1. We have audited the attached Balance Sheet of
 INFRASTRUCTURE DEVELOPMENT FINANCE 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
 Companys 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 enclose 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 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) as required by Article 215(4)(f) of the Articles of Association of
 the Company, we report that in our opinion, the transactions of the
 Company which have come to our notice have been within the powers of
 the Company;
 
 (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
 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.
 
 5. On the basis of the written representations received from the
 Directors as on March 31, 2011 taken on record by the Board of
 Directors, none of the Directors is disqualified as on March 31, 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 Companys business/
 activities/result/transactions, etc., clauses (ii), (viii), (x) and
 (xiii) 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.
 
 (b) During the year, the fixed assets have not been physically verified
 by the Management. However, the Company has a regular programme of
 physical verification of its fixed assets whereby all fixed assets are
 verified in a phased manner at regular intervals. In our opinion, the
 periodicity of physical verification is reasonable having regard to the
 size of the Company and the nature of its assets.
 
 (c) The fixed assets disposed of 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 loans, secured or unsecured, granted by the Company
 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 Company has granted short-term loans aggregating Rs. 940,000,000
 to two parties during the year. At the year- end, the outstanding
 balances of such loans aggregated Rs. Nil and the maximum amount involved
 during the year was Rs. 400,000,000.
 
 (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 Company.
 
 (c) The receipts of principal amounts and interest have been regular.
 
 (iv) In case of loans, secured or unsecured, taken by the Company from
 companies, firms or other parties listed in the Register maintained
 under Section 301 of the Companies Act, 1956, according to the
 information and explanations given to us:
 
 (a) Thirteen parties have subscribed to the public issue of
 Infrastructure Bonds during the year. At the year-end, the outstanding
 balance of such bonds aggregated Rs. 370,000 and the maximum amount
 involved during the year was the amount subscribed.
 
 (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 Company.
 
 (c) No payment of the principal amount and interest were due during the
 year.
 
 (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 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) 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 in Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transactions (excluding loans reported under
 paragraph (iii) above) is in excess of Rs. 5 lakhs in respect of any
 party, the transactions have been made at prices which are prima facie
 reasonable having regard to the prevailing market prices wherever
 applicable, at the relevant time.
 
 (vii) The Company has not accepted any deposit from the public within
 the meaning of Sections 58A & 58AA of the Companies Act, 1956.
 
 (viii) In our opinion, the internal audit functions carried out during
 the year by a firm appointed by the Management have been 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,
 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,
 Service Tax, Wealth Tax, Cess and other material statutory dues in
 arrears as at March 31, 2011 for a period of more than six months from
 the date they became payable.
 
 (c) Details of dues of Income-tax which have not been deposited as on
 March 31, 2011 on account of disputes are given below:
 
 STATUTE      NATURE      FORUM WHERE      PERIOD TO       AMOUNT
              OF DUES     DISPUTE IS       WHICH THE       INVOLVED
                          PENDING          AMOUNT            (Rs.)
                                           RELATES
 
 Income-   Income Tax     Commissioner    A.Y. 2007-08    388,394,270
 tax Act,                 of Income Tax
 1961                    (Appeals)
 
 Income-   Income Tax     Commissioner    A.Y. 2008-09      8,021,093
 tax Act,                 of Income Tax
 1961                     (Appeals)
 
 (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, the Company 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 Company has maintained proper records of
 the transactions and contracts in respect of its dealing in shares,
 securities, debentures and other investments and timely entries have
 been made therein. The aforesaid securities have been held by the
 Company in its own name, except to the extent of the exemption granted
 under Section 49 of the Companies Act, 1956.
 
 (xiii) 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 not prima facie prejudicial to the interests of the Company.
 
 (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 the maturity profile of assets and liabilities with a
 maturity profile 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. 1,900.14 crore.
 
 (xvi) According to the information and explanations given to us, the
 Company has made preferential allotment of shares to parties covered in
 the Register maintained under Section 301 of the Companies Act, 1956 at
 a price which is prima facie not prejudicial to the interests of the
 Company.
 
 (xvii) 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 during the year except in respect of
 debentures aggregating Rs. 19,760,000,000 for which securities/charges
 have been subsequently created.
 
 (xviii)We have verified the end use of money raised by public issue of
 Infrastructure Bonds during the year as disclosed in Note 8 of Schedule
 18 to the Accounts.
 
 (xix) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by or on the Company has been
 noticed or reported during the year.
 
 FOR DELOITTE HASKINS & SELLS
 
 Chartered Accountants
 (Registration No. 117366W)
 
 NALIN M. SHAH
 
 Partner
 
 Membership No. 15860
 
 Mumbai
 April 29, 2011