Dear Shareholders,
 
 The Directors present the 16th Annual Report of your Company together
 with the audited accounts for the financial year ended March 31, 2011.
 
 FINANCIAL PERFORMANCE
 
 The standalone and consolidated audited financial results for the year
 ended March 31, 2011 are as follows:
 
 Particulars             Standalone                Consolidated
 
             Rs. in crore  USD in million*  Rs. in crore  USD in million*
 
          2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10
 
 Sales 
 and 
 service 
 income    4,357.
               55  3,488.
                       68  977.14  776.99 17,879.
                                               13 20,619.
                                                       66  4,009.
                                                               22  4,592.
                                                                       35
 
 Other 
 operating 
 income      8.84   20.25    1.98    4.51  211.10  159.55   47.34   35.53
 
 Earnings 
 / (loss) 
 before    180.05 (242.70)  40.37  (54.05) 808.13  943.05  181.22  210.03
 interest, 
 deprecia
 -tion 
 and tax
 (EBIDTA)
 
 Add: 
 Other 
 non 
 operat
 -ing      331.67  222.89   74.37   49.64  106.60   69.46   23.90   15.47
 income
 
 Less: 
 Interest  578.04  653.59  129.62  145.57  1,135.
                                               67  1,195.
                                                       03  254.66  266.15
 
 Less: 
 Deprecia
 -tion     156.89  126.27   35.18   28.12  657.40  662.97  147.42  147.65
 
 Loss 
 before 
 tax & 
 exceptio
 -nal    (223.21)(799.67) (50.05)(178.10)(878.34)(845.49)(196.96)(188.30)
 Items
 
 Less: 
 Exceptio
 -nal 
 items      37.28  439.02   8.36   97.78  253.28 (211.89)  56.80  (47.19)
 
 Loss 
 before 
 tax      (260.49)(1,238.
                      69)  (58.41)(275.88)(1,131.
                                             62) (633.60)(253.75)(141.11)
 
 Less: 
 Current 
 tax       (19.19)     -    (4.30)      -  146.90  181.65   32.94   40.46
 (Net of 
 earlier 
 years 
 tax and 
 MAT 
 credit 
 entitle
 -ment)
 
 Less: 
 Deferred
  tax      (55.64) 175.40 (12.48)   39.06   38.37  174.45    8.60   38.85
 
 Less: 
 Fringe 
 benefit 
 tax                                                 0.03       -    0.01
 
 Loss 
 after 
 tax       (185.66)(1,414.
                      09) (41.63)(314.94) (1,316.
                                             89)(989.73) (295.30)(220.43)
 
 Add: 
 Share in 
 associa
 -te''s         N.A.   N.A.   N.A.    N.A. (27.83)  16.12    (6.24)   3.59
 profit / 
 (loss) 
 after tax
 
 Less: 
 Share of 
 loss /
 (profit) 
 of            N.A.   N.A.   N.A.    N.A. (20.75)   8.95   (4.65)    1.99
 minority
 
 Net Loss   (185.66)(1,414.
                        09)(41.63)(314.94)(1,323.
                                             97)(982.56)(296.89) (218.83)
 
 Add: 
 Balance 
 brought     386.00  1,800.
                         09  85.97  400.91  943.03 1,925.
                                                       60  210.03  428.86
 forward
 
 Profit 
 available 
 for         200.34  386.00  44.34   85.97 (380.94) 943.04 (86.86) 210.03
 appropria
 -tions
 
 Less: 
 Tax on 
 dividends        -       -      -       -       -    0.01      -    0.00
 
 Less: 
 Transfer 
 to legal 
 and              -       -      -       -  142.22       -   31.89      -
 statutory 
 reserve
 
 Less: 
 Transfer 
 to capital       -       -      -       -   30.00       -    6.73      -
 redemption
 reserve
 
 Surplus 
 carried to 
 balance 
 sheet        200.34  386.00  44.34   85.97(553.16) 943.03(125.48) 210.03
 
 *1 USD = Rs. 44.60 as on March 31, 2011 (1 USD = Rs. 44.90 as on March
 31, 2010)
 
 2.  OPERATIONS REVIEW
 
 On a standalone basis, the Company achieved sale of Rs.4,357.55 crore
 as against Rs.3,488.68 crore in the previous year. Net loss after tax
 is lower at Rs.185.66 crore as compared to net loss after tax of
 Rs.1,414.09 crore in the previous year. Though the volumes and
 performance improved compared to previous year, the costs could not be
 recovered fully as recessionary trends continue to persist in Europe
 and the USA.
 
