1.  We have audited the attached Balance Sheet of KALPATARU POWER
 TRANSMISSION 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 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 fi
 nancial 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 signifi cant 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 of India in terms of Section
 227 (4A) of the Companies Act, 1956 (‘the Act) 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 specifi ed 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 such
 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 re ad with the notes
 thereon, and subject to third party confi rmations, give the
 information required by the Companies Act, 1956 in the manner so
 required and give a true and fair view in conformity with 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 & 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 fl ows of the
 Company for the year ended on that date.
 
 5.  On the basis of written representations received from the Directors
 as on March 31, 2011 and taken on record by the Board of Directors,
 none of the Directors is disqualifi ed as on March 31, 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 on the accounts
 of Kalpataru Power Transmission Limited)
 
 1.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fi xed
 assets;
 
 (b) As explained to us, the assets have been physically verifi ed by
 the management in accordance with a phased program of verifi cation of
 its fi xed assets adopted by the Company which, in our opinion, is
 reasonable, considering the size and the nature of its business. The
 frequency of verifi cation is reasonable and no material discrepancies
 have been noticed on such physical verifi cation.
 
 (c) During the year, the Company has not disposed off substantial part
 of fi xed assets.
 
 2.  (a) The inventory has been physically verifi ed by the management
 during the year at reasonable intervals. In our opinion, the frequency
 of verifi cation is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, procedures of physical verifi cation of inventory followed
 by the management are reasonable and adequate in relation to the size
 of the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory. In our
 opinion, discrepancies noticed on physical verifi cation of stocks have
 been properly dealt with in the books of accounts.
 
 3.  (a) The Company has granted unsecured loans to two companies
 covered in the register maintained under section 301 of the Companies
 Act, 1956. The maximum amount involved during the year is Rs.
 13,832.33 lacs and the year end balance is Rs. 13,832.33 lacs.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of the loans given by the Company are not prima facie prejudicial to
 the interest of the Company.
 
 (c) The said parties have been regular in the payment of principal and
 interest as per stipulation, if any.
 
 (d) There is no overdue amount in respect of loans granted to
 companies, fi rms or other parties listed in the register maintained
 under section 301 of the Companies Act, 1956.
 
 (e) The Company has not taken any loans, secured or unsecured, from
 companies, fi rms or other parties listed in the register maintained
 under Section 301 of the Companies Act, 1956. Therefore, the provisions
 of sub-clause (e), (f) and (g) of clause 4 (iii) of the Order are not
 applicable to the Company.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business for the purchases of inventory and fi xed assets and for the
 sale of goods and services. During the course of audit, no major
 weakness has been noticed in the internal controls in respect of these
 areas.
 
 5.  (a) Based on the audit procedures applied by us and according to
 the information and explanations provided by the management, we are of
 the opinion that the particulars of contracts or arrangement that need
 to be entered into the register maintained under Section 301 of the
 Companies Act, 1956 have been so entered.
 
 (b) According to the information and explanations given to us, the
 transactions made in pursuance of contracts or arrangements entered in
 the register maintained under Section 301 of the Companies Act, 1956
 have been made at the prices which are reasonable having regard to the
 prevailing market prices at the relevant time
 
 6.  According to the information and explanations given to us the
 Company has not accepted any deposits during the year from public
 within the meaning of the provisions of Section 58A and 58AA or any
 relevant provisions of the Companies Act,1956 and rules made thereof.
 
 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 books of account relating to
 materials, labour and other items of cost maintained by the Company in
 respect of generation of electricity from agriculture residue pursuant
 to the rules made by the Central Government for the maintenance of cost
 records under section 209 (1) (d) of the Companies Act, 1956 and we are
 of the opinion that prima facie, the prescribed accounts and records
 have been made and maintained.
 
 9.  (a) According to the information and explanations given to us and
 the records examined by us, the Company is generally
 
 regular in depositing with appropriate authorities 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
 applicable to it.
 
