Housing Development Finance Corporation

1.  We have audited the attached Balance Sheet of HOUSING DEVELOPMENT
 FINANCE CORPORATION LIMITED as at March 31, 2009, the Profit and Loss
 Account and the Cash Flow Statement of the Corporation for the year
 ended on that date, both annexed thereto. These financial statements
 are the responsibility of the Corporations 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. 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.
 
 3.  As required by the Companies (Auditors Report) Order, (CARO) 2003
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act, 1956, we give in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the said Order.
 
 4. Further to our comments in the Annexure referred to in paragraph 3
 above:
 
 (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 Corporation so far as it appears from our examination
 of those books and proper returns adequate for the purposes of our
 audit have been received from the Dubai Branch not visited by us;
 
 (c) the report on the accounts of the Dubai Branch audited by the
 Branch Auditors has been forwarded to us and has been dealt with by us
 in preparing this report;
 
 (d) 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 and the audited Branch returns;
 
 (e) 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;
 
 (f) 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
 Corporation as at March 31, 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Corporation for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Corporation for the year ended on that date.
 
 5. On the basis of the written representations from the directors,
 taken on record by the Board of Directors as on March 31, 2009, none of
 the directors is disqualified as on March 31, 2009 from being appointed
 as a director under 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) The nature of the Corporations business/activities during the year
 is such that clauses (i)(c), (ii), (viii) and (xiii) of CARO, 2003 are
 not applicable.
 
 (ii) In respect of its fixed assets:
 
 (a) The Corporation has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) Some of the fixed assets were physically verified during the year
 by the Management in accordance with a programme of verification, which
 in our opinion provides for physical verification of all the fixed
 assets at reasonable intervals. According to the information and
 explanations given to us no material discrepancies were noticed on such
 verification.
 
 (iii) In respect of loans, secured or unsecured, granted by the
 Corporation to companies, firms 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 Corporation has granted loans to ten parties. At the year end,
 the outstanding balances of such loans granted aggregated to Rs.
 435,75,05,326 (number of parties – six) and the maximum amount involved
 during the year was Rs.746,08,93,202.
 
 (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 Corporation.
 
 (c) The receipt of principal amounts and interest during the year has
 been regular/as per stipulations.
 
 (iv) In respect of loans, secured or unsecured, taken by the
 Corporation from companies, firms 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 Corporation has taken loans from fifty two parties.  At the
 year-end, the outstanding balances of such loans taken aggregated to
 Rs.1859,16,07,087 (number of parties – forty six) and the maximum
 amount involved during the year was Rs.2706,02,11,170.
 
 (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 Corporation.
 
 (c) The payment of principal amounts and interest in respect of such
 loans during the year has been regular/as per stipulations.
 
 (v) 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 Corporation and the nature of its business for the
 purchase of fixed assets and for the sale of services.  During the
 course of our audit, we have not observed any major weakness in such
 internal controls.
 
 (vi) To the best of our knowledge and belief and according to the
 information and explanations given to us, there were no contracts or
 arrangements [excluding items reported under paragraphs (iii) and (iv)
 above] that needed to be entered in the Register maintained under
 Section 301 of the Companies Act, 1956.
 
 (vii) In our opinion and according to the information and explanations
 given to us, the Corporation has complied with the provisions of
 Sections 58 and 58AA of the Companies Act, 1956 and the Housing Finance
 Companies (NHB) Directions, 2001, with regard to the deposits accepted
 from the public.
 
 (viii) In our opinion, the internal audit functions carried out during
 the year by firms of Chartered Accountants appointed by the Management
 have been commensurate with the size of the Corporation and the nature
 of its business.
 
 (ix) According to the information and explanations given to us, in
 respect of statutory dues:
 
 (a) The Corporation has been regular in depositing undisputed dues
 including Provident Fund, Investor Education and Protection Fund,
 Income-tax, Sales-tax, Wealth Tax, Service Tax, Cess and any other
 material dues with the appropriate authorities during the year.
 
 (b) There were no undisputed amounts payable on account of the above
 dues, outstanding as at March 31, 2009 for a period of more than six
 months from the date they became payable.
 
 (c) Details of disputed Sales-tax, Wealth Ta x and Interest on Lease
 Tax and Stamp Duty which have not been deposited as on March 31, 2009
 on account of any dispute are given below:
 
 Particulars     Financial year to         Forum where           Amount
                 which the matter       matter is pending       (Rupees)
                 pertains
 
 Sales Tax       1994-1995,              Commissioner of        3,53,197
                 1999-2000,            Sales Tax (Appeals)
                 2002-2003
 
 Wealth Tax      1998-1999                  Assistant          11,97,432
                                         Commissioner of 
                                            WealthTax
 
 Interest on     1999-2000               Commissioner of        2,20,794
 Lease tax                             Sales Tax (Appeals)
 
 Stamp Duty      2004-2005              Inspector General         26,725
                                            of Stamps
 
 (x) The Corporation does not have any accumulated losses. The
 Corporation has not incurred cash losses during the financial year
 covered by our audit and in the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Corporation has not defaulted in the repayment of dues
 to financial institutions, banks and debenture holders.
 
 (xii) In our opinion the Corporation has maintained adequate documents
 and records where it has granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 (xiii) In our opinion, the Corporation is not dealing in or trading in
 shares, securities, debentures and other investments.  Accordingly, the
 provisions of clause 4(xiv) of the CARO, 2003 are not applicable to the
 Corporation.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Corporation for loans taken by others from banks are not prima facie
 prejudicial to the interests of the Corporation.
 
 (xv) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Corporation were, prima facie, applied by the
 Corporation during the year for the purposes for which the loans were
 obtained, other than temporary deployment pending application.
 
 (xvi) According to the information and explanations given to us and on
 the basis of the maturity profile of assets and liabilities with a
 residual maturity of one year, as given in the Asset Liability
 Management Report, liabilities maturing in the next one year are in
 excess of the assets of similar maturity by Rs. 2490,85,00,000.
 
 (xvii) The Corporation has made a preferential allotment of shares on
 exercise of options granted in earlier years under the ESOP Schemes to
 parties covered in the Register maintained under Section 301 of the
 Companies Act, 1956.  The prices at which such shares are allotted are
 not prima facie prejudicial to the interests of the Corporation.
 
 (xviii) According to the information and explanations given to us and
 the records examined by us, securities / charges have been created in
 respect of all debentures issued.
 
 (xix) During the period covered by our audit report, the Corporation
 has not raised any money by public issues.
 
 (xx) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud by the Corporation
 and no material fraud on the Corporation was noticed or reported during
 the year, although there have been few instances of loans becoming
 doubtful of recovery consequent upon fraudulent misrepresentation by
 borrowers, the amounts whereof are not material in the context of the
 size of the Corporation and the nature of its business and which have
 been provided for.
 
                                            For DELOITTE HASKINS & SELLS 
                                                   Chartered Accountants
 
                                                           P. R . Ramesh
 MUMBAI                                                          Partner
 May 4, 2009                                       (Membership No. 70928)