Adani Enterprises Ltd

to the members of

ADANI ENTERPRISES LIMITED

We have audited the attached Balance Sheet of ADANI ENTERPRISES LIMITED as at31st March, 2011 and also the Profit and Loss Account for the year ended on that dateannexed thereto and the Cash Flow statement for the year ended on that date, which we havesigned under reference to this report. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

We have conducted our audit in accordance with 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 misstatement. 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 management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provide a reasonable basis forour opinion.

1. As required by the Companies (Auditor’s Report) Order, 2003 (the"Order") (as amended), issued by the Central Government of India in terms ofsub-section (4A) of Section 227 of the Companies Act, 1956 (the "Act"), weenclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 ofthe said Order.

2. Further to our comments in the annexure referred to above, we report that:

i) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of our audit;

ii) In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash FlowStatement dealt with this report comply with the Accounting Standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representations received from the directors, as on 31stMarch, 2011, and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on 31st March, 2011 from being appointed as a director interms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with the Significant Accounting Policies andother notes thereon give the information required by the Companies Act, 1956 in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

a) in the case of the Balance Sheet, of the State of affairs of the Company as at 31stMarch, 2011;

b) in the case of Profit & Loss Account, of the Profit for the year ended on thatdate; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on thatdate.

ANNEXURE TO THE AUDITORS’ REPORT RE: ADANI ENTERPRISES LIMITED

(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, fixed assets, according to the practice of the Company, arephysically verified by the management at reasonable intervals, in a phasedverification-programme, which, in our opinion, is reasonable, looking to the size of theCompany and the nature of its business. No material discrepancies were noticed on suchverification.

(c) As the Company has disposed off an insignificant part of the fixed assets duringthe year, provisions of clause 4 (i) (c) of the Order are not applicable.

(ii) (a) During the year, the inventories, except transit stock have been physicallyverified by the management. For stocks lying with third parties, which have, however, beenconfirmed by them. 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) On the basis of our examination of the record of inventories, we are of the opinionthat, the Company is maintaining proper records of inventories. The discrepancies noticedon physical verification of inventories as compared to book records were not material andhave been properly dealt with in the books of account.

(iii) (a) The Company has given loans to eight subsidiaries of the Company. In respectof the said loans, the maximum amount outstanding at any time during the year is Rs.7,167.84 Crores and the year end balance is Rs. 3,744.98 Crores. The Company has not givenany loans to firms or other parties covered in the Register maintained under section 301of the Companies Act, 1956.

(b) In our opinion and explanation given to us, the rate of interest, where applicableand the other terms and conditions, are not prima facie prejudicial to the interest of theCompany.

(c) The principal amounts are repayable on demand. The interest, where applicable ispayable on demand.

(d) In respect of the said loans, the same are repayable on demand and therefore thequestion of overdue amounts does not arise. In respect of interest, where applicable,there are no overdue amounts.

(e) According to the information and explanation given to us, the company has not takenany loan secured or unsecured from companies, firms or other parties covered in theRegister maintained under Section 301 of the Companies Act, 1956. Consequently, therequirements of clause 4 (iii)(e) to 4(iii)(g) of the Order are not applicable.

(iv) According to the information and explanations given to us, there is an adequateinternal control system commensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory and fixed assets and for the sale of goods andservices. During the course of our audit, no major weakness has been noticed in theinternal control system.

(v) (a) In our opinion and according to the information and explanations given to us,the transactions made in pursuance of contracts or arrangements, that need to be enteredin Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements reffered to in (a) above andexceeding the value of Rs. 5,00,000 in respect of each party during the year have beenmade at prices which appear reasonable as per information available with the Company.

(vi) The Company has not accepted deposits from the public within the meaning ofSections 58A & 58AA of the Companies Act, 1956 or any other relevant provisions of theAct and the Rules framed there under. We are informed that no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any Courtor any other Tribunal.

(vii) As per the information and explanations given to us by the management, theCompany’s internal control procedures together with the internal checks conducted bythe group internal audit team during the year can be considered as an internal auditcommensurate with the size and nature of its business.

(viii) According to the information and explanations given to us, the maintenance ofcost records under Section 209(1)(d) of the Companies Act, 1956 is not applicable to theCompany. Accordingly, the provisions of Clause 4(viii) of the Order are not applicable.

(ix) (a) As explained to us, the statutory dues payable by the Company comprises ofProvident Fund, Investors Education Protection Fund, Employees State Insurance, IncomeTax, Sales Tax/VAT, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess, Octroi, EntryTax, Purchase Tax, Municipal Tax and other applicable statutory dues. According to therecords of the Company, the Company is generally regular in depositing undisputedstatutory dues with the appropriate authorities; however there has been delay in few caseswhich is not in arrears for more than Six months at the end of financial year. There areno undisputed statutory dues as referred to above as at 31st March, 2011 outstanding for aperiod of more than six months from the date they become payable.

There were no dues on account of Cess under Section 441A of the Companies Act, 1956since the aforesaid section has not yet been made effective by the Central Government.

(b) According to the records of the Company and representation made by the Management,the following are the disputed amounts in respect of various statutes:

(x) The Company has no accumulated losses at the end of the financial year and it hasnot incurred any cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by themanagement, we are of the opinion that the Company has not defaulted in repayment of duesto a bank. The Company has not borrowed any sums through financial institution ordebentures.

(xii) According to the information and explainations given to us, the Company has notgranted loans and advances on the basis of security by way of pledge of shares, debenturesand other securities. Accordingly, the provisions of Clause 4(xii) of the Order are notapplicable.

(xiii) According to the information and explainations given to us, the Company is not achit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause4(xiii) of the Order are not applicable.

(xiv) In respect of dealing in securities and other investments, in our opinion andaccording to the information and explanations given to us, proper records have beenmaintained of the transactions and contracts and timely entries have been made therein.All investments at the end of the year are held in the name of the company and itsnominees, wherever required.

(xv) In respect of guarantees given by the Company for loans taken by others frombanks, the terms and conditions are prima facie not prejudicial to the interest of theCompany.

(xvi) To the best of our knowledge and as explained, the term loans raised during theyear have been applied for the purpose for which they were raised.

(xvii) According to the Cash-flow statement and other records examined by us and theinformation and explanations given to us, on an overall basis, funds raised on short termbasis have not, prima facie, been used during the year for long term investment exceptpermanent working capital.

(xviii) The Company has not made any preferential allotment of shares to parties andcompanies covered in the Register maintained under Section 301 of the Companies Act.Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable.

(xix) The Company has not issued any debentures during the year and there are nodebentures outstanding as at the year end. Accordingly, the provisions of Clause 4(xix) ofthe Order are not applicable.

(xx) We have verified the end use of money raised through Rights Issue and QualifiedInstitutional Placement (QIP) as disclosed in the Note no. B 33 and B 34 of Schedule 20notes forming part of the accounts.

(xxi) Based upon the audit procedures performed and information and explanations givenby the management, no fraud on or by the Company were reported or noticed during the year.