Reliance Industries Ltd

To the Members of

Reliance Industries Limited

1. We have audited the attached Balance Sheet of RELIANCE INDUSTRIES LIMITED asat March 31, 2011, the Profit and Loss Account and the Cash Flow Statement for the yearended on that date annexed thereto. These financial statements are the responsibility ofthe Company’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards generally acceptedin India. 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 provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by theCentral Government of India in terms of sub-section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 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 are in compliance with the Accounting Standards referred to insub–section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the Directors as on March 31,2011 and taken on record by the Board of Directors, we report that none of the Directorsis disqualified as on March 31, 2011 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 explanationsgiven to us, the said accounts read together with the Significant Accounting Policies andnotes thereon give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31, 2011;

(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.

Annexure to Auditors’ Report

Referred to in Paragraph 3 of our report of even date

1. In respect of its fixed assets: a) The Company has maintained proper records showingfull particulars including quantitative details and situation of fixed assets on the basisof available information. b) As explained to us, all the fixed assets have been physicallyverified by the management in a phased periodical manner, which in our opinion isreasonable, having regard to the size of the Company and nature of its assets. No materialdiscrepancies were noticed on such physical verification. c) In our opinion, the Companyhas not disposed off a substantial part of its fixed assets during the year and the goingconcern status of the Company is not affected.

2. In respect of its inventories: a) The inventories have been physically verifiedduring the year by the management. In our opinion, the frequency of verification isreasonable. b) In our opinion and according to the information and explanations given tous, the procedures 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 proper records of inventories. As explained to us,there were no material discrepancies noticed on physical verification of inventories ascompared to the book records.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to /from companies, firms or other parties covered in the register maintained under Section301 of the Companies Act, 1956:

a) The Company has given loans to two subsidiaries. In respect of the said loans, themaximum amount outstanding at any time during the year was Rs. 7,196.72 crore and theyear-end balance is Rs. 6,997.07 crore.

b) In our opinion and according to the information and explanations given to us, therate of interest and other terms and conditions of the loans given by the Company, are notprima facie prejudicial to the interest of the Company.

c) The principal amounts are repayable on demand and there is no repayment schedule.The interests is payable 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, there are no overdueamounts.

e) The Company has not taken any loan during the year from companies, firms or otherparties covered in the Register maintained under Section 301 of the

Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g)of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business for the purchases of inventory and fixed assets and for the sale ofgoods and services. During the course of our audit, we have not observed any continuingfailure to correct major weaknesses in internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of theCompanies Act, 1956:

(a) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements that need to be entered in theregister 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 / arrangements entered in the Registermaintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appearreasonable as per information available with the Company.

6. According to the information and explanations given to us, the Company has notaccepted any deposit from the public. Therefore, the provisions of Clause (vi) ofparagraph 4 of the Order are not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with the sizeand nature of its business.

8. The Central Government has prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of theCompany. 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, carried out a detailed examination ofthe same.

9. In respect of statutory dues:

a) According to the records of the Company, undisputed statutory dues includingProvident Fund, Investor Education and Protection Fund, Employees’ State Insurance,Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess, and otherstatutory dues have been generally regularly deposited with the appropriate authorities.According to the information and explanations given to us, no undisputed amounts payablein respect of the aforesaid dues were outstanding as at March 31, 2011 for a period ofmore than six months from the date of becoming payable. Amounts due and outstanding for aperiod exceeding 6 months as at March 31, 2011 to be credited to Investor Education andProtection Fund of Rs. 7.81 crore, which are held in abeyance due to pending legal cases,have not been considered.

b) The disputed statutory dues aggregating Rs. 1,201.74 crore that have not beendeposited on account of disputed matters pending before appropriate authorities are asunder:

10. The Company does not have accumulated losses at the end of the financial year. TheCompany has not incurred cash losses during the financial year covered by the audit and inthe immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanationsgiven to us, we are of the opinion that the Company has not defaulted in repayment of duesto financial institutions, banks and debenture holders.

12. In our opinion and according to the explanations given to us and based on theinformation available, no loans and advances have been granted by the Company on the basisof security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund /society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are notapplicable to the Company.

14. The Company has maintained proper records of the transactions and contracts inrespect of dealing or trading in shares, securities, debentures and other investments andtimely entries have been made therein. All shares, securities, debentures and otherinvestments have been held by the Company in its own name.

15. The Company has given guarantees for loans taken by Others from banks and financialinstitutions. According to the information and explanations given to us, we are of theopinion that the terms and conditions thereof are not prima facie prejudicial to theinterest of the Company.

16. The Company has raised new terms loans during the year. The term loans outstandingat the beginning of the year and those raised during the year have been applied for thepurposes for which they were raised.

17. 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 there are nofunds raised on short-term basis that have been used for long- term investment.

18. 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, 1956.

19. The Company has created securities / charges in respect of secured debenturesissued.

20. The Company has not raised any monies by way of public issues during the year.

21. In our opinion and according to the information and explanations given to us, nomaterial fraud on or by the Company has been noticed or reported during the year.