 On consolidated basis, the sale is lower at Rs.17,879.13 crore as
 against Rs.20,619.66 crore in the previous year. Net loss after tax,
 share in associate''s profit and minority interest is Rs. 1,323.97 crore
 as compared to loss of Rs. 982.56 crore in the previous year. In the
 previous year, sale of Hansen stake contributed profit of Rs. 211.89
 crore while in the current year provision towards diminution in
 investment in Hansen resulted into increase in loss by Rs. 216.00
 crore.
 
 3.  DIVIDEND
 
 In view of losses incurred during the financial year 2010-11, the Board
 of Directors does not recommend any dividend for the year under review.
 
 4.  CAPITAL
 
 The movement in Authorised Share Capital and Paid-up Share Capital
 during the year under review is given as under:
 
 Changes in Authorised Share Capital
 
 The Authorised Share Capital of the Company was increased from
 Rs.445,00,00,000/- to Rs.700,00,00,000/- by creation of 127,50,00,000
 equity shares of Rs.2/- each.
 
 Changes in Paid-up Share Capital
 
 The Company allotted 8,000 equity shares of Rs.2/- each at a premium of
 Rs.49/- per equity share i.e. at an issue price of Rs.51/- per share
 pursuant to exercise of stock options by the eligible employees under
 the Employee Stock Option Plan-2005.
 
 Further, the Company allotted 18,86,33,322 equity shares of Rs.2/- each
 at a premium of Rs.61/- per equity share i.e. at an issue price of
 Rs.63/- per equity share on rights basis to the existing equity
 shareholders of the Company in the ratio of 2 equity shares for every
 15 fully paid-up equity shares held by the existing equity shareholders
 on the record date i.e. June 10, 2010 in terms of Letter of Offer dated
 May 31, 2010.
 
 Further, in terms of the Shareholders'' Agreement and Share Subscription
 Agreement inter alia entered into between the Company and IDFC Private
 Equity Fund III (IDFCPE), the Company allotted 3,19,92,582 equity
 shares of Rs.2/- each to IDFCPE on November 16, 2010 at a premium of
 Rs.58/- per equity share i.e. at an issue price of Rs.60/- per share
 for a consideration other than cash i.e. as purchase consideration for
 purchase of 4,12,54,125 equity shares of Rs.10/- each held by the said
 IDFCPE in SE Forge Limited, a subsidiary of the Company.
 
 As on date, the Authorised Share Capital of the Company is
 Rs.700,00,00,000/- divided into 350,00,00,000 equity shares of Rs.2/-
 each and the paid-up capital of the Company is Rs.355,47,31,294/-
 divided into 177,73,65,647 equity shares of Rs.2/- each.
 
 Foreign Currency Convertible Bonds (FCCBs)
 
 In May 2010, the Company successfully concluded a consent solicitation
 exercise on the existing five series of bonds (FCCBs). The bondholders
 of all the five series were asked to vote on an extraordinary
 resolution for removal of financial covenants on the USD 300 Million
 and USD 200 Million bonds and waiver of any prior breaches. As a part
 of this exercise, the Company paid; an aggregate incentive fee of USD
 6,019,220.00 across all existing five series of bonds.
 
 Further, as an incentive to the above waiver and to enhance the chances
 of conversion of the USD 300 Million and the USD 200 Million bonds the
 Company reduced the conversion price of the USD 300 Million bonds from
 Rs.359.68 per equity share to Rs.97.26 per equity share and the USD 200
 Million bonds from Rs.371.55 per equity share to Rs.97.26 per equity
 share and amended the fixed exchange rates on these bonds to 1 USD =
 Rs.44.6000.
 
