1.  We have audited the attached Balance Sheet of
 CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED (formerly known as
 Cholamandalam DBS Finance Limited) (the Company) as at 31 March,
 2011, the Profit and Loss Account and the Cash Flow Statement of the
 company for the year ended on that date, both annexed thereto. These
 financial statements are the responsibility of the Companys
 Management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with the 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 the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the 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.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (CARO)
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 maters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 (a) 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;
 
 (b) in our opinion, proper books of account as required by law have
 been kept by the company so far as it appears from our examination of
 those books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (e) 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 Companies Act, 1956 in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 company as at 31 March, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 company for the year ended on that date and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 company for the year ended on that date.
 
 5. On the basis of the written representations received from the
 Directors as on 31 March, 2011 taken on record by the Board of
 Directors, none of the Directors is disqualified as on 31 March, 2011
 from being appointed as a director in terms of Section 274(1)(g) of the
 Companies Act, 1956.
 
 Annexure to the Auditors Report
 (Referred to in paragraph 3 of our report of even date)
 
 (i) Having regard to the nature of the companys business/
 activities/result, clauses 4(ii), 4(viii), 4(x), 4(xiii), 4(xiv) and
 4(xx) of CARO are not applicable.
 
 (ii) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets.
 
 (b) The fixed assets were physically verified during the year by the
 Management in accordance with a regular programme of verification
 which, in our opinion, provides for physical verification of all the
 fixed assets at reasonable intervals. According to the information and
 explanation given to us, no material discrepancies were noticed on such
 verification.
 
 (c) The Fred assets disposed of during the year, in our opinion, do not
 constitute a substantial part of the fixed assets of the company and
 such disposal has, in our opinion, not affected the going concern
 status of the company.
 
 (iii) In respect of loans, secured or unsecured, granted by the Company
 to companies, firms or other partes covered in the Register under
 Section 301 of the Companies Act, 1956, according to the information
 and explanations given to us:
 
 (a) The Company has granted loans to two subsidiaries aggregating to
 Rs.4188.00 lakhs. At the year-end, the balance due from one company
 amounted to Rs.304 lakhs while the dues from another company was fully
 received before the year end. The maximum amount involved during the
 year was Rs.2282.60 lakhs (number of partes - two).
 
 (b) The rate of interest and other terms and conditions of such loans
 are, in our opinion, prima facie not prejudicial to the interests of
 the company.
 
 (c) While one subsidiary has settled its dues during the year, the dues
 from the other company has become doubtful and has been fully provided
 for.
 
 (d) There were no overdue amounts remaining outstanding as at the year
 end except the loan referred in (c) above.
 
 In respect of loans, secured or unsecured, taken by the company from
 companies, firms or other partes covered
 
 in the Register maintained under Section 301 of the Companies Act,
 1956, according to the information and explanations given to us:
 
 (a) The Company has taken loans aggregating Rs.3270 lakhs from one
 party during the year. At the year-end, the outstanding balance of such
 loans taken aggregated Rs. NIL and the maximum amount involved during
 the year was Rs.1940 lakhs (number of partes - One).
 
 (b) The rate of interest and other terms and conditions of such loans
 are, in our opinion, prima facie not prejudicial to the interests of
 the Company.
 
 (c) The payments of principal amounts and interest in respect of such
 loans are regular/as per stipulations.
 
 (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 and the nature of its business with regard
 to purchases of fixed assets and the sale of repossessed automobile
 assets and services. During the course of our audit, we have not
 observed any major weakness in such internal control system. The
 Company does not purchase inventory nor does it sell any goods (other
 than repossessed automobile assets) in the ordinary course of its
 business.
 
 (v) In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transaction is in excess of Rs.5 lakhs in
 respect of any party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Companies Act,
 1956 and the Companies (Acceptance of Deposits) Rules, 1975, as
 applicable to the
 
 company, with regard to the deposits accepted from the public prior to
 November 1, 2006. However, in respect of overdue amounts totalling to
 Rs.1.86 lakhs, payments have not made since the repayment of the same
 to the depositors has been stayed by the Madras High Court.  Further,
 in respect of overdue amounts totalling to Rs.0.11 lakhs, payments have
 not been made as per instructions received from the Central Bureau of
 Investigation. Other than the above, according to the information and
 explanations given to us, no order has been passed by the company Law
 Board or the National company Law Tribunal or the Reserve Bank of India
 or any Court or any other Tribunal.
 
 (vii) In our opinion, the internal audit functions carried out during
 the year by the companys internal audit department as well as an
 external firm of Chartered Accountants appointed by the Management,
 have been commensurate with the size of the company and the nature of
 its business.
 
