1.  We S. R. Batliboi & Co. (SRB) and G. D. Apte & Co.  (GDA) have
 jointly audited the attached Balance Sheet of Shriram Transport Finance
 Company Limited (the Company) as at March 31, 2011 and also the Profi
 -t and Loss Account and the Cash Flow Statement 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 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 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
 statements 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
 (the Act), we enclose in the Annexure a statement on the matters
 specifi ed in paragraphs 4 and 5 of the said Order.
 
 4.  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 purposes of our
 audit;
 
 ii. 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;
 
 iii. The Balance Sheet, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv. 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 Act.
 
 v. 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 disqualifi ed as on
 March 31, 2011 from being appointed as director in terms of clause (g)
 of sub-section (1) of section 274 of the Act.
 
 vi. 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;
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 b) in the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexurereferred to in paragraph 3 of our report of even date Re:
 Shriram Transport Finance Company Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fi xed
 assets.
 
 (b) All fi xed assets have not been physically verifi ed by the
 management during the year but there is a regular programme of verifi
 cation which, in our opinion, is reasonable having regard to the size
 of the Company and the nature of its assets. No material discrepancies
 were noticed on such verifi cation.
 
 (c) There was no substantial disposal of fi xed assets during the year.
 
 (ii) The Company is a Non-Banking Financial Company (NBFC) engaged in
 the business of giving loans and does not maintain any inventory.
 Therefore the provisions of clause 4(ii) of the Order are not
 applicable to the Company.
 
 (iii) (a) The Company has granted loan to one party covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 334.26 lacs and the
 year- end balance of loans granted to such parties was Rs. 111.99 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of loans granted, repayment of the principal amount is
 as stipulated and payment of interest have been regular.
 
 (d) There is no overdue amount of loans granted to companies, fi rms or
 other parties listed in the register maintained under section 301 of
 the Companies Act, 1956.
 
 (e) As informed, the Company has not taken any loans, secured or
 unsecured from companies, fi rms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956 and
 therefore provision of clause iii(f) and iii(g) are not applicable to
 the Company.
 
 (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, for the
 purchase of fi xed assets and for rendering of services. The activities
 of the Company do not involve purchase of inventory and the sale of
 goods. During the course of our audit, no major weakness has been
 noticed in the internal control system in respect of these areas and
 accordingly the question on commenting on whether there is a continuing
 failure to correct major weakness in the internal control system of the
 company does not arise.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act that need to be
 entered into the register maintained under section 301 have been so
 entered.  (b) In our opinion and according to the information and
 explanations given to us, the transactions made in pursuance of such
 contracts or arrangements exceeding value of Rupees fi ve lakhs have
 been entered into during the financial year at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) In respect of deposits accepted, in our opinion and according to
 the information and explanations given to us, directives issued by the
 Reserve Bank of India and the provisions of sections 58A, 58AA or any
 other relevant provisions of the Act and the rules framed there under,
 to the extent applicable, have been complied with. We are informed by
 the management that no order has been passed by the Company Law Board,
 National Company Law Tribunal or Reserve Bank of India or any Court or
 any other Tribunal.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of sub-section (1) of section 209 of the Companies Act, 1956 for
 the products of the Company.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, employees state insurance,
 income-tax, sales-tax, wealth-tax, service tax, cess and other material
 statutory dues applicable to it.  The provisions relating to customs
 duty and excise duty are not applicable to the Company
 
 Further, Section 441A of the Act has not been notifi ed by the Central
 Government of India upto the reporting date, and accordingly, as at the
 reporting date there is no statutory due payable under section 441A of
 the Act.
 
 (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, cess and other material undisputed
 statutory dues were outstanding, at the year end, for a period of more
 than six months from the date they became payable. The provisions
 relating to customs duty and excise duty are not applicable to the
 Company
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
                                                       Amount
 Name of the statute          Nature of dues         (Rs in lacs)
 
 Income Tax Act, 1961        Income Tax demands         48.31
 
 Income Tax Act, 1961        Income Tax demands      7,746.60
 
 Finance Act, 1994           Service tax on hire 
                              purchase               8,406.10
 (Service Tax)               and lease transactions
 
 Finance Act, 1994           Service Tax demands       315.00
 (Service Tax)
 
 Andhra Pradesh Value        Value Added Tax           348.41
 Added Tax
 
 
 Name of the Statue      Years to which the       Forum where
                         amount relates         dispute is pending
 
 Income Tax Act, 1961    A.Y. 2003-04            CIT (Appeals)
 
 Income Tax Act, 1961    A.Y. 2008-09            CIT (Appeals)
 
 Finance Act, 1994
 (Service Tax)           2003-04 to 2009-10     Commissioner of Service
                                                Tax. (Refer note
                                                11, in Schedule 21, 
                                                significant Accounting
                                                Policies and Notes to 
                                                Accounts)
 
 Finance Act, 1994
 (Service Tax)           2003-04 & 2004-05      Commissioner of Central 
                                                Excise and Customs
 
 Andhra Pradesh Value
 Added Tax               2004-05 to 2008-09     Andhra Pradesh High 
                                                 Court.
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 (xii) Based on our examination of documents and records, we are of the
 opinion that the Company has maintained adequate records where the
 Company has granted loans and advances on the basis of security by way
 of pledge of shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefi t fund / society. Therefore, the provisions of clause
 4(xiii) of the Order, are not applicable to the Company.
 
 (xiv) In respect of dealing/trading in shares, securities, debentures
 and other investments, in our opinion and according to the information
 and explanations given to us, proper records have been maintained of
 the transactions and contracts and timely entries have been made
 therein. The shares, securities, debentures and other investments have
 been held by the Company, in its own name.
 
 (xv) According to the information and explanations given to us, the
 Company has given guarantee for loans taken by others from bank or fi
 nancial institutions, the terms and conditions whereof in our opinion
 are not prima-facie prejudicial to the interest of the Company.
 
 (xvi) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were applied by the Company during the year for
 the purposes for which the loans were obtained other than funds
 temporarily invested pending utilization of the funds for the intended
 use.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short- term basis have been used 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 Act.
 
 (xix) According to the information and explanations given to us, during
 the period covered by our audit report, the Company had issued 11,700
 and 1,37,47,441 secured non convertible debentures of Rs 10,00,000 and
 Rs.1,000 each respectively. The Company has created security or charge
 in respect of debentures issued.
 
 (xx) We have verifi ed that the end use of money raised by public
 issues is as disclosed in the notes to the financial statements.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements 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 course of our audit.
 
 For S.R. BATLIBOI & Co.                       For G. D. Apte & Co.
 
 Firm Registration No:- 301003E       Firm Registration No:- 100515W
 
 Chartered Accountants                         Chartered Accountants
 
 per Shrawan Jalan                                       C. M. Dixit
 
 Partner                                                     Partner
 
 Membership No.:102102                         Membership No.: 17532
 
 Mumbai                                        Mumbai
 
 April 29, 2011                                April 29, 2011