DLF

1.  We have audited the attached Balance Sheet of DLF Limited, (the
 ‘Company’) as at March 31, 2008, and also the Profit and Loss Account
 and the Cash Flow Statement for the year ended on that date annexed
 thereto (collectively referred as the ‘Financial Statements’). 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 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 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.  As required by the Companies (Auditor’s Report) Order, 2003 (the
 ‘Order’) (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’), we enclose in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 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 appears from our examination of
 those books;
 
 c.  The Financial Statements dealt with by this report are in agreement
 with the books of account;
 
 d.  On the basis of written representations received from the
 directors, as on March 31, 2008 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2008 from being appointed as a director in terms of clause
 (g) of sub-Section (1) of Section 274 of the Act;
 
 e.  In our opinion and to the best of our information and according to
 the explanations given to us, the Financial Statements dealt with by
 this report comply with the accounting standards referred to in
 sub-Section (3C) of Section 211 of the Act and the Rules framed there
 under and give the information required by the Act, in the manner so
 required and give a true and fair view in conformity with the
 accounting principles generally accepted in India, in the case of:
 
 i) the Balance Sheet, of the state of affairs of the Company as at
 March 31, 2008;
 
 ii) the Profit and Loss Account, of the profit for the year ended on
 that date; and
 
 iii) the Cash Flow Statement, of the cash flows for the year ended on
 that date.
 
 Annexure to the Auditors’ Report of even date to the Members of DLF
 Limited, on the Financial Statements for the year ended March 31, 2008.
 
 Based on the audit procedures performed for the purpose of reporting a
 true and fair view on the Financial Statements of the Company and
 taking into consideration the information and explanations given to us
 and the books of account and other records examined by us in the normal
 course of audit, we report that:
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) A significant portion of the fixed assets has been physically
 verified by the management during the year. In our opinion, the
 frequency of verification of the fixed assets is reasonable having
 regard to the size of the Company and nature of its assets. No material
 discrepancies were noticed on such verification.
 
 (c) In our opinion, a substantial part of fixed assets have not been
 disposed off during the year.
 
 (ii) (a) Inventory has been physically verified during the year by the
 management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) There is one company (one of the subsidiary companies of DLF
 Limited) covered in the register maintained under Section 301 of the
 Act to which the Company has granted unsecured loans. The maximum
 amount outstanding during the year was Rs.  341,120.00 lacs and the
 year end balance was Rs.324,004.39 lacs.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (c) In respect of loans granted, repayment of the principal amounts is
 as stipulated and payment of interest has been regular.
 
 (d) There is no amount overdue in respect of loans granted to
 companies, firms or other parties listed in the register maintained
 under Section 301 of the Act.
 
 (e) The Company has not taken any loans, secured or unsecured from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act. Accordingly, the provisions of clauses
 4(iii)(f) and 4(iii)(g) of the Order are not applicable.
 
 (iv) In our opinion, there is an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory and fixed assets and for the
 sale of goods and services.
 
 (v) (a) In our opinion, the particulars of all contracts or
 arrangements that need to be entered into the register maintained under
 Section 301 of the Act have been so entered.
 
 (b) In our opinion, the transactions made in pursuance of such
 contracts or arrangements and exceeding the value of rupees five lakhs
 in respect of any party during the year have been made at prices which
 are reasonable having regard to prevailing market prices at the
 relevant time.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the Companies
 (Acceptance of Deposits) Rules, 1975 during the year.  Accordingly, the
 provisions of clause 4(vi) of the Order are not applicable.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 (viii) To the best of our knowledge, the Central Government has not
 prescribed maintenance of cost records under clause (d) of sub-Section
 (1) of Section 209 of the Companies Act, 1956 by the Company.
 Accordingly, the provisions of clause 4(viii) of the Order are not
 applicable to the Company.
 
 (ix) (a) The Company is generally regular in depositing the undisputed
 statutory dues including provident fund, investor education and
 protection fund, employees’ state insurance, income-tax, sales-tax,
 wealth- tax, service-tax, custom duty, excise duty, cess and other
 material statutory dues, as applicable, have generally been regularly
 deposited with the appropriate authorities.  No undisputed amounts
 payable in respect thereof were outstanding at the year end for a
 period of more than six months from the date they became payable.
 
 (b) There are no amounts in respect of sales tax, income tax, customs
 duty, wealth tax, service tax, excise duty and cess that have not been
 deposited with the appropriate authorities on account of any dispute
 except for the amounts mentioned below:
 
 Name           Nature of       Amount
 of the         dues            (Rs.)
 statute
 
 Income         Demand u/s      29,094,459
 Tax Act,       143(3)/263
 1961
 
 Income         Demand u/s      24,358,903
 Tax Act,       143(3)
 1961
 
 Period to              Forum
 which the              where
 amount                 dispute is
 relates                pending
 
 Assessment             CIT
 year 2002-2003         (Appeals)
 
 Assessment             CIT
 year 2005-2006         (Appeals)
 
 
 (x) In our opinion, the Company has no accumulated losses at the end of
 the financial year and it has not incurred cash losses in the current
 and the immediately preceding financial year.
 
 (xi) In our opinion, the Company has not defaulted in repayment of dues
 to a financial institution or a bank or debenture holders during the
 year.
 
 (xii) The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities. Accordingly, the provisions of clause 4(xii) of the Order
 are not applicable.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/society.  Accordingly, the provisions of clause 4(xiii) of
 the Order are not applicable.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable.
 
 (xv) In our opinion, the terms and conditions on which the Company has
 given guarantee for loans taken by others from banks or financial
 institutions are not, prima facie, prejudicial to the interest of the
 Company.
 
 (xvi) In our opinion, the Company has applied the term loans for the
 purpose for which the loans were obtained.
 
 (xvii) Based on an overall examination of the balance sheet and cash
 flow statement of the Company, we report that no funds raised on
 short-term basis have been used for long- term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 Section 301 of the Act. Accordingly, the provisions of clause 4(xviii)
 of the Order are not applicable.
 
 (xix) The Company issued 1,029, “2% Redeemable Unsecured Optionally
 Convertible Debentures” of Rs 100 each during the year, which were
 converted into equity shares during the year itself. Consequently, the
 Company did not have any debentures outstanding at the year end. The
 Company did not create any security in respect of the debentures
 issued.
 
 (xx) We have verified that the end use of money raised by public issue
 is as disclosed in Note 34 of Schedule 24 to the Financial Statements
 covered by this report.
 
 (xxi) No fraud on or by the Company has been noticed or reported during
 the period covered by our audit.
 
                                               for Walker, Chandiok & Co
                                               Chartered Accountants
 
                                                   per David Jones
                                                       Partner
                                                Membership No. 98113
 New Delhi
 June 3, 2008