1.  We have audited the attached REVISED Balance Sheet of M/s NHPC
 Limited as at March 31, 2011 and the REVISED Profit & Loss account,
 REVISED Statement of expenditure during construction and REVISED Cash
 Flow Statement of the Company 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.  Reference is invited to Auditors'' Report dated 27.05.2011 given by
 us on the financial Statements of NHPC Limited for the financial year
 ended as at 31.03.2011.
 
 3.  The Company has amended its aforesaid financial statements covered
 by the above referred Auditor''s Report so as to incorporate the
 provision for dividend and dividend distribution tax thereon in the
 books, which has been recommended by the Board of NHPC Limited.
 Accordingly, the Balance Sheet as at 31.03.2011 and Profit & Loss
 Account for the period ended on even date, audited by us (covered by
 our above referred Auditors Report) has been amended by the Company
 (refer Note No. 33 of Schedule 24).
 
 4.  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 from any 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 presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 5.  As required by the Companies (Auditor''s Report) Order, 2003, issued
 by the Central Government of India in terms of section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters in paragraph 4 and 5 of the said Order.
 
 6.  Further to our comments in the Annexure referred to in Para 3
 above, without qualifying our report, we draw attention to (a) Note No.
 5 (Schedule 24 – Notes to Accounts) in respect of accounting of sales
 on provisional basis pending determination of tariff by the Central
 Electricity Regulatory Commission and Prior Period sales, (b) Note No.
 7 (Schedule 24 – Notes to Accounts) regarding capitalisation of
 Corporate Office Expenses, Regional Office Expenses, Survey &
 Investigation and administration & other general overhead expenses of
 construction projects and (c) Note No. 12 (Schedule 24 – Notes to
 Accounts) regarding having referred the issue of capitalisation of
 expenditure incurred for creation of assets (enabling assets) not
 within the control of the company, to Expert Advisory Committee of the
 Institute of Chartered Accountants of India, 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) The allocation of work amongst the auditors has been followed as
 per the direction contained in letter No.CA.  V/COY/CENTRAL GOVERNMENT,
 NHPC(5)/70 dated 13.07.2010 addressed to NHPC by the Office of the
 Comptroller & Auditor General of India, New Delhi;
 
 (iii) 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 the
 books;
 
 (iv) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (v) 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;
 
 (vi) The Department of Companies Affairs, Ministry of Finance vide
 Notification No. F.No.8/5/2001-CL.V dated 21st October 2003 have
 notified that the provisions of clause (g) of sub-section (1) of
 section 274 of Companies Act, 1956, shall not apply to a Government
 Company.
 
 (vii) The Central Government has not prescribed the amount of Cess
 payable under section 441A on Companies Act,1956, we are not in a
 position to comment upon the regularity or otherwise of the company in
 depositing the same.
 
 (viii) In our opinion and to the best of our information and according
 to the explanations given to us, the annexed accounts read together
 with other notes thereon in schedule 24 and significant accounting
 policies in schedule 23, thereon give the information required under
 the Companies Act, 1956 in the manner so required and give a true &
 fair view in conformity with the accounting principles generally
 accepted in India:
 
 1.  In the case of the Balance Sheet, of the state of affairs of the
 company as at 31st March, 2011;
 
 2.  In the case of the Profit and Loss account, of the Profit for the
 year ended on that date;
 
 3.  In case of Statement of Expenditure During Construction, of the
 expenditure incurred up to the period ended on reporting date; and
 
 4.  In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITOR''S REPORT
 (Referred to in paragraph 3 of our report of even date)
 
 1.  In respect of its fixed assets:
 
 a) The company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 b) All the fixed assets have been physically verified by the
 management/outside Chartered Accountants Firm during the year. In our
 opinion, the frequency of verification is reasonable having regard to
 the size of the company and nature of the assets. As per the
 information given to us by the management, no material discrepancies as
 compared to book records were noticed in respect of fixed assets
 physically verified during the year.
 
 c) The Company has not disposed off substantial part of fixed assets
 during the year.
 
 2.  In respect of its inventories:
 
 a) The inventory has been physically verified during the year by the
 management/outside Chartered Accountants Firms. In our opinion, the
 frequency of verification is reasonable.
 
 b) In our opinion and according to the information and explanation
 given to us, the procedures of verification of stocks 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 inventories. The
 discrepancies noticed on physical verification of inventories have been
 properly dealt with in the books of account.
 
 3.  In respect of loans granted/taken to/from companies, firms or other
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956:
 
 a) The company has not taken or granted any loans, secured or
 unsecured, to/from companies, firms or other parties during the year
 covered in the register maintained under section 301 of the Companies
 Act, 1956. In view of this, sub clauses (b), (c) and (d) of clause
 (iii) are not applicable.
 
 b) As per explanations & information the Company has not taken any
 loans from the parties covered under the register maintained u/s 301 of
 the Companies Act, 1956. In view of this sub clause (e), (f) & (g) of
 clause (iii) are not applicable.
 
 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 with regard to the purchase of the inventory, fixed assets and
 sale of power & services; however the same needs to be strengthened
 further.
 
 5.  In respect of transactions with companies, firms or other parties
 covered in the register maintained under section 301 of the Companies
 Act, 1956:
 
 a) According to the information and explanations given to us, during
 the year under audit there have been no contracts & arrangements which
 need to be entered in the register maintained under section 301 of the
 Companies Act.
 
 b) In view of sub clause (a) above, the sub-clause is not applicable.
 
 6.  The Company has broadly complied with provisions of section 58A and
 58AA of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules, 1975. According to the information and explanation
 given to us, no order has been passed by the Company Law Board.
 
 7.  Corporation is having internal audit department/Outside Chartered
 Accountants Firm responsible for carrying out the Internal Audit of
 various sections at head office and at project offices at periodical
 intervals as per the approved audit plan.
 
 8.  The Company has maintained proper books of account relating to
 material, labour and items of cost incurred by the Company pursuant to
 the rule made by the Central Government for maintenance of cost records
 under section 209(1)(d) of the Companies Act, 1956. However, we have
 not made a detailed examination of these accounts with a view to
 determine whether they are accurate or complete.
 
 9.  In respect of statutory dues:
 
 (a) According to the records of the company, undisputed statutory dues
 including Provident Fund, Investor Education & Protection Fund, Income
 Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess
 & other material statutory dues, have generally been regularly
 deposited with the appropriate authorities. We are informed that the
 Employee''s State Insurance Scheme is not applicable to the Company.
 According to the information and explanations given to us, undisputed
 payable in respect of the aforesaid statutory dues were in arrears, as
 at 31/03/2011 for a period of more than six months from the date they
 became payable.
 
 (b) According to the information and explanations given to us and as
 per the records of the company, the dues of Sales Tax, Income Tax,
 Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not
 been deposited on account of any dispute amounting to Rs. 2253.31 Cr.
 
 Statute              Nature       Forum                     Amt 
                                                          (Rs. in crore)
 
 Income Tax Act,1961  Income tax   ACIT, Faridabad               8.65
 
                                   CIT (Appeal), Dehradun        1.12
 
                                   Total                         9.77
 
                      Sales Tax    Guhahati High Court        1934.07
 
                                   Sales Tax Appellate, J&K    247.54 
 Sales Tax Act of 
 various                           AC/JC, Trade Tax              0.05
 states
                                   JCCT, Sale tax               20.87
 
                                   High Court, Kolkatta          0.06
 
                                   Total                      2202.59
 
 Assam VAT            VAT          DC, Sales tax                13.87
 
 Custom Act,1962      Custom Duty  Mumbai Custom                 0.06
 
 Finance Act,1994     Service tax  Service tax 
                                   Commissioner, Delhi          27.02
 
                                   Grand Total                2253.31
 
 10.  The company has no accumulated losses as at the end of the
 financial year. The company has not incurred cash losses during the
 financial year covered by our audit or in the immediately preceding
 financial year.
 
 11.  Based on our audit procedures and according to the information and
 explanation given to us, we are of the opinion that the company has not
 defaulted in repayment of dues to financial institutions, bank or
 debenture holders.
 
 12.  In our opinion and according to the information and explanations
 given to us, no loans and advances have been granted by the company on
 the basis of the security by way of pledge of shares, debentures and
 other securities.
 
 13.  In our opinion, the company is not a chit fund or a nidhi/mutual
 benefit fund/society. Therefore, the provisions of this clause are not
 applicable to the company.
 
 14.  In our opinion, the company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors'' Report) Order,
 2003 is not applicable to the company.
 
 15.  The company has not given guarantees for loans taken by the others
 from banks or financial institutions.
 
 16.  As per information & explanations given to us by the management,
 the term loans have been applied for the purpose for which they were
 raised.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, we are of
 the opinion that there are no funds raised on short-term basis that
 have been used for long-term investment.
 
 18 During the year, 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 & explanations given to us, the
 company has created security in respect of Bonds issued by the company.
 
 20.  The Corporation has not raised money by Public Issue during the
 year.
 
 21.  Based on the audit procedures performed for the purpose of
 reporting the true & fair view of the financial statements and as per
 the information and explanations given by the Management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
                                            For S. B. G. & Company 
 
                                             Chartered Accountants
 
                                                 (CA. Suresh Kumar)
 
                                                           Partner
 
 Place: New Delhi                                    M. No. 072921
 
 Dated: 30.06.2011                                  F.R.No.001818N