 The shares to be allotted on such conversion of the USD 300 Million
 bonds and USD 200 Million bonds will aggregate to 7.90% of the
 post-conversion equity base of the Company based on the equity base of
 March 31, 2011.
 
 The entire exercise was carried out in accordance with the Ministry of
 Finance press release dated February 15, 2010 and March 15, 2010 and as
 per the approval of Reserve Bank of India.
 
 The total FCCBs outstanding on the books of the Company is USD
 47,90,39,000 as at March 31, 2011.
 
 Post March 31, 2011, Company issued USD 175 Million, 5% Foreign
 Currency Convertible bonds at par. The Bonds are convertible at any
 time on and after May 23, 2011 up to the close of business on April 6,
 2016 by holders of the Bonds into fully paid equity shares with full
 voting rights with a par value of Rs.2/- each of the Company at an
 initial conversion price of Rs.54.01 per share with a fixed rate of
 exchange on conversion of Rs.44.5875 to US.00
 
 5.  PARTICULARS OF CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT,
 TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Information as required under Section 217(1)(e) of the Companies Act,
 1956 read with the Companies (Disclosure of particulars in the report
 of board of directors) Rules, 1988 has been provided which forms part
 of the Directors'' Report.
 
 6.  SUBSIDIARIES & CONSOLIDATED FINANCIAL STATEMENTS
 
 As on March 31, 2011, the Company has 79 subsidiaries, a list of which
 is given in the notes to the accounts.
 
 I.  UPDATES ON SUBSIDIARIES
 
 Companies which became subsidiaries during the year under review
 
 Suzlon Wind Energy South Africa PTY Ltd., Suzlon Energy Australia
 CYMWFD Pty. Ltd., Sure Power LLC, Renewable Energy Contractors
 Australia Pty. Ltd., REpower Systems Polska Sp.zo.o, REpower Systems
 Scandinavia AB, REpower Portugal - Sistemas Eolicos, S.A., Ventipower
 S.A. and RiaBlades S.A. became step down subsidiaries of the Company.
 
 Companies which ceased to be subsidiaries during the year under review
 
 Windpark Meckel/Gilzem GmbH & Co KG ceased to be subsidiary of the
 Company and Sister – sistemas e Technologia de Energias renovaveis Lda
 was liquidated.
 
 Changes during the year under review
 
 The name of Einundzwanzigste Vittorio Verwaltungs GmbH was changed to
 REpower Systems GmbH.
 
 Updates on REpower
 
 The Company through AE-Rotor Holding BV, The Netherlands (''AERH''), a
 step down wholly owned subsidiary of the Company acquired an additional
 4.86% voting power of REpower Systems SE (''REpower''). AERH directly and
 indirectly holds 95.16% of the registered share capital of REpower.
 Under the German Stock Corporation Act, a shareholding of 95% in a
 German stock corporation enables the majority shareholder to initiate
 squeeze-out proceedings in respect of minority shareholders. The
 Company, through AERH, had provided a notice to the Executive Board of
 REpower requesting the conduct of a squeeze-out proceeding. Accordingly
 squeeze-out proceeding has been initiated in accordance with German
 Regulations. A successful completion of the squeeze-out proceedings
 will result in REpower becoming a step-down wholly owned subsidiary of
 the Company. Further, AERH has informed the Executive Board of REpower
 that it has set the cash compensation for the transfer of the shares
 from the minority shareholders of REpower to AERH at EUR 142.77 per
 no-par value share in compliance with the provisions of the German
 Stock Corporation Act. A resolution on the squeeze-out is proposed to
 be passed at the annual general meeting of REpower, which is scheduled
 to take place on September 21, 2011.
 
