Reliance Infrastructure Ltd

To the Members of Reliance Infrastructure Limited

1. We have audited the attached Balance Sheet of Reliance Infrastructure Limited(the "Company") as at March 31, 2011, and the related Profit and Loss Accountand Cash Flow Statement for the year ended on that date annexed thereto, 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.

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, as amended by theCompanies (Auditor’s Report) (Amendment) Order, 2004 (together the"Order"), issued by the Central Government of India in terms of sub-section (4A)of Section 227 of ‘The Companies Act, 1956’ (the ‘Act’) and on thebasis of such checks of the books and records of the Company as we considered appropriateand according to the information and explanations given to us, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the 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 comply with the accounting standards referred to in sub-section(3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March31, 2011 and taken on record by the Board of Directors, none of the directors isdisqualified as on March 31, 2011 from being appointed as a director in terms of clause(g) of subsection (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto give, the information required by the Act, in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:

(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.

Place: Mumbai

Date: May 27, 2011

Annexure referred to in paragraph 3 of the Auditors’ Report of even date to themembers of Reliance Infrastructure Limited on the financial statements for the year endedMarch 31, 2011

(i) (a) The Company is maintaining proper records showing full particulars, includingquantitative details and situation of its fixed assets.

(b) As informed to us, the fixed assets are physically verified by the Managementaccording to a phased program designed to cover all the items over a period of 3 yearswhich, in our opinion, is reasonable having regard to the size of the Company and thenature of its assets. Pursuant to the program, a portion of the fixed assets has beenphysically verified by the Management during the year and no material discrepanciesbetween the book records and the physical inventory have been noticed. However, we areinformed that distribution system being underground is not physically verifiable.

(c) In our opinion and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed of by the Company during the year.

(ii) (a) The inventory (excluding stocks with third parties) has been physicallyverified by the Management during the year. In respect of inventory lying with thirdparties, these have substantially been confirmed by them. In our opinion, the frequency ofverification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe Management are reasonable and adequate in relation to the size of the Company and thenature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, theCompany is maintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to book records were not material.

(iii) The Company has neither granted nor taken any loan, secured or unsecured, fromany company, firm or other party covered in the register maintained under Section 301 ofthe Act. Accordingly, provisions of clause 4(iii)(b)(c)(d)(f) and (g) of the order are notapplicable.

(iv) In our opinion and according to the information and explanations given to us,there is an adequate internal control system commensurate with the size of the Company andthe nature of its business for the purchase of inventory, fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records ofthe Company, and according to the information and explanations given to us, we haveneither come across nor have been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control system.

(v) According to the information and explanations given to us, there have been nocontracts or arrangements referred to in Section 301 of the Act during the year to beentered in the register required to be maintained under that Section. Accordingly, thequestion of commenting on transactions made in pursuance of such contracts or arrangementsdoes not arise.

(vi) The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the Company inrespect of products where, pursuant to the Rules made by the Central Government of India,the maintenance of cost records has been prescribed under clause (d) of sub-section (1) ofSection 209 of the Act, and are of the opinion that prima facie, the prescribed accountsand records have been made and maintained. We have not, however, made a detailedexamination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records ofthe Company examined by us, in our opinion, the Company is generally regular in depositingthe undisputed statutory dues including provident fund, investor education and protectionfund, employees’ state insurance, income-tax, sales tax, wealth tax, service tax,customs duty, excise duty, cess and other material statutory dues as applicable, with theappropriate authorities.

Further, since the Central Government has till date not prescribed the amount of cesspayable under section 441A of the Act, we are not in a position to comment upon theregularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amountspayable in respect of provident fund, investor education and protection fund,employees’ state insurance, income-tax, sales tax, wealth tax, service tax, customsduty, excise duty, cess and other material statutory dues as applicable were outstanding,at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of theCompany examined by us, the particulars of dues of income-tax, sales-tax, wealth-tax,service-tax, customs duty, excise duty and cess as at March 31, 2011 which have not beendeposited on account of a dispute, are as follows:

* Includes amount of Rs. 0.55 Crore paid under protest. (x) The Company has noaccumulated losses as at March 31, 2011 and it has not incurred any cash losses in thefinancial year ended on that date or in the immediately preceding financial year.

(xi) According to the records of the Company examined by us and the information andexplanation given to us, the Company has not defaulted in repayment of dues to anyfinancial institution or bank or debenture holders as at the balance sheet date.

(xii) The Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund / 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 a dealer or trader in shares, securities,debentures and other investments. Therefore, the provisions of clause 4(xiv) of the orderare not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, theterms and conditions of the guarantees given by the Company, for loans taken by othersfrom banks or financial institutions during the year, are not prejudicial to the interestof the Company.

(xvi) In our opinion, and according to the information and explanations given to us, onan overall basis, the term loans have been applied for the purposes for which they wereobtained.

(xvii) On the basis of an overall examination of the balance sheet of the Company, inour opinion and according to the information and explanations given to us, there are nofunds raised on short-term basis which have been used for long-term investment except fora short term loan of Rs. 75 Crore obtained from a bank for capital expenditure has beenused accordingly.

(xviii)The Company has made preferential allotment of shares to a Company covered inthe register maintained under Section 301 of the Act during the year. In our opinion andaccording to the information and explanations given to us, the price at which such shareshave been issued is not prejudicial to the interest of the Company.

(xix) The Company has created security or charge in respect of debentures issued andoutstanding at the year-end.

(xx) The Company has not raised any money by public issues during the year.

(xxi) During the course of our examination of the books and records of the Company,carried out in accordance with the generally accepted auditing practices in India, andaccording to the information and explanations given to us, we have neither come across anyinstance of fraud on or by the Company, noticed or reported during the year, nor have webeen informed of such case by the Management except in case of theft of electricityreported by the vigilance department of the Company, the amount for which is notascertainable.

Place: Mumbai

Date: May 27, 2011

To the Members of Reliance Infrastructure Limited

We have examined the attached abridged Balance Sheet of Reliance InfrastructureLimited (‘the Company’) as at March 31, 2011, the abridged Profit and LossAccount and the Cash Flow Statement for the year ended on that date, together with thenotes thereon.

These abridged financial statements have been prepared by the Company pursuant to Rule7A of the Companies (Central Government’s) General Rules and Forms, 1956 and arebased on the financial statements of the Company for the year ended March 31, 2011prepared in accordance with Schedule VI of the Companies Act, 1956 and is covered by ourreport of even date to the members of the Company which report is attached herewith.

Place: Mumbai

Date: May 27, 2011