1.  We have audited the attached Balance Sheet of THE TATA POWER
 COMPANY LIMITED (the Company), as at 31st March, 2011, the Profit and
 Loss Account and the Cash Flow Statement for the year ended on that
 date, both annexed thereto. 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 the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the 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.  Without qualifying our opinion we draw attention to:
 
 (i) Note 10 (f) 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 10 (f) and (g)] for
 the period upto 31st March, 2011.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 Tribunal''s Order can be successfully challenged. In
 view of this no provision/adjustment has been considered necessary.
 
 (ii) Note 10 (j) , which describes the key source of estimation
 uncertainty as at 31st March, 2011 relating to the Company''s long-term
 investment in its subsidiary.
 
 4.  As required by the Companies (Auditor''s Report) Order, 2003 (CARO)
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act, 1956, we give in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the said Order.
 
 5.  Further to our comments in the Annexure referred to in paragraph 4
 above, we report that:
 
 (i) 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;
 
 (ii) in our opinion, proper books of account as required by law have
 been kept by the Company, so far as it appears from our examination of
 those books ;
 
 (iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (v) 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, 2011;
 
 (2) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (3) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 6. On the basis of the written representations received from the
 Directors, as on 31st March, 2011 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2011 from being appointed as a director in terms of Section
 274(1)(g) of the Companies Act, 1956.
 
 Annexure to the Auditors'' Report
 (Referred to in paragraph 3 of our report of even date)
 
 (i) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets.
 
 (b) The fixed assets were physically verified during the year by the
 Management in accordance with a regular program of verification which,
 in our opinion, provides for physical verification of all the fixed
 assets at reasonable intervals. According to the information and
 explanation given to us, no material discrepancies were noticed on such
 verification.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of fixed assets of the Company and
 such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (ii) In respect of its inventory:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.  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 inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to/from Companies, firms or other parties listed in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased are of special nature and suitable alternative sources are
 not readily available for obtaining comparable quotations, there is an
 adequate internal control systems commensurate with the size of the
 Company and the nature of its business with regard to purchases of
 inventory and fixed assets and the sale of goods and services. During
 the course of our audit, we have not observed any major weakness in
 such 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) According to the information and explanations given to us, the
 Company has not accepted any deposit from the public during the year.
 In respect of unclaimed deposits, the Company has complied with the
 provisions of Sections 58A and 58AA or any other relevant provisions of
 the Companies Act, 1956.
 
 (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 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 in respect of the electricity business and electronic
 products of the Company and are of the opinion that prima facie the
 prescribed accounts and records have been made and maintained. We have,
 however, not made a detailed examination of the records with a view to
 determining whether they are accurate or complete.
 
 (ix) According to information and explanations given to us in respect
 of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 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
 applicable to it with the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Income Tax,
 Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess
 and other material statutory dues in arrears, as at 31st March, 2011
 for a period of more than six months from the date they became payable.
 
 (c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax,
 Custom Duty, Excise Duty and Cess which have not been deposited as on
 31st March, 2011 on account of disputes are given below:
 
 Name of       Nature of    Amount   Period to 
                                      which the    Forum where dispute 
                                                   is pending
 the statute   the dues    (Rs. in 
                            Crores)   amount
                                      relates
 
 Customs Laws  Customs Duty   2.74    1993-94 to 
                                      2003-04     Appellate Authority - 
                                                  upto Commissioner level
 
 Central 
 Excise        Excise Duty    13.78   1992-93 to 
                                       2002-03    Appellate Authority - 
                                                  upto Tribunal Level
 Laws
 
 Sales Tax 
 Laws          Sales Tax/
               Entry          13.27   2006-07 to 
                                        2010-11   Supreme Court
               Tax
 
 Cess Laws     Cess            8.71   1992-93 to 
                                       2009-10    Appellate Authority of
                                                  The Water (Prevention 
                                                  and Control of 
                                                  Pollution) Cess 
                                                  Act, 1977
 
 Income Tax    Income Tax     25.77   2008-09 to 
                                        2009-10   Appellate Authority-
                                                  Commissioner
 Act, 1961
 
 (x) The Company does not have accumulated losses as at 31st March, 2011
 and has not incurred cash losses during the financial year ended as 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 not defaulted in repayment of dues to
 banks, financial institutions and 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 of the guarantees given by the
 Company for loans taken by others from banks and financial institutions
 are not prima facie prejudicial to the interests of the Company.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained, other than temporary deployment pending
 application of term loans of Rs. 252 crores in working capital and
 short-term bank deposits.
 
 (xvii) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year for long-term investment.
 
 (xviii)According to information and explanations given to us, 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.
 
 (xix) According to the information and explanations given to us, during
 the period covered by our audit report, 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) To the best of our knowledge and according to the information and
 explanations given to us, no fraud on or by the Company has been
 noticed or reported during the year.
 
 For DELOITTE HASKINS & SELLS 
 
 Chartered Accountants 
 
 (Registration No.  117366W)
 
 N. VENKATRAM
 
 Partner
 
 (Membership Number: 71387)
 
 Mumbai, 19th May, 2011.