 Updates on Hansen
 
 The Company presently holds 26.06% in Hansen Transmissions
 International NV (''Hansen''). Post March 31, 2011, AERH has signed an
 irrevocable undertaking in favour of ZF Friedrichshafen AG (''ZF'') to
 sell its entire equity interest in Hansen i.e.  26.06% pursuant to cash
 offer to be made by ZF International BV (ZF Bidco), a wholly owned
 subsidiary of ZF, for the entire issued and to be issued share capital
 of Hansen at 66 pence per ordinary share which will aggregate to 115
 million GBP (USD 187 million). AERH''s obligation to accept the Offer
 under the Irrevocable Undertaking will lapse in certain circumstances,
 including if a firm intention to make an offer for Hansen''s shares is
 made by a third party for a consideration that is at least 12.5 per
 cent higher than consideration offered under the Offer or if the Offer
 lapses or is withdrawn.
 
 Updates on Amalgamation and Demerger
 
 During the year under review, a Petition under Section 391 to 394 read
 with Section 78 and 100 to 103 of the Companies Act, 1956 has been
 filed by the Company, Suzlon Towers And Structures Limited (STSL) and
 Suzlon Gujarat Wind Park Limited (SGWPL) with the Honourable High Court
 of Gujarat at Ahmedabad and by Suzlon Infrastructure Services Limited
 (SISL) and Suzlon Engitech Limited (SENL) with the Honourable High
 Court of Judicature at Bombay for sanctioning the Composite Scheme of
 Arrangement and Restructuring (De-merger and Amalgamation) between
 STSL, SISL, SGWPL, SENL, the wholly owned subsidiaries of the Company
 and the Company (SEL) for De-merger and Transfer of Power Generation
 Division of STSL to SENL, De-merger of Project Execution Division of
 SISL to SGWPL, Amalgamation of STSL (after the above referred de-
 merger) with the Company and Amalgamation of SISL (after the above
 referred de-merger) with the Company. The Appointed Date fixed for the
 purpose is April 1, 2010.
 
 The benefits that would be derived from Amalgamation and Demerger are
 as under:
 
 a.  Benefits of Demerger to the Resulting Companies i.e. SENL and SGWPL
 
 i.  Power Generation business requires separate and different skills
 altogether and hence demerging it into SENL will help to run it more
 efficiently.
 
 ii.  Project Execution is part of infrastructure building in which
 SGWPL is currently engaged into. The business of erection and
 commissioning presently undertaken by SISL, primarily in nature of
 infrastructure development, requires different skills and approach to
 the business for which the company has to select and train its
 employees to achieve high performance standards so as to meet the
 standards of its large and reputed competitors in the infrastructure
 space. With the proposed demerger and transfer of the said division,
 SGWPL would be better placed to scale up its skills in the
 infrastructure business and able to hire best talent available in the
 industry.
 
 iii.  De-merger would help in better evaluation of performance of this
 business.
 
 b.  Benefits of Amalgamation to the Transferee Company i.e. SEL
 
 i.  Tower Business:
 
 - The Tower business requires scaling up in view of the increased
 domestic market and needs focused efforts to bring the cost down on a
 continuous basis with equal emphasis on the quality side as well.
 Synergies of Supply Chain Management can be derived by bringing the
 Tower business into SEL.
 
 - Better and efficient material management along with stores management
 can be achieved, ensuring on time delivery in full.
 
 - Quick and more responsive product improvement and R&D on tower can be
 made possible through well established and more resourceful set up of
 SEL. Better compatibility of tower with each version of nacelle and
 better use of design and technical core competence of SEL would be the
 key benefits accruing as a result of this merger;
 
 - Better negotiating powers resulting into competitive sourcing of
 materials and services through more active support of well established
 Supply Chain Management Team of SEL.
 
 ii.  Operation and Maintenance Business
 
 - Customers will get more comfort and surety of after sales services
 for 20 years post commissioning, which is becoming a key factor to get
 more business.
 
 - Existing customers would feel more convinced from the fact that the
 equipment supplier itself is taking care of the OMS part. Long term
 visibility will be provided to large customers by providing OMS
 services through equipment supplier (SEL) only and thereby improving
 chances of availing more business from Utilities, Multi National
 Companies and other big corporate customers.
 
 - Availability of critical components from third party gets guaranteed
 for OMS.
 