 (b) According to the information and explanations given to us, there
 are no dues of income tax, sales tax, wealth tax, service tax, customs
 duty, excise duty and cess which have not been deposited on account of
 any dispute except the followings:
 
 Sr. Name of the 
      statute      Nature of dues   Year      Amount    Forum where 
                                                        dispute is
 No                                      (Rs. In lacs)  pending
 
 1.  Finance 
     Act,1994     Service Tax     2003-04     1757.70   Customs, Excise 
                                                        and Service
                                & 2004-05               Tax Appellate 
                                                        Tribunal
                  Penalty for 
                  input           2006-07        1.01   Commissioner 
                                                       (Appeals),
                  service tax                           Commercial Taxes
 
 2.  Madhya 
     Pradesh 
     Entry Tax    Entry Tax       2005-06        6.54   Joint 
                                                        Commissioner
                                                        (Appeals), 
     Act, 1976                                          Commercial Taxes
 
 3.  Rajasthan 
     VAT Act, 
     2003         VAT             2004-05        6.36   High Court of 
                                                        Rajasthan
 
                  VAT             2005-06       11.10   Assistant 
                                                        Commissioner,
                                                        Commercial Taxes
 
 4.  West Bengal 
     VAT Act, 
     2003         VAT             2004-05       12.33   West Bengal VAT
                                                        Appellate
                                                        Tribunal 
                  VAT             2007-08      186.49   Joint 
                                                        Commissioner,
                                                        Commercial Taxes
 
 5.  Haryana 
     Value Added 
     Tax Act,     VAT             2005-06 & 
                                  2006-07       19.27   Joint
                                                        Commissioner 
                                                       (Appeals), 
     2003                                               Commercial Taxes
 
 6.  Rajasthan 
     Tax on 
     Entry of     Entry Tax       2006-07 & 
                                  2007-08        2.78   Commercial Tax 
                                                        Officer 
     Goods in 
     Local Area 
     Act, 1999
 
 7.  Andhra 
     Pradesh VAT 
     Act, 2005     VAT            2006-07       10.56   Deputy 
                                                        Commissioner,
                                                        Commercial Taxes
 
 8.  Bihar VAT 
     Act, 2005     VAT            2005-06 to
                                  2008-09      130.79   Deputy
                                                        Commissioner, 
                                                        Commercial Taxes
 
 9.  The Mumbai 
     Stamp Act, 
     1958          Additional 
                   Stamp          2005-06               Deputy
                                                        Collector of 
                                                        Stamps
                   duty on land                  7.56   Duty
 
 10.  There are no accumulated losses of the Company as at March 31,
 2011. The Company has not incurred cash losses during the financial
 year covered by our audit and in the immediately preceding financial
 year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to a fi
 nancial institution or bank or debentures holders.
 
 12.  The Company has not granted any loans or advances on the basis of
 security, by way of pledge of shares, debentures and other securities.
 
 13.  As per the information and explanations given to us, the Company
 is not a chit fund or nidhi mutual benefi t fund/Society, therefore,
 the provisions of para 4 (xiii) of the Companies (Auditors Report)
 Order, 2003 are not applicable to the Company.
 
 14.  As per the information and explanations given to us, the Company
 is not dealing or trading in shares, securities, debentures and other
 investments. Accordingly, the provisions of para 4(xiv) of the
 Companies (Auditors Report) Order, 2003 are not applicable to the
 Company.
 
 15. The Company has given guarantees and letters of comfort in respect
 of loans taken by the Companys subsidiary from banks
 
 According to the information and explanations given to us, the terms
 and conditions on which the Company has given guarantees and letters of
 comfort are not prejudicial to the interest of the Company.
 
 16.  According to the information and explanations given to us, in our
 opinion the term loans raised during the year have been applied for the
 purposes for which they were raised.
 
 17.  According to the information and explanations given to us and on
 an overall examination the balance sheet and cash fl ow statement of
 the Company, we report that no funds raised on short-term basis have
 been used for long term investment.
 
 18.  The Company has not made any preferential allotment of shares
 during the year.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  We have verifi ed the end use of money raised through Qualifi ed
 Institutional Placement (QIP) as disclosed in note 25 of shedule S
 forming part of financial statements. Pending utilisation of the fund
 raised through QIP, a sum of Rs. 20,450 lacs has been temporarily
 deployed in mutual funds and fi xed deposit with banks.
 
 21.  According to the information and explanations given to us, no
 fraud on or by the Company was noticed or reported during the course of
 our audit.
 
 For Kishan M. Mehta & Co.,
 
 Chartered Accountants
 
 (Registration No.105229W)
 
 Kishan M. Mehta
 
 Partner
 
 (Membership No. 13707)
 
 Place: Ahmedabad
 
 Date: May 16, 2011
 
 For Deloitte Haskins & Sells,
 
 Chartered Accountants
 
 (Registration No 117365W)
 
 Gaurav J. Shah
 
 Partner
 
 (Membership No. 35701)
 
 Place: Ahmedabad
 
 Date: May 16, 2011