 of fraud on or by the Company, noticed and reported during the year,
 nor have we been informed of such case by the management.
 
                                    For S. S. KOTHARI MEHTA & CO.
 
                                           Chartered Accountants
                                        Registration No. 000756N
 
                                                (ARUN K. TULSIAN)
 
 Place: New Delhi                                        Partner
 
 Dated: 21st April, 2011                    Membership No. 89907