1. We have audited the attached Balance Sheet of D B Realty Limited
 (''the Company'') as at March 31, 2012 and also the Statement of Profit
 and Loss 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 Company''s management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 2. We conducted our audit in accordance with 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 misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3. We draw your attention to the followings matters:
 
 a) Managerial Remuneration of Rs. 15,709,677 paid by the Company has
 exceeded the limits specified under Schedule XIII read with Sec 349,
 350 & 198 of the Companies Act, 1956, by Rs. 8,350,386. We are informed
 that the Company has recovered the excess remuneration from the
 relevant directors during FY 2012-13.
 
 b) With reference to Note no 38 regarding provisional attachment order
 issued by adjudicating authority under prevention of Money Laundering
 Act (PML Act), by which the Company''s assets amounting to Rs. 521,621,696
 has been attached on August 30, 2011. This matter is sub-judice and the
 impact, if any, of the outcome is unascertainable at this stage.
 
 c) Share of profit (net) from investment in partnership firms and LLPs
 (the ''Firms'') aggregating Rs. 486,580,981 and investments in these Firms
 aggregating Rs. 5,752,683,419 (Refer Note 11 & 14); are based on
 financial statements of the firms as audited by another auditors whose
 reports have been furnished to us and which have been relied upon by
 us.
 
 d) The audited financial statements of one of the firms viz. Dynamix
 Realty (''Dynamix''), include disclosure in respect of :
 
 I. Outstanding receivables of Rs. 697,844,175 as at March 31, 2012 from
 Companies in which directors of the Company are interested. (Refer Note
 27 (A) 1 and 2 ) These amounts are considered as good and recoverable
 as stated in the said disclosure.
 
 II. Allegations made by the Central Bureau of Investigation of India
 (CBI) relating to the 2G Spectrum case {Refer Note 27 (A)(iv)}
 
 This matter is sub-judice and the impact, if any, of the outcome is
 unascertainable at this stage.
 
 e) With reference to note number 26, regarding guarantees aggregating Rs.
 15,589,597,000 issued by the Company to banks and financial
 institutions on behalf of two entities (in which some of directors of
 the Company are interested), which are significant in relation to the
 net worth of the Company at the year end. In the opinion of the
 Company, these are not expected to result into any financial liability
 to the Company.
 
 f) With reference to note number 32 regarding the Company''s investments
 aggregating Rs. 2,044,533,140 in and loans and advances aggregating Rs.
 3,172,489,420 to, certain subsidiaries, joint controlled entities and
 associates which have incurred losses and also have negative net worth
 as at the year end. As explained in the said Note, investments in these
 entities are considered strategic and long term in nature, the entities
 are in early stage of real estate development and in the opinion of the
 Company, have current market values of certain property significantly
 in excess of carrying values and are expected to achieve adequate
 profitability on substantial completion of their projects. Accordingly,
 the said investments and loans and advances are considered good and
 recoverable by the Company. Further, the Company has invested Rs.
 24,117,000 in one of the Joint Ventures. In the absence of financial
 statements of the said joint venture, we are not able to comment upon
 its impairment, if any.
 
 g) With reference to note number 28 to 30 regarding matters under
 litigation and are sub-judice, based on the Company''s assessment of the
 outcome, no adjustments are considered necessary in respect of
 recoverability of balances as at March 31, 2012 for loans and advances
 aggregating Rs. 1,640,849,994 and investments of Rs. 312,018,720.
 
 4. Further to the matters referred to in paragraph 3 above, as required
 by the companies (Auditor''s Report) Order, 2003, (as amended), 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 the basis
 of such checks of the books and records of the Company as we considered
 appropriate and according to the information and explanations given to
 us, we give in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 5. Further to our comments in the paragraph 3 and 4 above, we report
 that:
 
 i. 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;
 
 ii. in our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 iii. the Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv. in our opinion, the Balance Sheet, Statement of Profit and Loss and
 Cash Flow statement dealt with by this report are in compliance with
 the accounting standards referred to in sub-section (3C) of section 211
 of the Companies Act, 1956;
 
 v. on the basis of written representations received from the directors
 as of March 31, 2012 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 2012
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi. 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;
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2012;
 
 b) in the case of the Statement of Profit and Loss, of the profit for
 the year ended on that date; and
 
 c) in the case of Cash Flow statement, of the cash flows for the year
 ended on that date.
 
 6. The financial Statement of the Company for the year ended March 31,
 2011, were audited by another auditor who had expressed an unmodified
 opinion on those statements on June 8, 2011.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 [Referred to in paragraph 4 of the Auditors'' Report of even date to the
 members of DB Realty Limited on the financial statements for the year
 ended on 31st March, 2012]
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of 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) In our opinion and according to the information and explanations
 given to us, no substantial part of fixed assets has been disposed of
 by the Company during the year.
 
 (ii) (a) Inventories comprise of expenditure incurred on acquisition of
 plot of lands and development thereof. As explained to us, physical
 verifications were carried out during the year by the management at
 reasonable intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, keeping in view the nature of inventory, the procedures of
 physical verification by way of site visits by the management are
 reasonable and adequate in relation to the size of the Company and the
 nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the adequate inventory records have been maintained by the
 Company, except for records in respect of payments to tenants where
 documentation needs to be considerably strengthened by the Company. As
 explained to us, no material discrepancies were noticed on physical
 verification of inventory by the management.
 
 (iii) In respect of the loans, secured or unsecured, granted or taken
 by the Company to or from companies, firm or other parties 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 granted loans aggregating Rs. 3,668,971,775 to
 seventeen parties during the year. At the year end, the outstanding
 balances of such loans aggregated Rs. 4,160,996,605 to thirteen parties
 and the maximum amount involved during the year was Rs. 12,076,285,986.
 
 (b) The aforesaid loans are interest free except for loans of Rs.
 1,510,017,748. Based on explanations received from the management none
 of the other terms and conditions is prima facie, prejudicial to the
 interest of the Company. Attention is invited to Para 3(f) of Auditors''
 Report of even date.
 
 (c) The said loans (including interest thereon) are repayable on demand
 and there are no repayment schedules. Accordingly, the question of
 overdue amount does not arise.
 
 (d) There is no overdue amount in excess of Rs. 1 lakh in respect of
 loans granted to companies, firms and other persons listed in register
 maintained under sec 301 of the Companies Act, 1956.
 
 (e) The Company has taken loans from two parties during the year. As at
 the year end, the outstanding balance of such loans taken from one
 party aggregated Rs. 86,632,142 and the maximum amount involved during
 the year was Rs. 1,590,331,873.
 
 (f) According to the information and explanations given to us, the
 loans are interest free except one loan which is repaid fully during
 the year and other terms and conditions are, prima facie not
 prejudicial to the interest of the Company.
 
 (g) Since the said loans (including interest thereon) are repayable on
 demand and there is no repayment schedule, the question of repayment
 being regular does not arise.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanation that prelaunch advances
 from prospective buyers where the Company is in the process of
 finalizing the term sheets/ agreements, supporting receipts for
 aggregate consideration of Rs. 47,676,200 are in accordance with general
 industry practice; adequate internal control systems exist for sale of
 apartments and for purchase of fixed assets. As regards project
 inventory, the Company needs to strengthen internal controls for (a)
 tenancy payments/ compensation (as stated in ii (c) above) and (b)
 project contracting (including proper documentation for comparative
 quotations and machinery/mobilization advances) to be commensurate with
 the size of the Company and the nature of its business. During the
 course of our audit, we have not observed continuing failure to correct
 major weakness.
 
 (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 in section
 301 of the Companies Act, 1956 that need to be entered into the
 register maintained under section 301 have been so entered.
 
 (b) Where each such transaction is in excess of rupees five lakhs in
 respect of each party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time except for certain transactions in respect
 of (1) aircraft charges of Rs. 5,625,300 and (2) civil contract entered
 of Rs. 25,687,118 (referred to in (iv) above) awarded to an entity and
 approved by the Board of Directors where comparable quotations for
 additional scope of work were not available and in respect of which we
 are unable to comment.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 within the meaning of Sections 58A and 58AA of the Act and the rules
 framed there under.
 