 (viii) According to the information and explanations given to us in
 respect of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Income-tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Cess
 and other material statutory dues applicable to it with the appropriate
 authorities.
 
 (b) There were no undisputed amounts payable in respect of Income-tax,
 Wealth Tax, Custom Duty, Cess and other material statutory dues in
 arrears as at 31 March, 2011 for a period of more than six months from
 the date they became payable except for fixed deposit amounts totalling
 to Rs.1.97 lakhs which have not been credited to Investor Education and
 Protection Fund since the repayment to the depositors has been stayed
 by the Madras High Court for an amount of Rs. 1.86 lakhs, payments have
 not been made pursuant to instructions received from Central Bureau of
 Investigation for an amount of Rs.0.11 lakhs.
 
 (c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax
 and Cess which have not been deposited as on 31 March, 2011 on account
 of disputes are given below:
 
 Statute         Nature of     Forum where Dispute  Period to which 
                 Dues          is pending           the amount relates
                                                    (Financial Year)
 
 Income Tax 
 Act, 1961       Tax and       Commissioner of 
                               Income Tax           2000-01,2005-06 
                 Interest      (Appeals)            and 2006-07
 
 Tamil Nadu 
 General Sales 
 Tax Act, 1959   Sales Tax     Sales Tax 
                               Appellate 
                               Tribunal             1994-95 228.59 
 
 
 Central 
 Sales Tax 
 Act, 1956       Sales Tax     Sales Tax 
                               Appellate 
                               Tribunal             1994-95 59.77
 
 Bihar Finance 
 Act, 1981       Sales Tax     Sales Tax 
                               Appellate 
                               Tribunal             1992-93 and 1993-94
 
 Gujarat Sales 
 Tax Act, 1969   Sales Tax     Sales Tax 
                               Tribunal             1996-97 and 1997-98
 
 Karnataka Sales 
 Tax Act, 1957   Sales Tax     Sales Tax 
                               Appellate 
                               Tribunal             1992-93 to 1994-95,
                                                    1996-97 and 1999-00
 
 Delhi Sales 
 Tax Act, 1975   Sales Tax     Sales Tax 
                               Appellate 
                               Tribunal             1990-91 
 
                 Sales Tax     Deputy 
                               Commissioner of      1991-92 to 1998-99 
 U.P Trade Tax
 Act, 1948                     Trade Tax
 
 Service Tax 
 (Chapter V 
 of the          Service       Madras High Court    2001-02 and 2002-03
 Finance Act,    Tax
 1994) 
 
 
 Statute                     Amount involved (Rs. in lakhs)
 
 Income Tax Act, 1961                   432.54
 
 Tamil Nadu General Sales               228.59
 Tax Act, 1959
 
 Central Sales Tax Act, 1956             59.77
 
 Bihar Finance Act, 1981                  2.19
 
 Gujarat Sales Tax Act, 1969              2.03
 
 Karnataka Sales Tax Act, 1957           19.79
 
 Delhi Sales Tax Act, 1975                7.58
 
 U.P Trade Tax Act, 1948                  9.11
 
 Service Tax (Chapter V of the           69.33
 Finance Act, 1994)
 
 
 (ix) In our opinion and according to the information and explanations
 given to us, the company has not defaulted in the repayment of dues to
 banks and debenture holders.
 
 (x) In our opinion, the company has maintained adequate records where
 it has granted loans and advances on the basis of security by way of
 pledge of shares, debentures and other securities.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 company for loans taken by others from banks and financial institutions
 are not prima facie prejudicial to the interests of the company.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained, other than temporary deployment pending
 application.
 
 (xiii) On the basis of review of Asset / Liability Gap Analysis report,
 giving utilisation of funds on overall basis and the related
 information made available to us and as per the explanation given to
 us, we report that funds raised on short term basis have, prima facie,
 not been used during the year for long term investment.
 
 (xiv) According to the information and explanations given to us, the
 company has not made preferential allotment of shares to partes and
 companies covered in the Register maintained under Section 301 of the
 Companies Act, 1956.
 
 (xv) According to the information and explanations given to us, during
 the period covered by our audit report, the company had issued 7200
 debentures of Rs.10 lakh each. The Company has created security in
 respect of the debentures issued.
 
 (xvi) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the company and no material fraud
 on the company has been noticed or reported during the year.
 
 
                                              For Deloite Haskins & Sells
                                                    Chartered Accountants
                                                (Registration No.008072S)
 
                                                     M.K.Ananthanarayanan
                                                                  Partner 
                                                    (Membership No.19521)
 
 Chennai
 30 April, 2011