 - With Indian business profile picking up and with the changing
 scenario, customers expect OMS Service provider to have a stronger
 Balance Sheet. SEL is better placed than SISL.
 
 - Regular and online feedback from OMS Team provides enormous help in
 improving and upgrading the overall quality of its equipments, which
 would be possible with this amalgamation.
 
 - Better working capital management through maintenance of common stock
 of spares for OMS as well as for regular production and also better
 Machine Availability of WTGs resulting into higher customer
 satisfaction.
 
 iii.  The proposed amalgamation will enhance the bargaining power
 resulting in cost optimization through economical procurements from
 common vendors and suppliers.
 
 iv.  The proposed arrangement will consolidate the business activity of
 all the companies, thereby resulting into time, transactions and cost
 optimization and improvisation of overall operational efficiency and
 quality.
 
 v.  The proposed arrangement shall improve the efficiency in cash
 management, organizational capability from pooling of human capital
 having skill, talents and vast experience and thereby increase in
 competitiveness in the industry.
 
 vi.  The proposed arrangement will create enhanced value for
 shareholders and allow a focused strategy in operations, which would be
 in the best interest of all its shareholders, creditors and all persons
 connected with the companies.
 
 II.  CONSOLIDATED FINANCIAL STATEMENTS
 
 In terms of Section 212(8) of the Companies Act, 1956 read with the
 General Circular No.2/2011 dated February 8, 2011 issued by the
 Ministry of Corporate Affairs, Government of India, general exemption
 has been provided to companies from compliance of the provisions of
 Section 212(1) of the Companies Act, 1956 subject to compliance with
 conditions as referred to in the said General Circular No.2/2011 dated
 February 8, 2011. The Board of Directors of the Company, accordingly,
 has given its consent for not attaching the balance-sheet of the
 subsidiaries and accordingly, the balance sheet, profit and loss
 account and other documents of the subsidiary companies are not being
 attached with the balance sheet of the Company. However, some key
 information of the subsidiary companies as required to be provided in
 terms of the said circular, is disclosed under Section 212 Report
 forming part of this Annual Report.
 
 The annual accounts of the subsidiary companies and the related
 detailed information will be made available to any member of the
 Company / its subsidiaries who may be interested in obtaining the same.
 The annual accounts of the subsidiary companies will also be kept for
 inspection by any member at the Company''s Registered Office and
 Corporate Office and that of the respective subsidiary companies.
 
 The Annual Report of the Company contains the consolidated audited
 financial statements prepared pursuant to Clause 41 of the listing
 agreement entered into with the stock exchanges and prepared in
 accordance with the accounting standards prescribed by the Institute of
 Chartered Accountants of India (ICAI).
 
 7.  PARTICULARS OF EMPLOYEES
 
 In terms of the provisions of section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are required
 to be set out in the Directors'' Report.  However, as per the provisions
 of section 219(1)(b)(iv) of the said Act, the Annual Report excluding
 the aforesaid information is being sent to all the members of the
 Company and others entitled thereto. Any member interested in obtaining
 such particulars may write to the Company Secretary at the registered
 office of the Company.
 
 8.  DIRECTORS
 
 Mr. Girish R.Tanti and Mr. Ajay Relan, the Directors of the Company
 retire by rotation at the ensuing 16th Annual General Meeting and being
 eligible offer themselves for re-appointment. Mr. Vinod R.Tanti had
 been appointed as an Additional Director and Wholetime Director
 designated as Executive Director of the Company with effect from
 November 1, 2010. Ms. Mythili Balasubramanian, a nominee of IDBI Bank
 Limited and Mr. Rajiv Ranjan Jha, a nominee of Power Finance
 Corporation Limited were appointed as Additional Directors of the
 Company with effect from November 1, 2010 and April 28, 2011
 respectively. In terms of Section 260 of the Companies Act, 1956, Mr.
 Vinod R.Tanti, Ms. Mythili Balasubramanian and Mr. Rajiv Ranjan Jha
 hold office up to the ensuing 16th Annual General Meeting of the
 Company and being eligible offer themselves for appointment as the
 Directors of the Company.
 
