Reliance Power

1.  We have audited the attached Balance Sheet of Reliance Power
 Limited (‘the Company’) as at March 31, 2009 and the related Profit and
 Loss Account for the year ended on that date annexed thereto and the
 Cash Flow Statement for the year ended on that date, 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 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 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 (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 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, and taken on record by the Board of Directors, we report
 that none of the director 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 Power Limited on the financial statements for
 the year ended March 31, 2009
 
 1.  (a) The Company has maintained proper records to
 
 show full particulars, including quantitative details and situation, of
 its fixed assets. 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 verification is
 reasonable.
 
 (b) During the year, a substantial part of fixed assets have not been
 disposed off by the Company.
 
 2.  (a) The Company has not granted 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 with regard
 to the purchase of fixed assets. 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 we 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
 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.
 
 5.  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.
 
 6.  In our opinion, the Company’s present internal audit system is
 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
 maintenance of cost records prescribed 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 books and records as produced and examined by us 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, Investor
 Education and Protection Fund, Income Tax, Wealth Tax, Service Tax,
 Custom Duty, Excise Duty and Cess and other material statutory dues
 have generally been regularly deposited, by the Company during the year
 with the appropriate authorities in India.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, as at March 31, 2009, 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 neither accumulated losses as at March 31, 2009,
 nor has it incurred any cash losses either during the financial year
 ended on that date or in the immediately preceding financial year.
 
 10. According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders during the year.
 
 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.
 
 12. 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.
 
 13. 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 Company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 15. The Company has not obtained any term loans.
 
 16. 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 listed in the register maintained under Section
 301 of the Act during the year.
 
 18. The Company has not issued any debentures during the year.
 
 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 7 of
 Schedule 10) and the same has been verified by us.
 
 20. During the course of examination of the books of account and
 records of the Company, carried out in accordance with the generally
 accepted auditing practices in India, and according to the information
 and explanations given to us, 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.
 
 21. Clause (ii) of the Order is not applicable in the case of the
 Company for the current year, since in our opinion there is no matter
 which arises to be reported in the aforesaid order.
 
 For Price Waterhouse                         For Chaturvedi & Shah
 Chartered Accountants                        Chartered Accountants
          Partha Ghosh                                     C D Lala
               Partner                                      Partner
  Membership No. 55913                         Membership No. 35671
 
 Date : April 23, 2009                        Date : April 23, 2009
 Place: Mumbai                                Place: Mumbai