1.  We have audited the attached Balance Sheet of Reliance Power
 Limited (the Company) as at March 31, 2011 and the related Profit and
 Loss Account and Cash Flow Statement for the year ended on that date
 annexed thereto, which we have signed under reference to this report.
 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, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (together the Order), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1 956''
 of India (the ''Act'') and on the basis of such checks of the books and
 records of the Company 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 Order,
 
 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 sub-section (3C) of Section 211 of the Act;
 
 (e) 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 disqualified as on March 31, 2011
 from being appointed as a director in terms of clause (g) of sub-
 section (1) of Section 274 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 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, 2011
 
 (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 to Auditors'' Report
 
 Referred to in paragraph 3 of the Auditors'' Report of even date to the
 members of Reliance Power Limited on the financial statements for the
 year ended March 31, 2011
 
 1.  (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b) The fixed assets of the Company have been physically verified by the
 Management during the year and no material discrepancies between the
 book records and the physical inventory have been noticed. In our
 opinion, the frequency of verifcation is reasonable.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 2.  (a) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.  (b) 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,
 
 3.  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 for the
 purchase of fixed assets and for the sale of services. Further, on the
 basis of our examination of the books and records of the Company, and
 according to the information and explanations given to us, we have
 neither come across nor have been informed of any continuing failure to
 correct major weaknesses in the aforesaid internal control system.
 
 4.  According to the information and explanations given to us, there
 have been no contracts or arrangements referred to in Section 301 of
 the Act during the year to be entered in the register required to be
 maintained under that Section. Accordingly, the question of commenting
 on transactions made in pursuance of such contracts or arrangements
 does not arise.
 
 5.  The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 6.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 7.  The Central Government of India pursuant to the Cost Accounting
 Records (Electricity Industry) Rules, 2001 (''Rules'') has prescribed the
 maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Act to the Company, However, the Rules are not
 applicable to the Company, as the Company has not started commercial
 operations.
 
 8.  (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is generally regular in depositing the undisputed statutory dues
 including provident fund, investor education and protection fund,
 employees'' state insurance, income-tax, sales-tax, wealth tax, service
 tax, customs duty, excise duty, cess and other material statutory dues
 as applicable with the appropriate authorities. Further, since the
 Central Government has till date not prescribed the amount of cess
 payable under section 441A of the Companies Act, 1 956, the question of
 payment of cess by the company does not arise. There are no undisputed
 amounts payable in respect of such applicable statutory dues as at
 March 31, 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 the records of the Company examined by 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
 
 9.  The Company has no accumulated losses as at March 31 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 1 0. According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the balance sheet date
 
 11. The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 1 2. The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/ societies are not applicable to the
 Company.
 
 1 3. In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments,
 
 14.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company, for loans taken by others from banks or financial institutions
 during the year, are not prejudicial to the interest of the Company.
 
 15.  In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained except 4.928% Convertible
 Bonds (FCCBs) of Rs. 1,022,485,000 which, as explained, pending
 utilisation are nvested in the money market instruments and fixed
 deposits,
 
 1 6. 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
 
 17. The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 18.  The Company has not issued any debentures
 
 19. The Company has not raised any money by public issues during the
 year. The Management has disclosed the end use of monies during the
 year, out of public issue raised in the earlier year (Refer Note 6 of
 Schedule 1 5 of the financial statements) which has been verified by
 us.
 
 20.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the nformation and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the Management.
 
 21.  Clause (ii) of paragraph 4 of the Companies (Auditor''s Report)
 Order 2003, as amended by the Companies (Auditor''s Report) (Amendment)
 Order, 2004, is not applicable in the case of the Company for the year,
 since in our opinion there is no matter which arises to be reported in
 the aforesaid order.
 
 
 For Chaturvedi & Shah                    For Price Waterhouse
 
 Chartered Accountants                    Chartered Accountants
 
 Firm Regn. No: 1 01 720 W                Firm Regn. No: 3011 1 2E
 
 CD. Lala                                 Partha Ghosh
 
 Partner                                  Partner
 
 Membership No. 35671                     Membership No. 55913
 
 Place : Mumbai                           Place : Brussels
 
 Date   : May 27, 2011                    Date   : May 27, 2011