We have audited the attached Balance Sheet of M/s.  MAHINDRA & MAHINDRA
 FINANCIAL SERVICES LIMITED, as at 31st March, 2012, Statement of Profit
 and Loss and also the Cash Flow Statement for the year ended on that
 date 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.
 
 We conducted our audit in accordance with 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.
 
 As required by the Companies (Auditor''s Report) Order, 2003 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.
 
 Further to our comments in the Annexure referred to 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 purpose of our
 audit;
 
 (ii) 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;
 
 (iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) In our opinion, the Balance Sheet, Statement of Profit and Loss
 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;
 
 (v) On the basis of written representations received from the
 directors, as on 31st March, 2012 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2012 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 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, read together with the
 Companies Accounting Policies and the Notes thereto, 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
 Company as at 31st March, 2012, and
 
 (b) in the case of the Statement of Profit and Loss of the profit for
 the year ended on that date;
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors'' Report referred to in our report of even
 date:
 
 1 (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of the fixed
 assets. These assets were physically verified by the Management during
 the year at reasonable intervals and no discrepancies were noticed on
 such verification.
 
 (b) None of the fixed assets have been revalued during the year.
 
 (c) Fixed assets disposed off during the year were not substantial and
 therefore do not affect going concern status.
 
 2 Clause 4(ii) of the Companies (Auditor''s Report) Order 2003 is not
 applicable to the company.
 
 3 (a) Based on the records examined by us and according to the
 information and explanations given to us, the Company has :
 
 (i) Not granted any loans to parties covered in the Register maintained
 under section 301 of the Companies Act, 1956.
 
 (ii) Not taken any loans from parties covered in the Register
 maintained under section 301 of the Companies Act, 1956.
 
 4 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 for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. The management has initiated a programme to improve and
 rectify the internal control weaknesses noticed during the course of
 our audit.
 
 5 (a) According to the information and explanations given to us, the
 particulars of contracts or arrangements referred to in Section 301 of
 the Act have been entered in the register required to be maintained
 under that section.
 
 (b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements have been made at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 6 In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 58A, 58AA or any other relevant provisions of the Companies Act, 1956
 and rules framed there under, in respect of deposits accepted from
 public.
 
 7 In our opinion and according to the information and explanations
 provided to us, the Company has an internal audit system, which is
 commensurate with its size and nature of its business.
 
 8 On facts, the requirements of Para 4 (viii) requiring maintenance of
 cost records are not applicable in case of the Company.
 
 9 (a) According to the records of the Company and information and
 explanations given to us, the Company is regular in depositing
 undisputed statutory dues including Provident fund, Investor education
 and protection fund, Employees'' state insurance, Income tax, Sales tax,
 Wealth tax and Service tax, cess and other applicable statutory dues
 with the appropriate authorities.
 
 (b) Following are the disputed tax dues that have not been deposited
 since the matters are pending before various forums:
 
 Nature            Amount          Period to         Forum where
 of Dues           (Rs. in         which the         dispute is 
                   lacs)           amount relates    pending
                                   (Financial Year)
 
                   99.99           2002 - 2003       IT Appellate 
                                                     Tribunal
                   185.00          2002 - 2003       IT Appellate
                                                     Tribunal
 
 Income            8.93            2003 - 2004       IT Appellate
 Tax                                                 Tribunal
                   50.40           2003 - 2004       IT Appellate
                                                     Tribunal
 
 Service           88.41           2004 - 2005       Assistant
 tax                                                 Commissioner
                                                     of Service Tax
 
 10 The Company does not have accumulated losses as at the end of the
 current year. The Company has not incurred cash losses in such
 financial year and in the immediately preceding financial year.
 
 11 Based on the records examined by us and according to the information
 and explanations given to us, the Company has not defaulted in
 repayment of dues to any financial institution or bank or debenture
 holders.
 
 12 Based on the records examined by us and according to the information
 and explanations given to us, the Company has not granted any loans and
 advances on the basis of security by way of pledge of shares,
 debentures, or other securities.
 
 13 The company is not a Chit Funds, Nidhi or Mutual Benefit Fund /
 Society.
 
 14 Based on the records examined by us and according to the information
 and explanations given to us, the Company is not dealing or trading in
 shares, securities, debentures and other investments.
 
 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.
 
 16 Based on the records examined by us and according to the information
 and explanations given to us, during the year, term loans were applied
 for the purpose for which the loans were taken.
 
 17 On the basis of overall examination of the financial statements and
 other financial information furnished, including the statement of
 structural liquidity prepared in accordance with Reserve Bank of India
 guidelines, we report that the Company has not used short term funds
 for long term investments.
 
 18 The Company has not made any preferential allotment of shares to
 parties and companies covered in the Register maintained under section
 301 of the Act.
 
 19 On the basis of our examination of books of account and documents
 and according to the information and explanations given to us,
 appropriate securities have been created in respect of secured
 debentures issued by the company.
 
 20 The Company has not made any public issue of its shares during the
 year.
 
 21 To the best of our knowledge and belief and according to the
 information and explanations given to us, no frauds by the Company were
 noticed or reported. In respect of frauds on the Company, the Company
 has obtained a fidelity guarantee insurance cover in respect of
 possible losses.
 
                                            For B. K. KHARE AND CO
 
                                             Chartered Accountants
 
                                     Firm Registration No. 105102W
 
                                             Padmini Khare Kaicker
 
                                                           Partner
 
 Place : Mumbai                               Membership No. 44784
 
 Dated : April 23, 2012