Torrent Power

1.  We have audited the attached Balance Sheet of Torrent Power Limited
 as at 31st March, 2009 and also the 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 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, (the
 Order) 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 & 5 of the said Order.
 
 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 it appears from our examination of
 the 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 sub-section (3C) of section 211 of the
 Companies Act, 1956;
 
 (e) On the basis of written representation 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;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read with significant
 accounting policies and other notes thereon, 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, 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 TO THE AUDITORS REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  The nature of the Companys business / activities during the year
 is such that the requirements of clause (xiii) and (xiv) of paragraph 4
 of the Order are not applicable to the Company.
 
 2.  (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a programme of physical verification of its fixed
 assets over a period of three years, which in our opinion, is
 reasonable having regard to the size of the Company and the nature of
 its assets. In accordance with this programme, certain fixed assets
 have been physically verified by the management during the year and
 according to the information and explanations given to us, no material
 discrepancies have been noticed on such verification. As regards
 underground distribution systems, we have been informed that the same
 are not physically verifiable.
 
 (c) The Company has not disposed off a substantial part of fixed assets
 during the year.
 
 3.  (a) As explained to us, 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. No material discrepancies were noticed on physical
 verification.
 
 4.  (a) The Company has granted unsecured loans to two companies
 covered in the register maintained under Section 301 of the Companies
 Act, 1956. The maximum amount involved Rs.101.95 crores and the year
 end balance of such loans granted to such parties was Rs.2.22 crores.
 
 (b) In our opinion and according to the information and explanations
 given to us, the aforesaid loans are interest free and other terms and
 conditions are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The interest free loans granted by the company are repayable on
 demand. Under the circumstances, the question of regularity of
 repayment, overdue amount and steps for recovery do not arise.
 
 (d) The Company has not taken any loan secured / unsecured from
 companies, firms or other parties covered 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, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory and fixed assets and for the
 sale of goods and services and we have not observed any continuing
 failure to correct major weaknesses in such internal controls.
 
 6.  In respect of transactions that need to be entered in the register
 maintained in pursuance of Section 301 of the Companies Act, 1956:
 
 (a) The particulars of contracts or arrangements referred to in Section
 301 of the Companies Act, 1956, have been so entered;
 
 (b) The transactions 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.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A, 58AA or any other relevant provisions of the Companies Act, 1956
 and the rules framed there under, where applicable, with regard to the
 deposits accepted from the public. During the year, the Company has not
 accepted public deposits as defined under Section 58A of the Companies
 Act, 1956. No order 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.
 
 8.  In our opinion, the Company has an adequate internal audit system
 commensurate with its size and 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 not, however, made a detailed examination
 of the said records.
 
 10.  (a) According to the information and explanations given to us, the
 Company is generally regular in depositing with appropriate authorities
 undisputed statutory 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.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of income tax, wealth tax, sales
 tax, customs duty and excise duty were outstanding, as at 31st March,
 2009 for a period of more than six months from the date they became
 payable.
 
 (c) According to the information and explanations given to us, there
 are no dues of wealth tax, excise duty and cess which have not been
 deposited on account of any dispute. In respect of customs duty, sales
 tax and income tax, the following dues have not been deposited on
 account of dispute:
 
 Name of                   Nature of                  Amount
 Statute                       Dues           (Rs. in Crores)
                                                                      
 
 Custom Act,            Custom Duty on                  0.28
       1962          Higher Assessment     
                                 value                         
 Custom Act,            Custom Duty on                  0.07
       1962          Higher Assessment
                                 Value       
 Kerala General           Sales Tax on                  0.20
      Sales Tax        Works Contracts
      Act, 1963                          
 Andhra Pradesh           Sales Tax on                  0.13
 General Sales         Works Contracts
 Tax Act, 1957
 Andhra Pradesh           Sales Tax on                  0.20
 General Sales         Works Contracts         
 Tax Act, 1957                                            
 Income Tax              Demand of Tax                 11.39
 Act, 1961                                             
 Income Tax              Demand of Tax                  7.54
 Act, 1961                                                  
 
                                                                  
 
 Period to                        Forum
 which the                    where the
 amount                      dispute is
 relates                        pending
 
 2005-06                Supreme Court of
                        India, New Delhi
 2004-05                 Commissioner of
                        Appeal, Jamnagar
 2001-02             Sales Tax Appellate
                       Tribunal, Calicut
 1995-96                Appellate Deputy
 & 1996-97       Commissioner, Vijaywada
 1993-94             Sales Tax Appellate
 & 1994-95      Tribunal, Andhra Pradesh
 2003-04                      Income Tax
 & 2005-06            Appellate Tribunal
 1998-99 to           Gujarat High Court
 2001-02
 
 11.  The Company has been registered for a period less than five years
 and neither it has any accumulated losses nor cash losses during the
 financial year covered by our audit and during the immediately
 preceding financial year.
 
 12.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutions or banks. The Company has not issued any
 debentures.
 
 13.  The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 14.  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.
 
 15.  In our opinion, the term loans have been applied for the purpose
 for which they were raised except to the extent the funds deployed
 temporarily elsewhere pending application for the specified purpose.
 
 16.  According to 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.
 
 17.  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.
 
 18.  The Company has not issued any debentures during the year.
 
 19.  The Company has not raised money by public issue during the year.
 
 20.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company was 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 C.C. Chokshi & Co.
                                                Chartered Accountants
 
                                                       Gaurav J. Shah
 Ahmedabad                                                    Partner
 16th May, 2009                                  Membership No. 35701