1.  We have audited the attached Balance Sheet of TORRENT POWER LIMITED
 (“the Company) as at 31st March, 2011, the Profit and Loss Account and
 the Cash Flow Statement of the Company for the year ended on that date,
 both 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 misstatements. 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 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 (Auditors Report) Order, 2003 (CARO)
 issued by the Central Government in terms of Section 227(4A) 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 in paragraph 3
 above, we report as follows:
 
 (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 it appears from our examination of
 those books;
 
 (c) 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;
 
 (d) 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;
 
 (e) 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:
 
 (i) in the case of the Balance Sheet, of the state of the affairs of
 the Company as at 31st March 2011; 
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and 
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5.  On the basis of the written representations received from the
 Directors as on 31st March, 2011 taken on record by the Board of
 Directors, 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)
 
 1.  Having regard to the nature of the Companys business / activities
 / results, clauses (x), (xiii) and (xiv) of CARO are not applicable.
 
 2.  In respect of the Companys 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 over a period of three
 years by the Management in accordance with a regular programme of
 verification which, in our opinion, provides for physical verification
 of all the fixed assets at reasonable intervals. According to the
 information and explanations given to us, discrepancies noticed on such
 verification have been properly dealt with in the books of account.  As
 regards underground distribution systems, we have been informed that
 the same are not physically verifiable.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 3.  In respect of its inventory:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 (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.
 
 4.  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.
 
 5.  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 system 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 weaknesses in
 such internal control system.
 
 6.  In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to in Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Transactions during the year exceeding the value of Rupees Five
 Lacs in respect of any party have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time. No such transactions have been recorded in the said
 register in respect of sale of electricity as the Company is of the
 view that such transactions, being for cash at prevailing market
 prices, do not require to be entered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 7.  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, 58AA or any other relevant provisions of
 the Companies Act, 1956.
 
 8.  In our opinion, the internal audit functions carried out during the
 year by an entity of Chartered Accountants appointed by the management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 9.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for
 maintenance of cost records under section 209 (1) (d) of the Companies
 Act, 1956 in respect of generation and distribution of electricity and
 are of the opinion that prima facie the prescribed accounts and records
 have been maintained. We have, however, not made a detailed examination
 of the records with a view to determining whether they are accurate or
 complete.
 
 10.  According to the 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, Custom 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, Custom Duty and Excise Duty, Cess and other material 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 / VAT, 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            Forum           Period to  Amount
 Statute      Dues                 where the      which the   (Rs. in 
                                                              crores)
                                   dispute is       amount
                                   pending         relates
 
 Customs 
 Act,        Custom Duty on     Supreme Court of    2005-06    0.28
 1962       Higher Assessment   India, New Delhi
              Value
 
 Customs 
 Act,       Custom Duty on      Commissioner of     2004-05    0.07
 1962     Higher Assessment     Appeal, Jamnagar
           Value
 
 Kerala 
 General    Sales Tax on        Sales Tax Appellate 2001-02    0.20
 Sales Tax  Works Contracts     Tribunal, Calicut
 Act, 1963
 
 Andhra 
 Pradesh    Sales Tax on        Sales Tax Appellate 1993-94    0.20
 General 
 Sales     Works Contracts      Tribunal,           & 1994-95
 Tax Act, 
 1957                           Andhra Pradesh
 
 Income 
 Tax       Demand of Tax       Gujarat High Court      A.Y.    2.88
 Act, 1961                                           1998-99,
                                                    2000-01 &
                                                    2001-02
 
 Income 
 Tax       Demand of Tax        Income Tax             A.Y.    11.40
 Act, 1961                      Appellate Tribunal   2003-04
                                                    & 2005-06
 
 Income 
 Tax       Demand of Tax        CIT Appeals         A.Y.2006-07  3.38
 Act, 1961                                           & 2008-09
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 banks and financial institutions. The Company has not issued any
 debentures.
 
 12.  In our opinion, the Company has not granted loans and advances on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 13.  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 and financial institutions.
 
 14.  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.
 
 15.  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.
 
 16.  The Company has not made preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 17.  The Company has not issued any debentures during the year.
 
 18.  The Company has not raised money by public issue during the year.
 
 19.  To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no material fraud
 on the Company has been noticed or reported during the year except in
 case of theft of electricity reported by the vigilance department of
 the Company, the amount for which is not ascertainable.
 
                                           For Deloitte Haskins & Sells
 
                                                  Chartered Accountants
 
                                              (Registration No.117365W)
 
                                                        Gaurav J. Shah
 
 Ahmedabad                                                     Partner
 
 4th May, 2011                                    Membership No. 35701