Tata Power Company Ltd

THE TATA POWER COMPANY LIMITED

1. We have audited the attached Balance Sheet of THE TATA POWER COMPANY LIMITED("the Company"), as at 31st March, 2011, the Profit and Loss Account and theCash Flow Statement for the year ended on that date, both annexed thereto. These financialstatements are the responsibility of the Company's Management. Our responsibility is toexpress an opinion on these financial 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 thedisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and the significant estimates made by Management, as well as evaluatingthe overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

3. Without qualifying our opinion we draw attention to:

(i) Note 10 (f) of the Notes forming part of the Accounts. As stated in the Note,subject to the outcome of the Appeal filed before the Supreme Court, no adjustment hasbeen made by the Company in respect of the standby charges accounted for as revenue inearlier periods estimated at Rs. 519 crores and its consequential effects [Note 10 (f) and(g)] for the period upto 31st March, 2011.The impact of the above on the results for theyear cannot presently be determined pending the ultimate outcome of the matter. TheCompany is of the view, supported by legal opinion, that the Tribunal's Order can besuccessfully challenged. In view of this no provision/adjustment has been considerednecessary.

(ii) Note 10 (j) , which describes the key source of estimation uncertainty as at 31stMarch, 2011 relating to the Company's long-term investment in its subsidiary.

4. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by theCentral Government in terms of Section 227(4A) of the Companies Act, 1956, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. Further to our comments in the Annexure referred to in paragraph 4 above, we reportthat:

(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 it appears from our examination of those books ;

(iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;

(iv) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 211(3C) of the Companies Act, 1956;

(v) in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(1) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2011;

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

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

6. On the basis of the 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 Section 274(1)(g) of the Companies Act, 1956.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No. 117366W)

N. VENKATRAM

Partner

(Membership Number: 71387)

Mumbai, 19th May, 2011.

(Referred to in paragraph 3 of our report of even date)

(i) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular program of verification which, in our opinion, provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us, no material discrepancies were noticed on suchverification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of fixed assets of the Company and such disposal has, in our opinion, notaffected the going concern status of the Company.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by theManagement at reasonable intervals. In respect of materials lying with third parties,these have substantially been physically verified or confirmed by third parties. In ouropinion 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 werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured,to/from Companies, firms or other parties listed in the register maintained under Section301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us,having regard to the explanations that some of the items purchased are of special natureand suitable alternative sources are not readily available for obtaining comparablequotations, there is an adequate internal control systems commensurate with the size ofthe Company and the nature of its business with regard to purchases of inventory and fixedassets and the sale of goods and services. During the course of our audit, we have notobserved any major weakness in such internal control system.

(v) According to the information and explanations given to us, the Company has notentered into any contract or arrangement with other parties, which needs to be entered inthe register maintained under Section 301 of the Companies Act, 1956.

(vi) According to the information and explanations given to us, the Company has notaccepted any deposit from the public during the year. In respect of unclaimed deposits,the Company has complied with the provisions of Sections 58A and 58AA or any otherrelevant provisions of the Companies Act, 1956.

(vii) In our opinion, the internal audit function carried out during the year by a firmof Chartered Accountants appointed by the Management has been commensurate with the sizeof the Company and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 209(1)(d) of the Companies Act, 1956 in respect of the electricity business andelectronic products of the Company and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have, however, not made a detailedexamination of the records with a view to determining whether they are accurate orcomplete.

(ix) According to information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed dues, includingProvident Fund, Investor Education and Protection Fund, Employees' State Insurance, IncomeTax, Sales Tax,Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other materialstatutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income Tax, Wealth Tax,Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess and other material statutorydues in arrears, as at 31st March, 2011 for a period of more than six months from the datethey became payable.

(c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,Excise Duty and Cess which have not been deposited as on 31st March, 2011 on account ofdisputes are given below:

(Rs) The Company does not have accumulated losses as at 31st March, 2011 and hasnot incurred cash losses during the financial year ended as on that date or in theimmediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to banks, financial institutions anddebenture holders.

(xii) According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

(xiii) The provisions of any special statute as specified under Clause (xiii) of theOrder are not applicable to the Company.

(xiv) In our opinion and according to the information and explanations given to us, theCompany is not a dealer or trader in securities.

(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 others frombanks and financial institutions are not prima facie prejudicial to the interestsof the Company.

(xvi) In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purposes for which they were obtained, other thantemporary deployment pending application of term loans of Rs. 252 crores in workingcapital and short-term bank deposits.

(xvii) In our opinion and according to the information and explanations given to us andon an overall examination of the Balance Sheet, we report that funds raised on short-termbasis have not been used during the year for long-term investment.

(xviii)According to information and explanations given to us, the Company has not madeany preferential allotment of shares to parties and Companies covered in the registermaintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, during the periodcovered by our audit report, the Company has created securities/charges in respect of thedebentures issued.

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

(xxi) To the best of our knowledge and according to the information and explanationsgiven to us, no fraud on or by the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No. 117366W)

N. VENKATRAM

Partner

(Membership Number: 71387)

Mumbai, 19th May, 2011.