 (vii) A firm of chartered accountants has been appointed by the
 management for carrying out the internal audit. In our opinion, the
 function needs to be strengthened as regards time frame for reporting,
 coverage and periodicity of reporting so as to be commensurate with the
 size of the Company and the nature of its business.
 
 (viii) We have been informed by the Management that proper cost records
 under clause (d) of sub-section 1 of section 209 of the Companies Act,
 1956 have been maintained. However, these records have not been
 provided to us for our verification.
 
 (ix) According to the information and explanations given to us, in
 respect of statutory and other dues:
 
 (a) The Company is generally regular in depositing undisputed statutory
 dues including provident fund, employees'' state insurance, income-tax,
 wealth tax, cess and any other material statutory dues as applicable to
 it with the appropriate authorities during the year.
 
 (b) No undisputed amounts payable in respect of aforesaid were in
 arrears as at 31st March 2012 for a period of more than six months from
 the date they became payable except service tax on booking of flats /
 premises of Rs. 455,163/- has not been deposited with the Government
 authorities.
 
 (c) According to the information and explanations given to us, no dues
 are outstanding of income tax, service tax, provident fund, employees''
 state insurance and cess, for more than six months on account of any
 dispute.
 
 (x) There are no accumulated losses of the Company as on 31st March
 2012. Further, the Company has not incurred cash losses during the
 financial year covered by audit and in the immediately preceding
 financial year.
 
 (xi) According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to a financial
 institution and banks. The Company has not issued any debentures during
 the year.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced before us, the Company has
 not granted loans & advances on the basis of security by way of pledge
 of shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003
 (as amended) are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. The Company has redeemed
 surplus funds invested in mutual funds, in respect of which proper
 records of the transactions and contracts have been maintained and
 timely entries have beenRs. made therein. All shares, securities and
 other investments have been held by the Company in its own name.
 
 (xv) The Company had given guarantees (as referred in Note 26) in the
 earlier years on behalf of two entities and the balance of Rs.
 15,589,597,000 is subsisting as at the year end. As informed to us, the
 Board of Directors has approved this in the past considering the long
 term business interests of the Company and the same were consented to
 in writing by the non-promoter group shareholders in those years. Based
 on approvals / written consents / control relationships, the terms and
 conditions of such guarantees have been regarded as, prima facie, not
 prejudicial to the interests of the Company.
 
 (xvi) In our opinion, the term loan has been applied for the purpose
 for which the loans were raised.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, funds
 raised on short term basis have prima facie not been used during the
 year for long term investment.
 
 (xviii) According to the information and explanation given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the Register maintained under Section 301 of
 the Companies Act, 1956.
 
 (xix) The Company did not have outstanding debentures during the year
 and hence this clause is not applicable.
 
 (xx) The Management has disclosed the end use of money raised by public
 issue at Note 39. We have verified the same with monitoring report
 issued by monitoring agency (Punjab National Bank, Capital Market
 Service Branch, Mumbai).
 
 (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, and according to the information and
 explanations given to us, we have neither come across any instance of
 material fraud on or by the company, noticed or reported during the
 year, nor have we been informed of such case by the management.
 However, we are informed that during the previous year, the CBI in its
 charge sheet filed in connection with irregularities in the allotment
 of 2G telecom license, has accused the Managing Directors of the
 Company (in their capacity as promoters of a telecom licensee company –
 Swan Telecom Pvt Ltd (now known as Etisalat DB Telecom Pvt Ltd)). Two
 other Key Management Personnel of the Company have also been charge
 sheeted in their capacity as Directors of another Company (Refer Note
 38) which is alleged to have paid an amount of Rs. 2,000,000,000 as
 illegal gratification in the same connection. As explained to us, the
 Company is not directly a party to the allegations and the matter is
 sub-judice in the Court of Special Judge (CBI), New Delhi.
 
 For Haribhakti & Co.
 
 Chartered Accountants
 
 Chetan Desai
 
 Partner
 
 Membership No.: 17000
 
 Place: Mumbai
 
 Date: May 26, 2012