1.  We have audited the attached Balance Sheet of Mahindra Lifespace
 Developers Limited as at 31st March 2011 and the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date, 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 misstatement. 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 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, 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:
 
 a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purpose 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 the
 books.
 
 c) The Balance Sheet and the Profit and Loss Account 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 comply with the Accounting Standards referred
 to in sub-section (3C) of section 211 of the Companies Act, 1956.
 
 e) Without qualifying our opinion, we draw attention to:
 
 i. Note No. 7 (c) of Schedule 21 of the accounts, we have relied on
 management representation, due to the resolution of matter being
 dependent on future
 
 events whose outcome is not known, regarding realisability of
 construction work in progress, project advances and interest accrued
 thereon of Rs. 7,146.11 lakhs on account of a project, where
 commencement of construction has been delayed on account of a dispute
 between the land owner and the Company, which is referred to
 arbitration.
 
 ii. Note No. 9 of Schedule 21 regarding reliance on management owing to
 the technical nature of estimates of the percentage of completion,
 costs to completion and the projections of revenues expected from
 projects and realisability of Construction work in progress.
 
 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 notes
 thereon give the information required by the Companies Act, 1956, in
 the manner so required, 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 31st March, 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 Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 5. On the basis of the written representations received from the
 Directors as on 31st March, 2011, and 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 clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 
 ANNEXURE TO THE AUDITORS REPORT
 
 Referred to in Paragraph (3) of our report of even date on the accounts
 of Mahindra Lifespace Developers Limited ended 31st March, 2011.
 
 1) i) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (ii) The Company has a program for physical verification of fixed
 assets at periodic intervals. In our opinion, the period of
 verification is reasonable having regard to the size of the Company and
 the nature of its assets.  Discrepancies reported on such verification
 have been properly dealt in the accounts.  
 
 (iii) In our opinion, the disposal of fixed assets during the year does
 not affect the going concern assumption.
 
 2) The Management has conducted physical verification of inventory at
 reasonable intervals. The procedures of physical verification of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the Company and the nature of its business. The
 Company is maintaining proper records of inventory and no material
 discrepancies were noticed on physical verification.
 
 3) The Company has not granted or taken any loans, secured or
 unsecured, to or from companies, firms or other parties listed in the
 register maintained under section 301 of the Companies Act, 1956.
 Therefore, the provisions of sub- clause (b), (c), (d), (e), (f) and
 (g) of sub-para (iii) of para 4 of the Order is not applicable.
 
 4) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business, for the purchases of inventory, fixed assets and for the sale
 of goods and services. In our opinion and according to the information
 and explanations given to us, there is no continuing failure to correct
 major weaknesses in internal control.
 
 5) (i) In our opinion and according to the information and explanations
 given to us, there were no transactions with any party that needed to
 be entered in the Register maintained in pursuance of section 301 of
 the Companies Act, 1956.
 
 (ii) As there are no transactions in case of any party that need to be
 entered in the Register maintained pursuant to section 301 of the
 Companies Act, 1956, sub- clause (b) of sub-para (v) of Para 4 of the
 Order is not applicable.
 
 6) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 within the meaning of section 58A and 58AA of the Companies Act, 1956,
 and the rules framed thereunder.
 
 7) The Company has an internal audit system, which in our opinion is
 commensurate with the size of the Company and nature of its business.
 
 8) As informed to us, the maintenance of cost records has not been
 prescribed by the Central Government under section 209(1)(d) of the
 Companies Act, 1956, in respect of the activities carried on by the
 Company.
 
 9) (i) According to the records of the Company, the Company is
 generally regular in depositing undisputed statutory 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 other statutory dues applicable to
 it with the appropriate authorities. According to the information and
 explanations given to us, no undisputed amounts payable in respect of
 Income tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and Excise
 Duty were outstanding, at the year end for a period of more than six
 months from the date they became payable.
 
 (ii) According to the information and explanations given to us, there
 are no dues of Sales Tax, Service Tax, Customs Duty, Wealth Tax, Excise
 Duty or Cess outstanding on account of any dispute, other than disputed
 Income Tax demand as under:
 
 Sr.  Assessment      Nature      Amount      Forum where 
 No.     Year         of Dues     Rs. in          case is
                                   lakh           pending
 
 1     2008-09        Income       531.81    Commissioner
                       Tax                  of Income Tax
                                                (Appeals)
 
 2     2007-08        Income       425.08    Commissioner
                       Tax                  of Income Tax
                                                (Appeals)
 
 3     2006-07        Income        13.67    Commissioner
                       Tax                  of Income Tax
                                                (Appeals)
 
 3     2005-06        Penalty       28.74    Commissioner
                                            of Income Tax 
                                                (Appeals)
 
 
 10) The Company does not have accumulated losses at the end of the
 financial year and it has not incurred any cash losses in the current
 year and in the immediately preceding financial year.
 
 11) According to the information and explanations given to us and based
 on the documents and records produced before us, the Company has not
 defaulted in repayment of dues to banks.
 
 12) According to the information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares and other securities.
 
 13) In our opinion and according to the information and explanations
 given to us, the nature of activities of the Company does not attract
 any special statute applicable to chit fund and nidhi/ mutual benefit
 fund/ societies.
 
 14) In our opinion, the Company has maintained proper records of the
 transactions and contracts of the investments dealt in by the Company
 and timely entries have been made therein.  The investments made by the
 Company are held in its own name except to the extent of the exemption
 under section 49 of the Act.
 
 15) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions, the terms and conditions whereof are
 prejudicial to the interest of the Company.
 
 16) The Company has borrowed term loan of Rs 100 crore as on 31st March
 2011, which will be utilised subsequently for the purposes for which it
 was sanctioned.
 
 17) According to the information and explanations given to us on an
 overall examination of the Balance Sheet and Cash Flows of the Company,
 we report that the Company has not utilized funds raised on short-term
 basis for long term investment.
 
 18) There is no preferential allotment of shares during the year.
 
 19) The Company did not issue any debentures during the year.
 
 20) The Company has not made any public issue of its shares during the
 year.
 
 21) Based on the audit procedures performed and as per the information
 and explanations given by the management, we report that no fraud on or
 by the Company has been noticed or reported during the year.
 
 Schedules annexed to and forming part of Balance Sheet as at 31st
 March, 2011 and Profit and Loss Account for the year ended 31st March,
 2011.
                                                   For and on behalf of
 
                                                    B. K. Khare and Co.  
                                                  Chartered Accountants
 
 
 
                                                  Padmini Khare Kaicker 
                                                                Partner
                                                           M. No. 44784 
                                          Firm Registration No. 105102W
 
 
 
                                                                 Mumbai 
                                                  Dated: April 23, 2011