1.  We have audited the attached Balance Sheet of HOUSING DEVELOPMENT
 FINANCE CORPORATION LIMITED (the Corporation) as at 31st March, 2011,
 the Profit and Loss Account and the Cash Flow Statement of the
 Corporation for the year ended on that date, both annexed thereto, in
 which are incorporated the Returns from the Dubai Branch audited by
 other auditors. 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. 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 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, 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 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 audited by other
 auditors;
 
 (iii) the reports on the accounts of the Dubai Branch audited by other
 auditors have been forwarded to us and have been dealt with by us in
 preparing this report;
 
 (iv) 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;
 
 (v) 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;
 
 (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
 Corporation as at 31st March, 2011;
 
 (b) in the case of the Profit and Loss Account, of the profit of the
 Corporation for the year ended on that date and
 
 (c) 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 received from the
 Directors as on 31st March, 2011 taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31st 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 Corporations
 business/activities/results/ transactions etc. clauses (ii), (viii),
 (x) and (xiii) of CARO 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 the fixed
 assets.
 
 (b) Some of 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 fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the
 Corporation and such disposal has, in our opinion, not affected the
 going concern status of the Corporation.
 
 (iii) In respect of loans, secured or unsecured, granted by the
 Corporation to companies, firms or other parties covered in the
 Register under Section 301 of the Companies Act, 1956, according to the
 information and explanations given to us:
 
 (a) The Corporation has granted loans to eleven parties. At the year
 end, the outstanding balances of such loans granted aggregated Rs.
 940,67,63,993 (number of parties - eight) and the maximum amount
 involved during the year was Rs. 1299,38,93,070.
 
 (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 receipts of principal amounts and interest have 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 seventy eight parties. At the
 year-end, the outstanding balance of such loans taken aggregated Rs.
 3548,87,62,991 (number of parties – sixty nine) and the maximum amount
 involved during the year was Rs. 4657,52,11,483.
 
 (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 payments of principal amounts and interest in respect of such
 loans are 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 with
 regard to purchases of fixed assets and the sale of services.  During
 the course of our audit, we have not observed any major weakness in
 such internal control system.
 
 (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 in
 pursuance of 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 58A and 58AA of the Companies Act, 1956 and the Housing
 Finance Companies (NHB) Directions, 2001, with regard to the deposits
 accepted from the public.  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.
 
 (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 generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Income- tax, Sales 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,
 Cess and other material statutory dues in arrears as at 31st March,
 2011 for a period of more than six months from the date they became
 payable.
 
 (c) Details of dues of Sales-tax, Wealth Tax, Interest on Lease Tax,
 Stamp Duty and Employees State Insurance which have not been deposited
 as on 31st March, 2011 on account of disputes are given below:
 
 Statute            Nature of             Forum where
                     Dues                 Dispute is
                                          pending
 
 The West           Sales Tax            Commissioner
 Bengal Sales                            of Sales Tax
 Tax Act,1994                            (Appeals)
 
 The Wealth         Wealth Tax           Assistant
 Tax Act, 1957                           Commissioner of
                                         Wealth Tax
 
 Maharashtra 
 Sales              Interest on          Commissioner of
 Tax on the Transfer  Lease Tax          Sales Tax (Appeals)
 of the Right to 
 use any Goods for
 any Purpose
 Act, 1985
 
 Indian Stamp       Stamp Duty           Inspector General
 Act, 1899                               of Stamps
 
 Employees State   Payment towards      Assistant / Deputy
 Insurance          Employers           Director – ESIC
 Act, 1948          Contribution to ESIC
 
 
 
 Statue                           Period to              Amount
                                  which the             involved
                                  amount relates          Rs.
 
 The West
 Bengal Sales
 Tax Act,1994                      1994-1995,          3,53,197
 
                                   1999-2000,          
                                   2002-2003
 
 The Wealth
 Tax Act, 1957                     1998-1999          11,97,432
 
 Maharashtra Sales
 Tax on the Transfer
 of the Right to use any
 Goods for any Purpose
 Act, 1985                         1999-2000           2,20,794
 
 Indian Stamp
 Act, 1899                         2004-2005             26,725
 
 Employees State
 Insurance
 Act, 1948                         2010-2011           1,46,448
 
 (x) In our opinion, and according to the information and explanations
 given to us, the Corporation has not defaulted in the repayment of dues
 to banks, financial institutions and debenture holders.
 
 (xi) In our opinion, the Corporation 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.
 
 (xii) Based on our examination of the records and evaluation of the
 related internal controls, the Corporation has maintained proper
 records of the transactions and contracts in respect of its dealings in
 shares, securities, debentures and other investments and timely entries
 have been made therein.  The aforesaid securities have been held by the
 Corporation in its own name.
 
 (xiii) In our opinion, and according to the information and
 explanations given to us, the Corporation has not given any guarantees
 for loans taken by others from banks and financial institutions.
 
 (xiv) 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.
 
 (xv) According to the information and explanations given to us and on
 the basis of maturity profile of the 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 not in
 excess of the assets of similar maturity.
 
 (xvi) 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.
 
 (xvii) According to the information and explanations given to us, and
 during the period covered by our audit report, the Corporation has
 issued secured non-convertible debentures amounting to Rs. 13,865 crores.
 The Corporation has created security in respect of the debentures
 issued.
 
 (xviii) During the period covered by our audit report, the Corporation
 has not raised any money by public issues.
 
 (xix) 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
                                      (Registration No.117366W)
 
                                                  P. R. Ramesh
 
 MUMBAI,                                               Partner
 
 10th May 2011                           (Membership No. 70928)