 The Board of Directors of the Company at its meeting held on February
 4, 2011 has reappointed Mr. Tulsi R.Tanti as a Managing Director and
 Mr. Girish R.Tanti as a Wholetime Director designated as Executive
 Director of the Company without remuneration for a further period of
 three years with effect from April 1, 2011.
 
 Post March 31, 2011, Mr. Pradip Kumar Khaitan, the Non-Executive
 Director resigned from the directorship of the Company with effect from
 April 28, 2011. The Board expresses its appreciation for the valuable
 service rendered and matured advice provided by him during his
 association with the Company. Mr. Girish R.Tanti ceased to be the
 Executive Director of the Company with effect from July 30, 2011,
 however continues as a Non-Executive Director on the Board of the
 Company. The Board expresses its appreciation for the valuable service
 rendered and matured advice provided by him during his association with
 the Company as an Executive Director.
 
 Further in terms of approval of the Remuneration Committee and the
 Board of Directors at their respective meetings held on July 30, 2011,
 it has been decided to pay remuneration to Mr. Tulsi R.Tanti, Managing
 Director and Mr. Vinod R.Tanti, Executive Director and accordingly
 approval of members is being sought for ratification and appointment of
 Mr. Tulsi R.Tanti as Managing Director and Mr. Vinod R.Tanti as
 Executive Director at the ensuing 16th Annual General Meeting of the
 Company.
 
 The details of Mr. Girish R.Tanti, Mr. Ajay Relan, Ms. Mythili
 Balasubramanian, Mr. Rajiv Ranjan Jha, Mr. Tulsi R.Tanti and Mr. Vinod
 R.Tanti, the Directors as required to be given in terms of Clause 49 of
 the Listing Agreement have been provided under Profile of Directors
 seeking appointment / reappointment forming part of Notice convening
 the ensuing 16th Annual General Meeting of the Company.
 
 9.  DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors
 confirm to the best of their knowledge and belief that:
 
 a.  in the preparation of the annual accounts, the applicable
 accounting standards had been followed and that there are no material
 departures;
 
 b.  the directors had selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at March 31, 2011 and of the loss of the Company for
 the year ended on that date;
 
 c.  the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 d.  the directors had prepared the annual accounts on a going concern
 basis.
 
 10.  PUBLIC DEPOSITS
 
 During the year under review, the Company did not accept any deposits
 within the meaning of the provisions of Section 58A of the Companies
 Act, 1956.
 
 11.  MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis Report on the operations and
 financial position of the Company has been provided forming part of the
 Directors'' Report.
 
 12.  CORPORATE GOVERNANCE
 
 As required by Clause 49 (VI) of the listing agreement entered into by
 the Company with the stock exchanges, a detailed report on corporate
 governance is provided which forms part of the Directors'' Report. The
 Company is in compliance with the requirements and disclosures that
 have to be made in this regard. The auditors'' certificate on compliance
 with corporate governance requirements by the Company is attached to
 the Corporate Governance Report and forms part of the Directors''
 Report.
 
 13.  EMPLOYEES STOCK OPTION PLANS (ESOPs)
 
 As required under the Securities and Exchange Board of India (Employee
 Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
 1999, the information pertaining to various Employee Stock Option Plans
 (ESOPs) of the Company has been provided which forms part of the
 Directors'' Report.
 
 14.  GROUP
 
 Pursuant to intimation from the Promoters, the name of the Promoters
 and entities comprising the ''group'' as defined under the Monopolies and
 Restrictive Trade Practices (MRTP) Act, 1969 have been provided which
 forms part of the Directors'' Report.
 
 15.  AUDITORS AND AUDITORS'' OBSERVATIONS
 
 I.  AUDITORS
 
 M/s. SNK & Co., Chartered Accountants, Pune, (Firm Registration
 No.109176W) and M/s. S.R. Batliboi & Co., Chartered Accountants, Pune,
 (Firm Registration No.301003E) the joint statutory auditors of the
 Company hold office until the conclusion of the ensuing 16th Annual
 General Meeting of the Company. Both the statutory auditors have
 confirmed their eligibility and willingness to accept office, if
 reappointed.
 
