1.  We have audited the attached Balance Sheet of NTPC LIMITED as at
 31st March 2011, the Profit and Loss Account and also the Cash Flow
 Statement for the year ended on that date annexed thereto. These
 financial statements are the responsibi lity 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 Auditing Standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whetherthe
 financial statements are free from material misstatement. An audit
 includes examining, on 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 issued
 by the Government of India in terms of sub-section (4A) of Section 227
 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 annexure referred to in para 3 above, we
 report that:
 
 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, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) 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;
 
 e) Being a Government Company, pursuant to the Notification no. GSR
 829(E) dated 21.10.2003 issued by Government of India, provisions of
 clause (g) of sub-section (1) of Section 274 of the Companies Act,
 1956, are not applicable to the Company,-
 
 f) Without qualifying our report, we draw attention to Note no. 2 (a)
 and (b) (Schedule 26 - Notes on Accounts) in respect of accounting of
 sales on provisional basis pending determination of tariff by the
 Central Electricity Regulatory Commission,-
 
 g) 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 in Schedule 26, 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 Balance Sheet, of the state of affairs of the
 Company as at 31st March 2011,
 
 b.  in the case of Profit and Loss Account, of the profit for the year
 ended on that date, and
 
 c.  in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS’ REPORT
 
 Statement referred to in paragraph (3) of our report of even date to
 the members of NTPC LIMITED on the accounts for the year ended 31st
 March 2011
 
 (i) (a) The Company has generally maintained proper records showing
 full particulars including quantitative details and situation of fixed
 assets.
 
 (b) Al I the assets have not been physically verified by the management
 during the year but there is a regular programme of verification which,
 in our opinion, is reasonable having regard to the size of the Company
 and the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 (c) Substantial part of the fixed assets has not been disposed off
 during the year.
 
 (ii) (a) The inventory has been physically verified by the management
 at reasonable intervals.
 
 (b) The procedures of physical verification 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. The
 discrepancies noticed on physical verification of inventory, wherever
 material, have been properly dealt with in the books of account.
 
 (iii) (a) The Company has not granted any loans secured or unsecured to
 any companies, firms or other parties covered in register maintained
 under Section 301 of the Companies Act, 1956.
 
 In view of clause (iiiXa) above, the clauses (iiiXb), (iiiXc) and
 (iiiXd) are not applicable.
 
 (e) The Company has not taken any loans, secured or unsecured from
 companies, firms or other parties covered in register maintained under
 Section 301 of the Companies Act, 1956.
 
 In view of (iii) (e) above, the clauses (iii) (f) and (iii) (g) are not
 applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business for
 purchase of inventory and fixed assets and for sale of electricity,
 goods and services.  During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control systems.
 
 (v) (a) According to the information and explanations given to us,
 during the year under audit there have been no contracts or
 arrangements which need to be entered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 In view of clause (v) (a) above, the clause (v) (b) is not applicable.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by the
 Reserve Bank of India, the provisions of Sections 58A and 58AA or any
 other relevant provisions of the Companies Act, 1956 and the Companies
 (Acceptance of Deposits) Rules, 1975 with regard to the deposits
 accepted from the public. No order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 Court or any other tribunal.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of business.
 
 (viii) We have broadly reviewed the accounts and records maintained by
 the Company 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. We have not,
 however, made detailed examination of the records with a view to
 determine whether they are accurate and complete.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, income tax, sales-tax, wealth tax,
 service tax, custom duty, excise duty, cess and other statutory dues
 have generally been regularly deposited with the appropriate
 authorities and there are no undisputed dues outstanding as on 31st
 March 2011 for a period of more than six months from the date they
 became payable.
 
 (b) The disputed statutory dues aggregating to Rs. 172.86 crore that have
 not been deposited on account of matters pending before appropriate
 authorities are detailed below:
 
 Sl.No.  Name of 
         Statute      Nature of dues    Forum where the 
                                        dispute is pending    Rs. crore
 
 1 Central Sales Tax 
   and Sales Tax/VAT  Sales Tax/VAT    Additional
                                       Commissioner of Sales 
                                       Taxes                   25.27 
 Acts of Various 
 States
 
                                       Commissioner of 
                                       Sales Tax                6.46
 
                                       Dy. commissioner of 
                                       Sales/ Commercial 
                                       Taxes                   15.93
 
                                       High Court              83.38
 
                                       Sales Tax Tribunal       1.07
 
                                       Joint Commissioner 
                                       (Appeal) Trade tax       2.46
 
 2 Water (Prevention
  & Control of       Water/Pollution 
                     Cess              Appellate Authority, 
                                       Pollution Control 
                                       Board                    1.26
 Pollution) Cess 
 Act, 1977
 
 3. Indian Stamp 
 Act, 1899           Land Tax          Appellate Authority
                                       -Board of Revenue        0.96
 
 4. Central Excise 
 Act, 1944          Central Excise 
                    Duty               CESTAT                   0.30
 
 5. Income Tax 
 Act, 1961          Income Tax         Income Tax Appellate 
                                       Tribunal/CIT             0.35
                                       Allahabad High Court    34.70
                                       Asst. Commissioner       0.72
 
 Total                                                        172.86
 
 (x) The Company has no accumulated losses and has not incurred cash
 losses during the financial year covered by our audit and the
 immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutions, banks or debenture holders.
 
 (xii) According to the information and explanations given to us,
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 (xiii) The Company is not a chit fund or a nidhi/mutual benefit
 fund/society. Therefore, the provisions of clause 4(xiii) of the
 Companies (Auditor''s Report) Order, 2003 are not applicable to the
 Company.
 
 (xiv) 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 (Auditor''s Report) Order, 2003 are not
 applicable to the Company.
 
 (xv) The Company has not given any guarantees for loans taken by others
 from banks or financial institutions.
 
 (xvi) According to the information and explanations given to us, the
 term loans have been applied for the purpose for which they were
 obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investments.
 
 (xviii) According to the information and explanations given to us, the
 Company has not made preferential allotment of shares during the year.
 
 (xix) According to the information and explanations given to us, the
 Company has created security or charge in respect of the Bonds issued
 by the Company during the year except in respect of certain bonds
 raised in March 2011 for which security creation is in process.
 
 (xx) According to the information and explanations given to us, the
 Company has not raised any money by public issue during the year.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 year.
 
 For Dass Gupta & Associates    For K K Soni & Co.    For Varmaand Varma
 
 Chartered Accountants        Chartered Accountants Chartered Accountants
 
 Firm Reg. No.000112N          Firm Reg. NO.000947N  Firm Reg. NO.004532S
 
 [ Ashok Kumar Jain ]           [ S.S. Soni ]     [ C.G. Pankajakshan ]
 Partner                           Partner               Partner
 M. No. 090563                  M. No. 094227           M. No.020512
 For Parakh & Co.              For B.C. Jain & Co.   ForS. K. Mehta&Co.
 
 Chartered Accountants       Chartered Accountants Chartered Accountants
 
 Firm Reg. NO.01475C         Firm Reg. NO.001099C   Firm Reg. NO.000478N
 
 [V. D. Mantri ]               [ Rishabh Jain ]       [ Rohit Mehta ]
 
 Partner                           Partner                Partner
 
 M. No. 074678                   M. No.400912         M. No.091382
 
 Place: New Delhi
 
 Date: 10th May 2011