Aban Offshore Ltd

TO THE SHAREHOLDERS OF ABAN OFFSHORE LIMITED

We have audited the attached Balance Sheet of M/s. Aban Offshore Limited, as at31^st March 2010, and also the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company’s Management. Our responsibility isto express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the Auditing Standards generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

We report as follows:

1. As required by the Companies (Auditor’s Report) Order, 2003 (the‘Order’) 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 onthe matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we reportthat:

a. We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany, so far as it appears from our examination of those books;

c. The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statementdealt with by this report comply with the Accounting Standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956;

e. Based on the representations made by the Directors and taken on record by the Boardof Directors of the Company and the information and explanations given to us, none of theDirectors is, as at 31st March 2010, prima-facie disqualified from being appointed asdirector in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956 on the said date;

f. In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements read together with the notes thereon, give theinformation required by the Companies Act, 1956, in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31^stMarch 2010;

(ii) in the case of the Profit and Loss Account, of the Profit for the year ended onthat date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

(Referred to in paragraph 1 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us the fixed assets have been physically verified by the Managementduring the year in a phased manner, which in our opinion is reasonable, having regard tothe size of the Company and nature of its assets. As explained to us no materialdiscrepancies have come to the notice on such physical verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company and such disposal has, in our opinion,not affected the going concern status of the Company.

(ii) (a) As explained to us the inventories have been physically verified during theyear by the Management. In our opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the Management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) The Company has maintained records of inventory. The discrepancies noticed onverification between the physical stocks and the book records have been dealt with in thebooks of account.

(iii) (a) The Company has not granted any loan secured or unsecured to companies, firmsor other parties covered in the Register maintained under Section 301 of the CompaniesAct, 1956, during the year, except unsecured loans to its wholly owned foreign subsidiaryas shown below:

(b) The rate of interest and other terms and conditions of such loan are, in ouropinion, prima facie, not prejudicial to the interest of the Company.

(c) The repayment of principal and payment of Interest is on "on demand"basis as per the loan agreement.

(d) The loan given by the Company to its wholly owned foreign subsidiary company isrepayable on demand and therefore the question of overdue amount does not arise.

(e) The Company has taken loan from a company, covered in the Register maintained underSection 301 of the Companies Act, 1956 during the year, as shown below:

(f) The rate of interest and other terms and conditions of such loans are, in ouropinion, prima facie, not prejudical to the interest of the Company.

(g) The balance amount of principal is not due for repayment during the year andpayment of interest is as per stipulations.

(iv) 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 Companyand the nature of its business with regard to purchases of fixed assets and for the saleof services. During the course of our Audit no major weakness has been noticed in theinternal controls in respect of these areas.

(v) (a) According to the information and explanations given to us, we are of theopinion that transactions that need to be entered into the Register maintained underSection 301 of the Companies Act, 1956 have been entered in the said Register.

(b) In our opinion and according to the information and explanations given to us, weare of the opinion that transactions that need to be entered in the Register maintainedunder Section 301 of the Companies Act, 1956 have been made at prices which are reasonablehaving regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits during the year from the public withinthe meaning of the provisions of Section 58A and 58AA of the Companies Act, 1956 or anyother relevant provisions of the Act and the rules made thereunder.

(vii) In our opinion, the Company has an internal audit system commensurate with thesize and nature of its business.

(viii) The Central Government has prescribed maintenance of Cost Records under Section209 (1) (d) of the Companies Act, 1956 in respect of the wind power generating activity ofthe Company. We have broadly reviewed the accounts and records of the Company in thisconnection and are of the opinion, that prima facie, the prescribed accounts and recordshave been made and maintained. We have not, however, made a detailed examination of thesame.

(ix) (a) According to the information and explanations given to us and on the basis ofour examination of the books of account, in our opinion the Company is regular indepositing with appropriate authorities undisputed statutory dues including ProvidentFund, Investor Education and Protection Fund, Income Tax, Customs Duty, Sales Tax, ValueAdded Tax, Service Tax, Cess and other material statutory dues applicable to it. We areinformed that the Employees’ State Insurance Scheme is not applicable to the Company.According to the information and explanations given to us, no undisputed amounts payablein respect of above were in arrears, as at 31^st March 2010 for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues ofIncome Tax, Customs Duty, Sales Tax, Value Added Tax, Service Tax and Cess, which have notbeen deposited with appropriate authorities on account of any dispute.

(x) The Company has no accumulated loss as at 31st March 2010 and has not incurred cashlosses in the financial year under report or in the immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanationsgiven to us, the Company has not defaulted in repayment of dues to banks and financialinstitution. In April 2006, the Company has issued 1161 Foreign Currency ConvertibleBonds. 620 bonds have been converted into Equity Shares upto the end of the year under ouraudit. The balance amount has not become due for payment as at the close of the year,though the balance has already become due for optional conversion.

(xii) Based on our examination of the records and the information and explanationsgiven to us, the Company has not granted any loans and / or advances on the basis ofsecurity by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Order are not applicable tothe Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of theOrder are not applicable to the Company.

(xv) The Company has given guarantees for loans taken by a subsidiary of its whollyowned foreign subsidiary from banks. According to the information and explanations givento us, we are of the opinion that the terms and conditions thereof are not prima –facie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the explanations given to us, the term loanstaken by the Company have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overallexamination of the Balance Sheet of the Company we are of the opinion that the Company hasnot utilised short term funds towards long term Investment.

(xviii)The Company has allotted Equity Shares under Employee Stock Option Scheme to itsemployees in accordance with SEBI guidelines during the year. The price fixed by the Boardfor these shares is reasonable and not prejudicial to the interest of the Company. TheCompany has also allotted equity shares during the year to Qualified Institutional Buyersat a price fixed as per provision of SEBI (Issue of Capital and Disclosure Requirements)Regulations 2009.

(xix) No debentures have been issued by the Company during the year and hence theprovisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) During the year the Company has not raised money by way of public issue. Hence theprovisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi) During the course of our examination of the books of account, we have neithercome across any instance of fraud on or by the Company, either noticed or reported duringthe year, nor have we been informed of any such case by the management.