Tata Power Company

1.  We have audited the attached Balance Sheet of THE TATA POWER
 COMPANY LIMITED, as at 31 st March, 2009, 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
 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 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 (Auditors Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of
 Section 227 of the Companies Act, 1956, 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 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.The report on the accounts of Bangladesh branch audited by
 other auditors has been forwarded to the Company and has been
 appropriately dealt with;
 
 (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) without qualifying our opinion, we draw attention to Note 11(e) of
 the Notes forming part of the Accounts. As stated in the note, subject
 to the outcome of the Appeal filed before the Supreme Court, no
 adjustment has been made by the Company in respect of the standby
 charges accounted for as revenue in earlier periods estimated at Rs.
 519 crores and its consequential effects [note 11 (e) and (f)] for the
 period upto 31st March, 2009.The impact of the above on the results for
 the year cannot presently be determined pending the ultimate outcome of
 the matter. The Company is of the view, supported by legal opinion,
 that the Tribunals Order can be successfully challenged. In view of
 this no provision/adjustment has been considered necessary.
 
 (e) in our opinion, the Balance Sheet, Profit and Loss account and the
 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;
 
 (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:
 
 (1) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 (2) in the case of the Profit and Loss account, of the profit for the
 year ended on that date; and
 
 (3) in the case of the Cash Flow statement, of the cash flows for the
 year ended on that date.
 
 5. On the basis of written representations received from the directors,
 as on 31st March, 2009 and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31st March,
 2009 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956.
 
 Annexure to the Auditors Report
 
 Referred to in paragraph 3 of our report of even date.
 
 (i) (a) In respect of fixed assets, the Company has maintained proper
 records showing full particulars including quantitative details and
 situation in most cases of such assets.
 
 (b) Physical verification of fixed assets was carried out during the
 year by the Management,in accordance with the established system of
 periodical verification of fixed assets once in two/three years. In our
 opinion, the frequency of verification is reasonable, considering the
 size of the Company and the nature of its assets. According to the
 informations and explanations given to us, no material discrepancies
 were noticed on such verification.
 
 (c) In our opinion, a substantial part of fixed assets has not been
 disposed off by the Company during the year.
 
 (ii) (a) The inventory of the Company except for fuel, has been
 physically verified during the year by the management under a perpetual
 inventory system. Inventory of Fuel was verified during the year and/or
 at the end of the year. In respect of materials lying with third
 parties, these have substantially been physically verified or confirmed
 by third parties. In our opinion the frequency of verification is
 reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the management were found reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) On the basis of our examination of records of inventory, in our
 opinion, the Company has maintained proper records of inventory and the
 discrepancies noticed on physical verification between the physical
 stocks and book records were not material in relation to the operations
 of the Company.
 
 (iii) According to the information and explanations given to us, 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
 provisions of Clause (iii)b, (iii)c, (iii)d, (iii)f and (iii)g of the
 Order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 are of a special nature and their prices cannot be compared with
 alternative quotations, there is an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchases of inventory, fixed assets and with
 regard to the sale of goods and services. Further, on the basis of our
 examination, and according to the information and explanations given to
 us, we have neither come across nor have we been informed of any
 instance of major weaknesses in the aforesaid internal control system.
 
 (v) According to the information and explanations given to us, the
 Company has not entered into any contract or arrangement with other
 parties, which needs to be entered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits from the public
 during the year. In respect of unclaimed deposits matured in earlier
 years, that are outstanding during the year, the Company has complied
 with the provisions of Sections 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules, 1975. According to the information and explanations
 given to us, no order under the aforesaid sections has been passed by
 the Company Law Board or National Company Law Tribunal or Reserve Bank
 of India or any Court or any other Tribunal, on the Company.
 
 (vii) In our opinion, the internal audit function carried out during
 the year by a firm of Chartered Accountants appointed by the management
 has been commensurate with the size of the Company and the nature of
 its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company in respect of the electricity business and electronic products
 of the Company pursuant to the Rules made by the Central Government for
 the maintenance of cost records under Section 209(1 )(d) of the
 Companies Act, 1956. We are of the opinion that prima facie the
 prescribed accounts and records have been maintained and are being made
 up. We have not, however, made a detailed examination of the records
 with a view to determining whether they are accurate or complete.
 
 (ix) (a) According to the information and explanations given to us and
 according to the books and records as produced and examined by us, in
 our opinion, the undisputed statutory dues including provident fund,
 investor education and protection fund,employeesstate insurance,
 income tax, sales tax, wealth tax, service tax, customs duty, excise
 duty, cess and other material statutory dues applicable to the Company
 have generally been regularly deposited during the year with the
 appropriate authorities. According to the information and explanations
 given to us, no undisputed amounts payable in respect of income tax,
 wealth tax, sales tax, service tax, customs duty, excise duty and cess
 were in arrears as at 31 st March, 2009 for a period of more than six
 months from the date they became payable.
 
 (b) As at 31 st March, 2009 according to the records of the Company and
 the information and explanations given to us, the following are the
 particulars of disputed dues on account of income tax, sales tax,
 wealth tax, service tax, customs duty, excise duty and cess matters
 that have not been deposited:
 
 Name of            Nature of               Amount
 the statute        the dues            (Rs. in Crores)
 
 Customs            Customs                 3.51
 Laws               Duty
 
 Central            Excise Duty            13.78
 Excise Laws
 
 Sales Tax          Sales Tax/              6.29
 Laws               Entry Tax
 
 Cess Laws          Cess                    7.78
 
 Income Tax         Income Tax             27.38
 Act, 1961
 
 Period to which the         Forum where pending
 amount relates
 
 1993-1994 to 2003-2004      Appellate Authority - upto
                             Commissioner level
 
 1992-1993 to 2002-2003      Appellate Authority - upto Tribunal
                             Level 
 
 2001-2002 to 2002-2003      Appellate Authority-Deputy 
 and 2006-2007 to            Commissioner level and Supreme 
 2008 - 2009                 Court
 
 1992-1993 to 2002-2003      Appellate Authority of The Water
                             (Prevention and Control of Pollution) 
                             Cess Act, 1977
 
 2004-2005 to 2007-2008      Appellate Authority - Commissioner
 
 (x) The Company does not have accumulated losses as at 31 st March,
 2009 and has not incurred cash losses during the financial year ended
 on that date or in the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has during the year not defaulted in repayment
 of dues to any financial institution, bank or to debenture holders.
 
 (xii) According to the information and explanations given to us,the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 (xiii) The provisions of any special statute as specified under Clause
 (xiii) of the Order are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities.  
 
 (xv) 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 others from banks or financial
 institutions are not prejudicial to the interest of the Company.  
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the term loans taken by the Company have been applied for
 the purposes for which they were obtained and to the extent that these
 have not been utilized, term loans of Rs.310 crores,as explained,are
 invested in working capital and short-term investments.
 
 (xvii) Based on the information and explanations given to us and on an
 overall examination of the Balance Sheet of the Company, funds raised
 on short-term basis have prima facie, not been used during the year for
 long-term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties and Companies covered in the register maintained under
 Section 301 of the Companies Act, 1956 during the year.
 
 (xix) In our opinion and according to the information and explanations
 given to us, the Company has created securities/charges in respect of
 the debentures issued.
 
 (xx) The Company has not raised any money by public issue during the
 year.
 
 (xxi) According to the information and explanations given to us, no
 material fraud on or by the Company has been noticed or reported during
 the year.
 
                                           For DELOITTE HASKINS & SELLS 
                                           Chartered Accountants
 
                                           N.VENKATRAM
                                           Partner
                                           Membership Number: 71387
 Mumbai, 28th May, 2009