 II.  AUDITORS'' OBSERVATIONS AND MANAGEMENT''S RESPONSE TO AUDITORS''
 OBSERVATIONS
 
 The Directors refer to the qualification and Matter of Emphasis in the
 Auditor''s Report and as required by section 217(3) of the Companies
 Act, 1956, provide their explanation as under:
 
 Qualification:
 
 Note 3 of Schedule P of standalone financial statements and Note 5 of
 Schedule P of consolidated financial statements regarding recognition
 of deferred tax asset aggregating Rs.55.64 crore. Auditors are of the
 opinion that recognition of deferred tax asset does not satisfy the
 conditions of virtual certainty prescribed under Accounting Standard –
 22, Accounting for Taxes on Income as notified by the Companies
 (Accounting Standards) Rules, 2006 (as amended) and have expressed
 qualified opinion.
 
 Management response:
 
 The Company has brought forward losses which can be set off against tax
 liabilities which would arise on its'' future profits and also available
 for set off against profits of subsidiaries getting amalgamated with
 the Company post implementation of the Composite Scheme of Arrangement
 and Restructuring (De-merger and Amalgamation). The Company believes
 that profitability in first quarter of next financial year and healthy
 order book in hands of the Company and the current advanced stage of
 the said Scheme satisfy the conditions of virtual certainty prescribed
 under Accounting Standard – 22 for recognition of deferred tax assets.
 
 Matter of Emphasis:
 
 Note 4 of Schedule P of standalone financial statements and Note 7 of
 Schedule P of consolidated financial statements regarding non provision
 of proportionate premium on redemption of foreign currency convertible
 bonds amounting to Rs.579.21 crore in securities premium as the
 ultimate outcome of the matter cannot presently be ascertained.
 
 Management response:
 
 In the opinion of the management, redemption of foreign currency
 convertible bonds is contingent in nature and the likelihood of the
 same cannot presently be ascertained. Accordingly no provision for any
 liability has been made in the financial statements and the
 proportionate premium has been shown as a contingent liability.
 Further, the Company has adequate securities premium to absorb the
 proportionate premium on redemption as at March 31, 2011, in case the
 contingency materialises.
 
 Matter of Emphasis:
 
 Note 6 of Schedule P of consolidated financial statements regarding non
 provision of Infrastructure Development Charges (''IDC'') aggregating
 Rs.64.80 crore.
 
 Management response:
 
 The Indian Wind Energy Association (''InWEA'') of which the Company is a
 member has filed a civil appeal in the Supreme Court against an order
 of the Appellate Tribunal for Electricity in regard to levy of IDC by
 Tamil Nadu State Electricity Board.  The matter is pending the hearing
 of the Supreme Court. The Company has obtained a legal opinion which
 states that InWEA (and consequently the Company) has a strong case and
 accordingly the Company has shown it as a contingent liability.
 
 16.  ACKNOWLEDGEMENT
 
 The directors wish to place on record their appreciation for the
 co-operation and support received from the government and semi-
 government agencies, especially from the Ministry of New and Renewable
 Energy (MNRE), Government of India, all state level nodal agencies and
 all state electricity boards.
 
 The directors are thankful to all the bankers and financial
 institutions for their support to the Company. The Board places on
 record its appreciation for continued support provided by the esteemed
 customers, suppliers, bankers, financial institutions, consultants,
 bond holders and shareholders.
 
 The directors also acknowledge the hard work, dedication and commitment
 of the employees. The enthusiasm and unstinting efforts of the
 employees have enabled the Company to survive through the tough times
 and to show improvements on many fronts enabling it to continue as one
 of the leading players in the wind industry and maintain its dominant
 position in the domestic markets.
 
                         For and on behalf of the Board of Directors of
 
                                                  Suzlon Energy Limited
 
 Place: Pune                                              Tulsi R.Tanti
 
 Date: July 30, 2011                       Chairman & Managing Director