We have audited the attached Balance Sheet of Dewan Housing Finance
 Corporation Limited, as at 31st March, 2011, the Profit & Loss Account
 and the Cash Flow Statement of the Company for the year ended on that
 date, 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.
 
 We have conducted our audit in accordance with the auditing standards
 generally accepted in India. These 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 disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and 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.
 
 We report that,
 
 1.  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.
 
 2.  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 and proper returns adequate for the purposes of our audit
 have been received from the branches not visited by us. The Branch
 Auditors'' reports have been forwarded to us and have been appropriately
 dealt with.
 
 3.  The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account
 and with the audited returns from the branches.
 
 4.  In our opinion, the Balance Sheet, Profit & Loss Account and Cash
 Flow Statement read with Notes thereon dealt with by this report comply
 with the accounting standards referred to in sub-section (3C) of
 Section 211 of Companies Act, 1956.
 
 5.  On the basis of written representations received from the Directors
 of the Company as on 31st March, 2011, and taken on record by the
 Board, we report that none of the Directors is disqualified as at 31st
 March, 2011, from being appointed as a Director under Section 274 (1)
 (g) of the Companies Act, 1956.
 
 6.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 Significant Accounting Policies and notes thereon 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 Balance Sheet, of the state of affairs of the Company
 as at 31st March, 2011,
 
 ii) In the case of Profit & Loss Account, of the profit of the Company
 for the year ended on that date and
 
 iii) In the case of Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 7.  As required by the Companies (Auditors'' Report) Order, 2003 issued
 by the Central Government, in terms of Section 227 (4A) of the
 Companies Act, 1956, we further state that,
 
 i) The Company is maintaining proper records showing full particulars,
 including quantitative details and situation of fixed assets. The fixed
 assets have been physically verified by the Management at reasonable
 intervals and no material discrepancies were noticed on such
 verification. The Company has not disposed off substantial part of
 fixed assets during the year.
 
 ii) The Company does not have any inventory due to nature of its
 business of housing finance.
 
 iii) The Company has granted unsecured loan in the nature of inter
 corporate deposit aggregating to Rs. 2000 lacs to its subsidiary company
 covered in the register maintained under Section 301 of the Companies
 Act, 1956 and has recovered the full amount along with interest leaving
 Nil balance at the year end. The rate of interest & other terms and
 conditions of the loan are, in our opinion , prima facie not
 prejudicial to the interest of the Company and repayment of Principal &
 interest has been regular and as per stipulation during the year. The
 Company has not taken any loans from any company, firm or other parties
 listed in the register maintained under Section 301 of the Companies
 Act, 1956.
 
 iv) There is an adequate internal control system commensurate with the
 size of the Company and the nature of its business, for the purchase of
 fixed assets and sale of services. The Company has no purchase or sale
 of goods.
 
 v) In respect of the contracts or arrangements referred to in Section
 301 of the Companies Act , 1956:
 
 (a) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements, that need to be entered in the register maintained under
 Section 301 of the Companies Act, 1956 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lacs in
 respect of any party during the year, have been made at prices which
 are reasonable having regard to the prevailing market prices at the
 relevant time.
 
 vi) The Company has accepted deposits from the public. In our opinion
 and according to the information and explanations given to us, the
 Company has, during the year, complied with the directives issued by
 the National Housing Bank under the Housing Finance Companies [NHB]
 Directions, 2010 with regard to deposits accepted from the public and
 the rules framed thereunder and the provisions of Sections 58A, 58AA
 and other relevant provisions of the Companies Act, 1956.
 
 vii) In our opinion, and according to the information and explanations
 given to us, the Company has an internal audit system commensurate with
 its size and nature of its business, implemented by in-house department
 and supported by various independent professional firms of Chartered
 Accountants appointed as concurrent auditor by the Management to carry
 out concurrent audit function at all its branches.
 
 viii) Central Government has not prescribed maintenance of any cost
 records in respect of the business of the Company.
 
 ix) According to the information and explanations given to us, the
 Company is regular in depositing undisputed statutory dues such as
 Provident Fund, Investors Education and Protection Fund, Employees''
 State Insurance, Income-Tax, Wealth Tax, Service Tax and any other
 statutory dues whichever is applicable to the Company with the
 appropriate authorities. However, the Company has deposited full amount
 of disputed Income Tax pending in the appeals on the subject matters
 before appropriate appellate authorities and has no unpaid demands of
 the department.
 
 x) The Company has positive net worth, which is more than its equity
 capital and has neither any accumulated losses nor it has incurred any
 cash losses in the current financial year.
 
 xi) According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to any financial
 institutions or banks or debenture holders.
 
 xii) According to the information and explanations given to us, the
 Company has maintained adequate documents and records for the loans and
 advances granted by it on the basis of security by way of residential
 houses and properties, pledge of shares, debentures and other
 securities.
 
 xiii) The Company is not engaged in the business of any Chit Fund /
 Nidhi / Mutual Benefit Fund or society.
 
 xiv) According to the information and explanations given to us, the
 Company is maintaining proper records of the transactions and contracts
 about the dealings in securities & investments and has made timely
 entries in records. The shares, securities, debentures and other
 securities have been held by the Company in its own name.
 
 xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 xvi) In our opinion and according to the information and explanations
 given to us, the Company has generally applied the amount raised by it
 by way of term loans for the purpose for which those loans were
 obtained, other than temporary deployment pending application of those
 funds.
 
 xvii) The Company is engaged in the housing finance business and is
 governed by National Housing Bank (NHB) Directions for raising deposits
 and deployment of its funds in its business and the Company has
 followed the NHB guidelines for fund raising and deployment of funds
 and is adhering to the Asset Liabilities Management guidelines (ALCO)
 prescribed by NHB and accordingly based on the above information, we
 report that the Company has generally not used its short term funds in
 long term investments.
 
 xviii) The Company has made preferential allotment of equity shares
 during the year as approved by the members in its EOGM for the quantity
 and pricing thereof. Accordingly the price at which such shares are
 allotted are not prima facie prejudicial to the interest of the
 Company.
 
 xix) According to the information & explanations given to us, the
 Company has issued unsecured non convertible debentures amounting to Rs.
 500 crores and secured non convertible debentures amounting to Rs. 585
 crores in respect of which securities and charges have been created
 during the year.
 
 xx) The Company has not raised any money by way of public issue of
 equity share capital during the year save and except preferential
 allotment, Qualified Institutional Placement and allotment of equity
 shares under Employees Stock Option Scheme as detailed in Note no. B-1
 of Schedule ''Q''.
 
 xxi) As explained to us, no material fraud on or by the Company has
 been noticed or reported during the year except some instances of fraud
 reported on the Company by way of misrepresentation by borrowers to
 avail housing loans or about its repayment in certain accounts
 involving an amount of about Rs. 29.03 lacs. The Company has initiated
 the legal proceedings against such parties and is hopeful of
 recoveries. However, the Company has provided for appropriate
 contingencies that may arise in future in respect thereof.
 
                                       For B. M. CHATURVEDI & CO.  
 
                                           Chartered Accountants
 
                                               ICAI FRN: 114317W
 
                                              (Rajendra K. Gupta)
 
 Place : Mumbai
 
                                                         Partner
 
 Date : 13th May, 2011                         ICAI M. N. 070165