1 We have audited the attached Balance Sheet of Reliance Communications
 Limited (''the Company'') as at 31 March 2011 and also the profit and 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. Those 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 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 (Auditor''s Report) Order, 2003 (''the
 Order'') issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 (''the Act''),
 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 the paragraph
 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 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) on the basis of written representations received from the directors
 of the Company as at 31 March 2011 and taken on record by the Board of
 Directors, we report that none of the directors is disQualified as at 31
 March 2011 from being appointed as a director of the Company under
 clause (g) of sub-section (1) of Section 274 of the Companies Act,
 1956; and
 
 (f) 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 loss 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.
 
 Annexure to Auditors'' Report - 31st March, 2011
 
 With reference to the Annexure referred to in the Auditors'' Report to
 the Members of Reliance Communications Limited (''the Company'') on the
 financial statements for the year ended 31 March 2011, we report the
 following:
 
 1.  (a) The Company is in the process of updating its fixed asset
 register including, to give effect to the assets transferred on
 demerger of the optical fibre undertaking and the passive infrastructure
 to a subsidiary company.
 
 (b) We are informed that the Company physically verifies its assets over
 a three year period, except for base trans-receiver stations. We are
 informed that these assets are under continuous operational
 surveillance at National Network Operating Centre and are therefore not
 separately physically verified. In our opinion, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its assets. In accordance with this policy,
 the Company has physically verified certain fixed assets during the year.
 
 (c) Fixed assets disposed off during the year were not substantial and,
 therefore, do not affect the going concern assumption.
 
 2.  (a) The inventory has been physically verified by management during
 the current year. In our opinion, the frequency of such verification is
 reasonable.
 
 (b) The procedures for the physical verification of inventories followed
 by 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.
 Discrepancies identifed on physical verification of inventories as
 compared to book records were not material.
 
 3.  The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Accordingly, paragraph 4(iii) of the Order is not applicable.
 
 4.  In our opinion, and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories and fixed assets are for the Company''s
 specialised requirements for which suitable alternative sources are not
 available to obtain comparable quotations, there is an adequate
 internal control system commensurate with the size of the Company and
 nature of its business with regard to the purchase of inventories and
 fixed assets and with regard to the sale of services. In our opinion,
 activities of the Company do not involve sale of goods. In our opinion,
 and according to the information and explanations given to us, there is
 no continuing failure to correct major weaknesses in the internal
 control system.
 
 5.  In our opinion, and according to the information and explanations
 given to us, there are no contracts and arrangements the particulars of
 which need to be entered into the register maintained under section 301
 of the Companies Act, 1956.
 
 6.  The Company has not accepted any deposits from the public.
 
 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 maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under section 209(1) (d) of the Companies
 Act, 1956 in respect of telecommunication activities 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.
 
 9.  (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Wealth Tax, Income Tax,
 Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees'' State
 Insurance and other material statutory dues have been regularly
 deposited during the year by the Company with the appropriate
 authorities. As explained to us, the Company did not have any dues on
 account of Excise Duty and Investor Education and Protection Fund.
 There were no dues on account of cess under Section 441A of the
 Companies Act, 1956 since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Wealth Tax,
 Income Tax, Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees''
 State Insurance and other material statutory dues were in arrears as at
 31 March 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, there
 are no dues of Income Tax, Wealth Tax, Service Tax, Customs Duty,
 Employees'' State Insurance which have not been deposited on account of
 any dispute. The dues of Excise Duty, Sales Tax and Entry Tax as
 disclosed below have not been deposited by the Company on account of
 disputes.
 
 Name of the Statute   Nature of   Amount   Period to 
                                            which the  Forum where 
                                                       dispute is pending
                       the Dues     (Rs 
                                   crores)     amount
                                              relates
 
 The Central Excise 
 and Salt Act, 1944   Excise duty    2.08     2002-04  Tribunal
 
 Entry Tax Act, 
 Uttar Pradesh        Entry Tax      0.13     2003-04  Trade Tax
                                                       Tribunal, Lucknow
 
 Trade Tax Act, 
 Uttar Pradesh        Sales Tax      0.93     2004-05  Trade tax 
                                                       Tribunal,(Appeals)
 
                                    10.53     2005-06  Joint Commissioner
                                                      (Appeals)
 
                                     0.24     2003-04  Trade Tax Tribunal
                                                       Lucknow
 
 Entry Tax Act, 
 Madhya Pradesh       Entry Tax      0.29     2002-03  Deputy 
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
                                     0.20     2003-04  Deputy
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
                                     0.16     2005-06  Deputy 
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
                                     0.15     2006-07  Deputy
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
                                     0.65     2007-08  Deputy 
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
 Punjab VAT Act       VAT            0.01     2007-08  Deputy 
                                                       Commissioner 
                                                      (Appeals)
 
 Entry Tax Act, 
 Chhattisgarh         Entry Tax      0.03     2003-04  Deputy 
                                                       Commissioner 
                                                      (Appeals)
                                                      (Commercial Taxes)
 
 Uttarakhand VAT Act  VAT            0.01     2005-06  Deputy 
                                                       Commissioner of
                                                       Commercial
                                                       Taxes
 
 West Bengal VAT Act  VAT            1.49     2005-06  First appellate
                                                       authority
 
                                     1.80     2006-07  First appellate
                                                       authority
 
                                     2.40     2007-08  Deputy 
                                                       Commissioner of
                                                       Sales Tax
 
 Entry Tax Act, 
 Rajasthan             Entry tax     0.03     2005-06  Deputy 
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
                                    10.78     2007-08  Deputy 
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
                                    10.59     2008-09  Deputy 
                                                       Commissioner of
                                                       Appeals
                                                      (Commercial Taxes)
 
 Delhi VAT Act        VAT           36.48     2007-08  Commissioner
                                                      (Appeals)
 
 Maharashtra 
 Sales Tax            Sales Tax      4.79     2004-05  Deputy 
                                                       Commissioner of
                                                       Sales tax
 
 West Bengal,CST      CST            0.21     2007-08  Deputy
                                                       Commissioner of
                                                       Sales Tax
 
 Punjab VAT Act       VAT            0.05              First appellate
                                                       authority
 
 10.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the current financial
 year 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 its
 bankers or debenture holders or to any financial institutions.
 
 12.  According to the information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 13.  In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund/ nidhi/ mutual benefit fund/
 society.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantees for loans taken by wholly owned subsidiaries and other
 companies with whom the Company has business dealings, from banks or
 financial institutions are not prejudicial to the interest of the
 Company.
 
 16.  In our opinion and according to the information and explanations
 given to us and examination of the records of the Company by us, the
 term loans taken by the Company have been applied for the purpose for
 which they were raised except portion of term loans availed as at the
 end of the year is kept in bank, to be applied for the purpose for
 which it was obtained.
 
 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 the funds raised on short term basis have not been
 used for long term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 companies/firms/parties covered in the register maintained under Section
 301 of the Companies Act, 1956.
 
 19.  According to the information and explanations given to us, the
 Company has created security in respect of debentures issued.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  According to the information and explanations given to us, no
 significant fraud on or by the Company, that causes a material
 misstatement to the financial statements, has been noticed or reported
 during the year.
 
 
 For Chaturvedi & Shah                       For B S R & Co.
 
 Chartered Accountants                       Chartered Accountants
 
 Firm Reg. No: 101720W                       Firm Reg. No: 101248W
 
 C. D. Lala                                  Bhavesh Dhupelia
 
 Partner                                     Partner
 
 Membership No: 35671                        Membership No: 042070
 
 Mumbai
 
 30 May 2011