Suzlon Energy Ltd

To,

The Members of Suzlon Energy Limited

1. We have audited the attached Balance Sheet of Suzlon Energy Limited(‘the Company’) as at March 31, 2011 and also the Profit and Loss account andthe cash flow statement 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.

2. We 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 provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issuedby the Central Government of India in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

4. 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 purposes 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 and 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 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.

v. On the basis of the written representations received from the directors, as on March31, 2011, and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on March 31, 2011 from being appointed as a director in termsof clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. Without qualifying our opinion, we draw attention to Note 4(c), Schedule P in thefinancial statements regarding non-provision of proportionate premium on redemption of‘US$ 479.04 million (Rs. 2,136.27 Crores as at March 31, 2011) Foreign CurrencyConvertible Bonds amounting to Rs. 579.21 Crores which has been considered by the Companyas a contingent liability. Since the ultimate outcome of the matter cannot be presentlyascertained, no provision for the above liability that may result in future has been madein the accompanying financial statements.

vii. We draw attention to Note 3, Schedule P in the financial statement. During theyear ended March 31, 2011, the Company has recognised deferred tax asset aggregatingapproximately Rs 55.64 crores on tax losses of Suzlon Energy Limited. In our opinion, therecognition of deferred tax asset aggregating approximately Rs 55.64 crores does notsatisfy the conditions of virtual certainty prescribed under Accounting Standard 22,Accounting for Taxes on Income as notified by the Companies (Accounting Standards) Rules,2006 (as amended). Had the above-mentioned deferred tax asset not been recognised, the netloss for the year would have been higher and the deferred tax gain for the year in theprofit and loss account would have been lower by approximately Rs 55.64 crores.Accordingly, the deferred tax asset in the Balance Sheet has been overstated byapproximately Rs. 55.64 crores.

viii. In our opinion and to the best of our information and according to theexplanations given to us, the said accounts give the information required by the CompaniesAct, 1956, in the manner so required and subject para 5(vii) above, give a true andfair view in conformity with the accounting principles generally accepted in India;

(a) in the case of the balance sheet, of the state of affairs of the Company as atMarch 31, 2011;

(b) in the case of the profit and loss account, of the loss 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.

Re: Suzlon Energy Limited

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

(b) Fixed assets have been physically verified by management during the year inaccordance with a regular programme of verification which, in our opinion, is reasonablehaving regard to the size of the Company and the nature of its assets. As informed, nomaterial discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

2. (a) The management has conducted physical verification of inventory at reasonableintervals during the year.

(b) The procedures of physical verification of inventory followed by management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) The Company is maintaining proper records of inventory and no materialdiscrepancies were noticed on physical verification.

3. (a) As informed, the Company has not granted any loans, secured or unsecured tocompanies, firms or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (a) to (d) of theCARO are not applicable.

(b) The Company has taken a loan from a Company covered in the register maintainedunder section 301 of the Companies Act, 1956. The maximum amount involved during the yearand the year-end balance of the loan taken from such party was Rs. 145.32 crores.

(c) In our opinion and according to the information and explanations given to us, therate of interest, and other terms and conditions for such loan are prima facie notprejudicial to the interest of the Company.

(d) The loan taken by the company is a long term loan. According to the information andexplanations given to us, no repayment was due in respect of the principal portion tillthe balance sheet date. The payment of interest has been regular.

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 purchase of inventory and fixed assets and for the sale ofgoods and services. During the course of our audit, we have not observed any majorweakness or continuing failure to correct any major weakness in the internal controlsystem of the company in respect of these areas.

5. (a) According to the information and explanations provided by management, we are ofthe opinion that the particulars of contracts or arrangements referred to in section 301of the Act that need to be entered into the register maintained under section 301 havebeen so entered.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements exceeding value of Rupeesfive lakhs have been entered into during the financial year at prices which are reasonablehaving regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public. Accordingly, theprovisions of clause 4(vi) of the CARO are not applicable.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under section209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, theprescribed accounts and records have been made and maintained in respect of generation ofelectricity from wind power.

9. (a) Undisputed statutory dues including provident fund, investor education andprotection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax,service tax, customs duty, excise duty, cess and other material statutory dues havegenerally been regularly deposited with the appropriate authorities.

Further, since the Central Government has till date not prescribed the amount of cesspayable under section 441 A of the Companies Act, 1956, we are not in a position tocomment upon the regularity 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, wealth-tax, service tax, sales-tax, customs duty, exciseduty, cess and other undisputed statutory dues were outstanding, at the year end, for aperiod of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues ofincome tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess whichhave not been deposited on account of any dispute.

10. The Company has no accumulated losses at the end of the financial year. It hasincurred cash losses in the current and immediately preceding financial year.

11. Based on our audit procedures and as per the information and explanations given bythe management, we are of the opinion that the Company has not defaulted in repayment ofdues to a financial institution, bank or debenture holders.

12. According to the information and explanations given to us and based on thedocuments and records produced to us, the Company has not granted loans and advances onthe basis of security by way of pledge of shares, debentures and other securities.Accordingly, the provisions of clause 4(xii) of the CARO are not applicable.

13. In our opinion, the Company is not a chit fund or a nidhi /mutual benefitfund/society. Accordingly, the provisions of clause 4(xiii) of the CARO are notapplicable.

14. In our opinion, the Company does not deal or trade in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the CAROare not applicable.

15. According to the information and explanations given to us, the Company has givenguarantee for loans taken by others from banks or financial institutions, the terms andconditions whereof in our opinion are prima-facie not prejudicial to the interests of theCompany.

16. In our opinion and according to the information and explanations given to us, on anoverall basis, the term loans have been applied for the purposes for which they wereobtained.

17. According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that no funds raised onshort-term basis have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under section 301 of the Companies Act, 1956.Accordingly, the provisions of clause 4(xviii) of the CARO are not applicable.

19. No debentures have been issued by the Company during the year. Further, the Companyhas unsecured Foreign Currency Convertible Bonds outstanding during the year on which nosecurity or charge is required to be created.

20. We have verified that the end use of money raised from Rights Issue of equityshares is as disclosed in the notes to the financial statements.

21. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations given bymanagement, we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit.