Energy Development Company Ltd

We have audited the attached Balance Sheet as at 31st March, 2009 and the Profit and Loss Account along with the Cash Flow Statement for the year ended on that date of Energy Development Company Limited. 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.

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 misstatements. 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditor's Report) (Amendment) Order, 2004 ("the Order") issued by the Central Government in terms of section 227(4A) of the Companies Act, 1956,("the Act") and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

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

(b) Fixed assets have been physically verified by the management during the year, which in our opinion is reasonable having regards to the size of the Company and nature of its business. No material discrepancies in respect of the assets verified during the year were noticed.

(c) The Company has not disposed off any substantial part of the fixed assets during the year.

ii) (a) The inventory has been physically verified during the year by the management at reasonable intervals.

(b) The procedure of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventories and discrepancies noticed on the physical verification of inventory, as explained, were not material as compared to the book records.

iii) (a) According to information and explanations given to us the company had given unsecured loans to a company listed in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs. 70000000 and the year-end balance of such loans was Rs. 200000.

(b) In our opinion, the rate of interest and other terms and conditions on which the unsecured loans as mentioned in (a) above were prima facie not prejudicial to the interest of the Company.

(c) According to the information and explanations given to us, the principal amount and interest in respect of loan granted as mentioned in (a) above are repayable on demand. These loans are being repaid as and when recalled.

(d) As informed to us, having regards to terms and conditions of the loan as mentioned above, there is no overdue amount outstanding in respect of such loan and interest there on.

(e) As informed to us, the company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause (iii) (e), (f) and (g) of the Order are not applicable to the company.

iii) 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 with regard to purchases of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct weaknesses in the internal controls.

iv) (a) According to the information and explanations provided by the management, particulars of the contracts or arrangement referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the register maintained under Section 301 of the Act and exceeding five lacs in respect of any party during the year, have been made at prices which are reasonable having regards to the prevailing market prices at the relevant time.

v) The Company has not accepted any deposits from the public under Section 58A, 58AA or any other relevant provision of the Act and the rules framed there under.

vi) Internal audit of the Company has been carried out by firms of Chartered Accountants. In our opinion the internal audit system in respect of the areas covered during the year is commensurate with the size and nature of the business of the Company.

vii) We have broadly reviewed the cost records and accounts prescribed by the Central Government under section 209(1) (d) of the Act and are of the opinion that prima-facie, such records have been maintained by the Company. However, we have not carried out any detailed examination of such accounts and records.

viii) (a) According to the information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no undisputed amounts payable in respect of aforesaid dues for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess that have not been deposited with the appropriate authorities on account of any dispute.

ix) The Company does not have any accumulated losses as at the end of the financial year and the Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

x) In our opinion and on the basis of information and explanations given by the management, the Company has not defaulted in the repayment of dues to the Financial Institutions and Banks. There were no debenture holders during the year.

xi) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiii) 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 the Order are not applicable to the Company.

xiv) 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.

xv) According to the information and explanations given to us, the Company has not availed fresh term loans during the current financial year.

xvi) According to the information and explanations given to us and on an overall examination of the Balance Sheet, no short-term funds have been utilized for the long term investment during the year

xvii) The Company as given in Note 14 of Schedule 17 has made preferential issue of warrants to the parties covered in the Register maintained under Section 301 of the Act. Having regard to the terms of such issue, in our opinion, the same is not prejudicial to the interest of the Company.

xviii) The Company has not issued any debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable to the Company.

xix) The Company has not raised money by public issue during the year.

xx) During the course of our examination of the books of account carried out in accordance with generally accepted auditing practices in India, we have neither come across any incidence of fraud on or by the Company nor have we been informed of any such case by the management.

2. Further to the 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) The Balance Sheet, the Profit and Loss Account and the Cash Flow statement are in agreement with the books of account;

iii) 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 of account;

iv) In our opinion, the Profit and Loss Account and the Balance Sheet of the Company comply with the accounting standards referred to in Sub-Section 3(C) of Section 211 of the Act;

v) On the basis of written representations 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 of the Company 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 Act;

vi) 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 Act in the manner so required and read together with the other notes thereon, give a true and fair view :

(a) in case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009;

(b) in case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

(c) in case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.