1.  We have audited the attached Balance Sheet of THE INDIAN HOTELS
 COMPANY LIMITED (the Company) as at March 31, 2011, the profit and
 Loss Account 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 the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the fi
 nancial 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 fi
 nancial statement presentation. We believe that our audit provides a
 reasonable basis for our opinion.
 
 3.  Without qualifying our report, we invite attention to Notes 26, 27
 and 28 of Schedule 14 regarding the Company''s investments in and
 exposure to certain companies, where there is significant diminution
 in the value of the investments. The total amount of such investments
 and exposure is Rs. 1,283.08 crores.
 
 4.  As required by the Companies (Auditor''s Report) Order, 2003 (CARO)
 issued by the Central Government in terms of Section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 5.  Further to our comments in paragraph 3 above and in the Annexure
 referred to in paragraph 4 above, we report as follows:
 
 (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 it appears from our examination of
 those books;
 
 (c) 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;
 
 (d) 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;
 
 (e) 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
 Company as at March 31, 2011;
 
 (ii) in the case of the profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 6.  On the basis of the written representations received from the
 Directors as on 31st March, 2011 taken on record by the Board of
 Directors, 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 4 of our report of even date)
 
 (i) Having regard to the nature of the Company''s
 business/activities/result/transactions, etc. clauses (viii), (x),
 (xiii), (xiv) and (xx) of paragraph 4 of CARO are not applicable.
 
 (ii) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets. In
 respect of the assets acquired by the Taj Mahal Palace, Mumbai as part
 of the restoration programme pursuant to the terrorist attack in
 November 2008, the fixed asset records will be updated only after the
 insurance claim for reinstatement has been settled, upon which only the
 final cost of each of these assets will be ascertainable.
 
 (b) Physical verification of fixed assets has been carried out by the
 Management at most of the Units in accordance with a programme of
 verification which, in our opinion, provides for physical verifi
 cation of all the fixed assets at reasonable intervals. We have been
 informed that the reconciliation of assets verified with the fixed
 assets register is in progress at one of the Units. According to the
 information and explanations 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 Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (iii) In respect of its inventory:
 
 (a) As explained to us, the inventories were physically verified
 during the year by the Management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the Management were 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 Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 (iv) According to the information and explanations given to us, the
 Company has neither granted nor taken any loan, secured or unsecured,
 to/from companies, firms or other parties listed in the Register under
 Section 301 of the Companies Act, 1956.
 
 (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 Company and the nature of its business with regard
 to purchase of inventory and fixed assets and for the sale of goods
 and services. During the course of our audit, we have not observed any
 major weakness in such internal control system.
 
 (vi) 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 Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) There were no transactions in excess of Rs. 5 lakhs each in respect
 of any party during the year.
 
 (vii) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA, or any other relevant provisions of the Companies Act,
 1956 and the Companies (Acceptance of Deposits) Rules, 1975, with
 regard to the deposits accepted from the public. According
 
 to 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 Company has an adequate internal audit
 system commensurate with the size of the Company and the nature of its
 business.
 
 (ix) According to the information and explanations given to us, in
 respect of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service
 Tax, Customs Duty, Excise Duty, Cess and any other material statutory
 dues with the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Income Tax,
 Wealth Tax, Custom Duty, Excise Duty, 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, Income Tax and Service Tax which have
 not been deposited as on 31st March, 2011 on account of disputes are
 given below:
 
 Name of    Nature of   Amount    Period to which   Forum where dispute
                                                    is pending
 Statute     Dues       (^ cro
                          res)    the amount 
                                  relates
 
 Central   Sales Tax      0.11    2000-2001 /     Additional Commissioner
                                                  of Sales Tax
 Sales Tax                        2002-2003       (Appeals)
 
 Act, 1956                0.03    1996-98         Appellate & Revision 
                                                  Board
 and Sales                0.25    1995-1996       Appellate Board
 
 Tax Act                  0.03     2007-08        Commissioner of Sales 
                                                  Tax
 of vari
 ous                      0.54     2005-07       Deputy Commissioner of 
                                                 Commercial Taxes 
                          0.06     2003-05       Joint Commissioner of 
                                                 Trade Tax
 
                          4.90     1999-05       Joint Commissioner of 
                                                 Sales Tax
 
                          0.25     1997-98       Maharashtra Sales Tax 
                                                 Tribunal
 
                          0.10     1992-95       Tribunal
 
 Income Tax Income Tax    0.31     2006-09       Commissioner of Income 
                                                 Tax (Appeals)
 Act, 1961
 
 Finance 
 Act,       Service Tax   0.58      2002-04      Central Excise Service 
                                                 Tax Appellate
 1994                                            Tribunal
 
                          0.32      2004-05      Appellate Tribunal
 
                          5.86      2006-10      Commissioner of Service
                                                 Tax
 
                          0.43      2005-10      Additional Commissioner 
                                                 of Service Tax(Appeals)
           
                          0.05      2002-05      Assistant Commissioner 
                                                 of Service Tax(Appeals)
 
                          0.01      2005-07      Assistant Commissioner 
                                                 Service tax
 
                          1.15      2001-05 / 
                                    2006-07      Commissioner of Service
                                                  Tax
                      
                          0.04      2002-05      Deputy Commissioner of 
                                                 Central Excise
 
                          0.33      2003-06      Joint Commissioner of 
                                                 Service Tax(Appeals)
 
               Total     15.35
 
 (x) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks, financial institutions and debenture holders.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not granted any loan or advance on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks and financial
 institutions are prima facie, not prejudicial to the interests of the
 Company.
 
 (xiii) 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.
 
 (xiv) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, funds
 raised on short-term basis have not been used during the year for
 long-term investment.
 
 (xv) According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies/firms covered in the Register maintained under Section
 301 of the Companies Act, 1956.
 
 (xvi) According to the information and explanations given to us and the
 records examined by us, securities have been created during the year in
 respect of the debentures issued during the previous year.
 
 (xvii) To the best of our knowledge and according to the information
 and explanations given to us, no fraud by the Company and no material
 fraud on the Company has been noticed or reported during the year.
 
 For DELOITTE HASKINS & SELLS                      For N. M. RAIJI & CO.
 
 Chartered Accountants                             Chartered Accountants
 
 (Registration No. 117366W)                   (Registration No. 108296W)
 
 Nalin M. Shah                                           Vinay D. Balse
 
 Partner                                                       Partner
 
 (Membership No.15860)                           (Membership No. 39434)
 
 Mumbai, May 24, 2011