1.  We have audited the attached Balance Sheet of LIC Housing Finance
 Limited (the Company) as at March 31, 2011, the Profit and Loss
 Account and also the Cash Flow Statement for the year ended on that
 date, annexed thereto (in which are incorporated the accounts of 5
 branches, known as back offices audited by other auditors). 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 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, 2003 (as
 amended) (the Order), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 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 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 and proper returns adequate for the purposes of our audit
 have been received from the branches not visited by us. The branch
 auditors reports have been forwarded to us and have been appropriately
 dealt with;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account
 and with the audited returns from the branches;
 
 (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards
 
 referred to in sub-section (3C) of Section 211 of the Companies Act,
 1956, in so far as they apply to the Housing Finance Company;
 
 (e) On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 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 read with the
 significant accounting policies and notes thereon, 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 for the
 year ended on that date; and
 
 (iii) in the case of the Cash-flow statement, of the cash-flows for the
 year ended on that date.
 
 Annexure to the Auditors Report
 
 Annexure to the Auditors Report referred to in paragraph 4 of our
 Report of even date to the Members of LIC Housing Finance Limited on
 the accounts for the year ended March 31, 2011
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets have been physically verified by the management
 during the year. In our opinion, the frequency of verification is
 reasonable. 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.
 
 (ii) As the Company does not have inventory, the Clauses (ii)(a) to
 (ii)(c) of Para 4 of the Order are not applicable to the Company.
 
 (iii) (a) According to the information and explanations given to us,
 the Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956.  Accordingly, sub-clause
 (b), (c) and (d) are not applicable.
 
 (b) According to the information and explanations given to us, 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 Companies Act, 1956.  Accordingly, sub-clause (f) and (g)
 are not applicable.
 
 (iv) 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 fixed assets and for sale of services. The nature of the
 Companys business is such that it does not involve purchase and sale
 of goods. During the course of our audit, we have not observed any
 major weaknesses in the aforesaid internal control system.
 
 (v) According to the information and explanations given to us, there
 have been no contracts or arrangements referred to in section 301 of
 the Companies Act, 1956 during the year to be entered in the register
 required to be maintained under that section. Accordingly, sub- clause
 (b) is not applicable.
 
 (vi) 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 of the Companies Act, 1956, to the extent applicable to
 the Housing Finance Company and the Housing Finance Companies (NHB)
 Directions, 2010 with regard to the deposits accepted from the public.
 We are informed that no Order has been passed by the Company Law Board
 or the Reserve Bank of India or any Court or any other Tribunal.
 
 (vii) In our opinion, the internal audit functions carried out during
 the year by the Companys internal audit department and by a firm of
 Chartered Accountants appointed by the management have been
 commensurate with the size of the Company and nature of its business.
 
 (viii) As the Company is not a manufacturing concern, the clause (viii)
 of Para 4 of the Order regarding maintenance of cost records under
 clause (d) of sub-section (1) of section 209 of the Companies Act, 1956
 is not applicable to the Company.
 
 (ix) (a) In our opinion and according to the information and
 explanations given to us, the Company has generally been regular in
 depositing undisputed statutory dues, including provident fund,
 investor education and protection fund, employees state insurance,
 income tax, wealth tax, service tax, custom duty, cess and any other
 material statutory dues where applicable, with the appropriate
 authorities during the year.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other undisputed statutory dues were outstanding, at the year end, for
 a period of more than six months from the date they became payable.
 
