Reliance Natural Resources

1.  We have audited the attached Balance Sheet of Reliance Natural
 Resources Limited (the Company) as at March 31, 2009, the Profit and
 Loss Account for the year ended on that date and the Cash Flow
 Statement for the year ended on that date annexed thereto (together
 referred to as the financial statements). 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
 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 (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report) (Amendment) Order 2004
 (together the Order), 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 give in the
 Annexure a statement on the matters specified in paragraphs 4 and 5 of
 the said Order to the extent applicable to the Company.
 
 4.  Further to our comments in the Annexure referred to in 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 Section 211 (3C) of the Act;
 
 e.  On the basis of written representations received from the
 directors, as on March 31, 2009, and taken on record by the Board of
 Directors, we report that none of the directors of the Company is
 disqualified as on March 31, 2009 from being appointed as a director in
 terms of Section 274(1)(g) of the Act;
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto, give in the prescribed
 manner, the information required by the Act and also 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 March 31, 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure referred to in paragraph 3 of Auditors Report of even date to
 the members of Reliance Natural Resources Limited on the Financial
 Statements for the year ended March 31, 2009
 
 1.  The Company has maintained proper records to show full particulars,
 including quantitative details and situation, of its fixed assets. We
 have been informed that all fixed assets of the Company are physically
 verified by the Management during the year according to the program
 designed and no material discrepancies were noticed.
 
 2.  During the year, a substantial part of fixed assets have not been
 disposed off by the Company.
 
 3.  In our opinion, there is no physical inventory in existence and
 hence the question of physical verification and its comparison with the
 inventory records does not arise.
 
 4.  (a) The Company has granted interest free unsecured loan to a
 wholly owned subsidiary company covered in the register maintained
 under Section 301 of the Act. The maximum amount involved during the
 year and the year end balance of such loan is Rs 1,884 Lakh.
 
 (b) In our opinion and according to the information and explanation
 given to us, the terms and conditions of such loan are not prima facie
 prejudicial to the interest of the Company.
 
 (c) In respect of the aforesaid loan, the principal amount is repayable
 on demand.
 
 (d) In respect of the aforesaid loan, there is no overdue amount more
 than Rupees One Lakh.
 
 5.  The Company has not taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.  Consequently the requirements of clause
 iii (f) and (g) of the Order are not applicable.
 
 6.  In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to the purchase of 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, and according to the information and explanation given to
 us, we have neither come across nor have we been informed of any
 continuing failure to correct major weaknesses in the aforesaid
 internal control system.
 
 7.  According to the information and explanations given to us, there
 are no contracts or arrangements referred to in Section 301 of the Act
 that need to be entered in the register required to be maintained under
 that section.
 
 8.  The Company has not accepted any deposits from the public within
 the meaning of Section 58A and 58AA of the Act and the rules framed
 there under.
 
 9.  In our opinion, the Companys present internal audit system is
 commensurate with its size and nature of its business.
 
 10.  On the basis of information given to us by management of the
 Company, no cost records are prescribed by the Central Government of
 India under Section 209(1)(d) of the Act .
 
 11.  According to the books and records as produced before us and in
 accordance with generally accepted auditing practices in India and also
 based on Management representations, undisputed statutory dues in
 respect of Provident Fund, Employees State Insurance dues, Income Tax,
 Sales Tax, Wealth Tax, Service Tax and Cess and other material
 statutory dues have generally been regularly deposited, by the Company
 during the year with the appropriate authorities in India. There were
 no undisputed statutory dues payable in respect of the aforesaid dues
 were outstanding as at March 31, 2009 for a period of more than six
 months from the date they became payable.
 
 12.  As at March 31, 2009, there have been no disputed dues which have
 not been deposited with the respective authorities in respect of Income
 Tax, Wealth Tax, Excise Duty, Sales Tax, Service Tax and Cess.
 
 13.  The Company does not have accumulated losses as at March 31, 2009,
 and has not incurred any cash losses either during the current
 financial year or in the immediately preceding financial year.
 
 14.  According to the records of the Company, it has not defaulted in
 repayment of dues to any financial institution or bank or debenture
 holders during the year.
 
 15.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 16.  In our opinion, considering the nature of activities carried on by
 the Company during the year, the provisions of any special statute
 applicable to chit fund / nidhi / mutual benefit fund / societies are
 not applicable to it.
 
 17.  In our opinion, the Company has not dealt or traded in shares,
 securities, debentures and other investments.
 
 18.  In our opinion and according to the information and explanations
 given to us, the company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 19.  On the basis of review of utilization of funds pertaining to term
 loans on overall basis and related information as made available to us,
 the term loans taken by the Company have been applied for the purpose
 for which they are obtained except for Foreign Currency Convertible
 Bonds of Rs 11,212.53 Lakh which, as explained, pending utilization are
 invested in Bank Deposits.
 
 20.  On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short term
 basis which have been used for long term investment.
 
 21.  The Company has not made any preferential allotment of shares to a
 company listed in the register maintained under Section 301 of the Act
 during the year.
 
 22.  The Company has not issued any debentures during the year and
 hence question of creation of security or charge in respect thereof
 does not arise.
 
 23.  The Company has not raised any money by public issue during the
 year.
 
 24.  On the basis of examination of books of accounts and other records
 of the Company, we have not come across any fraud on or by the Company,
 noticed or reported during the year, nor have we been informed of such
 case by the Management.
 
                                            For Pathak H D & Associates
                                                  Chartered Accountants
 
                                                          Vishal D Shah
                                                                Partner
                                                  Membership No. 119303
 
 Place: Mumbai
 Date : April 23, 2009