 (c) According to the information and explanations given to us and based
 on the records of the Company examined by us, the following are the
 particulars of disputed dues on account of income tax, wealth-tax,
 service tax, custom duty and cess which have not been deposited by the
 Company as at March 31, 2011:
 
 
 No.  Name of the Nature of the  Amount      Amount     period to 
      Statue      Dues           (Rupees)    Paid/      which the
                                             adjusted   amount
                                             relates    relates
                                             (Rupees)   (AY)
 
 1.   Income Tax  Income Tax     35,00,000   35,00,000   1999-2000 
      Act, 1961
 
 
 2.   Income Tax  Income Tax    2,78,45,437 2,78,45,437  2001-2002 
      Act, 1961
 
 3.   Income Tax  Income Tax    6,33,61,000 6,33,61,000  2002-2003 
      Act, 1961
 
 
 4.   Income Tax  Income Tax    2,08,00,000 2,08,00,000  2003-2004
      Act, 1961
 
 5.   Income Tax  Income Tax    9,36,81,691 9,36,81,691  2004-2005 
      Act, 1961  
 
 6.   Income Tax  Income Tax   35,71,94,000 35,71,94,000 2005-2006 
      Act, 1961
 
 7.   Income Tax  Income Tax   23,85,58,159 23,85,58,159 2006-2007
      Act,1961
 
 8.   Income Tax  Income Tax   33,10,50,489 33,10,50,489 2007-2008 
      Act,1961
 
 No.  Forum where the dispute
      is pending
 
 1.   Income Tax Appellate Tribunal
 
 2.   Income Tax Appellate Tribunal
 
 3.   Income Tax Appellate Tribunal
 
 4.   Income Tax Appellate Tribunal
 
 5.   Income Tax Appellate Tribunal
 
 6.   CIT (Appeals)
 
 7.   CIT (Appeals)
 
 8.   CIT (Appeals)
 
 
 (x) The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 under report and in the immediately preceding financial year.
 
 (xi) In our opinion, and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 financial institutions, banks and debenture holders.
 
 (xii) The Company has maintained adequate documents and records for the
 loans and advances granted by it on the basis of security by way of
 residential houses and properties and other securities. The Company has
 not granted loans and advances by way of pledge of shares and
 debentures during the year.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 (xiii) of para 4 of the Order are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company has not dealt/ traded in shares, debentures
 and investments other than mutual fund. The Company has maintained
 proper records of the transactions and contracts in respect of
 investments in mutual funds and timely entries have been made therein.
 All the investments have been held by the Company in its own name.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for the loans taken by others from
 banks or financial institutions during the year.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, term loans availed by the Company were, prima facie,
 applied by the Company during the year for the purposes for which the
 loans were
 
 obtained, other than temporary deployment pending application.
 
 (xvii) According to the information and explanations given to us and on
 the basis of review of Asset Liability Management report prepared for
 submission to the Board of Directors of the Company, giving utilisation
 of funds on overall basis, we report that funds raised on short term
 basis have, prima facie, not been used during the year 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 Companies Act, 1956 during the year.
 
 (xix) According to the information and explanations given to us and the
 records examined by us, in respect of debentures issued by the Company
 during the period covered by our report, security / charge have been
 created on two of the immovable properties of the Company and are
 further supplemented by a negative lien on all other assets of the
 company.
 
 (xx) The Company has not raised any money by public issue during the
 year.
 
 (xxi) During the course of our examination of the books of account
 carried out in accordance with the generally accepted auditing
 standards in India and as per the information and explanations given to
 us, we have not come across any instance of fraud, either noticed or
 reported during the year, on or by the Company, except that there have
 been instances of misappropriation of funds by way of sanction and
 disbursal of non-tenable loans or use of deception to obtain housing
 loans by some of the customers involving an aggregate amount of Rs.
 87,941,488/-. However, as informed to us, such instances are inherent
 in the nature of business of the Company and adequate provision in
 respect thereof has been made in the accounts for the year.
 
 
                                                 For SHAH GUPTA & CO.
                                                Chartered Accountants
                                                         FRN. 109574W
 
                                                       Vipul K Choksi
                                                              Partner 
                                                          M No. 37606
 
                                                For CHOKSHI & CHOKSHI
                                                Chartered Accountants
                                                         FRN. 101872W
 
                                                        Vineet Saxena
                                                              Partner 
                                                         M No. 100770
 
 Place: Mumbai 
 Date: April 28, 2011