1.  We have audited the attached Balance Sheet of Sundaram Finance
 Limited, Chennai (the Company) as at 31st March 2012, the Profit and
 Loss Statement and the Cash Flow Statement for the year ended on that
 date, annexed thereto, which we have signed under reference to this
 report. 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.
 
 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 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 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 (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (together the ''Order'') issued by the Central Government in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act),
 and based on the information and explanations given to us, 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 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 appears from our examination of
 those books.
 
 iii. the Balance Sheet, Profit and Loss Statement 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 Statement 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, to the extent applicable.
 
 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 Act, and
 
 vi.  in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon give the information required by the Act 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;
 
 b) in the case of the Profit and Loss Statement, 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.
 
 1.  a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) The Company has a phased programme of physical verification of fixed
 assets, which in our opinion, is reasonable having regard to the size
 of the Company and nature of fixed assets. In accordance with the
 programme, the fixed assets have been physically verified by the
 management during the year. The discrepancies noticed on such
 verification were not material and have been properly dealt with in the
 books of account.
 
 c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets have not been disposed
 off by the Company during the year.
 
 2.  a. i) The Company has granted secured loans to three companies and
 unsecured loans to three companies covered in the register maintained
 under Section 301 of the Act. The maximum amount involved during the
 year was Rs 7623.32 lakhs for the secured loans and Rs 2390.00 lakhs for
 the unsecured loans. The balance outstanding at the end of the year was
 Rs 3449.19 lakhs in respect of the secured loans and Rs 595 lakhs in
 respect of the unsecured loans.
 
 ii) The rate of interest and other terms and conditions of the loan
 are, prima facie, not prejudicial to the interest of the Company.
 
 iii) The payment of interest and the repayment of principal are
 regular.
 
 iv) There is no amount overdue on the loans.
 
 v) Apart from the above, the Company has not granted loans to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 b. i) The Company has issued debentures to one company and availed
 unsecured loans from two companies covered in the register maintained
 under Section 301 of the Act. The maximum amount involved during the
 year was Rs 4426.58 lakhs in respect of debentures issued and Rs 450
 lakhs in respect of the unsecured loans. The balance outstanding at the
 end of the year was Rs 4426.58 lakhs in respect of the debentures and Rs
 200 lakhs in respect of the unsecured loans.
 
 ii) The rate of interest and other terms and conditions of the loan
 are, prima facie, not prejudicial to the interest of the Company.
 
 iii) The payment of interest is regular.
 
 iv) There is no amount overdue on the loans.
 
 Apart from the above, the Company has not taken loans from companies,
 firms or other parties covered in the register maintained under Section
 301 of the Act.
 
 3.  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 with regard to purchases of fixed assets and sale of goods and
 services. During the course of our audit, no major weakness has been
 noticed in the above controls and therefore the reporting of the same
 does not arise.
 
 4.  a) To the best of our knowledge and belief and according to the
 information and explanations given to us, 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 in the register maintained under
 that Section have been so entered.  b) In our opinion, according to the
 information and explanations given to us, the transactions made in
 pursuance of such contracts or arrangements entered in the register
 maintained under Section 301 of the Act and exceeding the value of
 rupees five lakhs in respect of any party during the year, prima facie,
 have been made at prices which are reasonable having regard to the
 nature of the service and the prevailing market prices at the relevant
 time.
 
 5.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by
 Reserve Bank of India and the provisions of Section 58A, Section 58AA
 or any other relevant provisions of the Act, and the rules framed
 thereunder with regard to deposits accepted from the public.
 
 6.  The Company has an internal audit system, which in our opinion, is
 commensurate with the size and the nature of its business.
 
 7.  The Central Government has not prescribed the maintenance of cost
 records under Section 209(1)(d) of the Act.
 
 8.  a) According to the records of the Company and the information and
 explanations given to us, undisputed statutory dues including provident
 fund, investor education and protection fund, employee state insurance,
 income tax, wealth tax, service tax, sales tax, value added tax,
 customs duty and excise duty were regularly deposited during the year
 with the appropriate authorities.
 
 b) According to the information and explanations given to us, there are
 no undisputed amounts payable in respect of income tax, wealth tax,
 sales tax, excise duty and cess which are outstanding as at 31st March,
 2012 for a period of more than six months from the date they became
 payable except service tax amounting to Rs 478.47 lakhs.
 
 9.  According to the records of the Company and the information and
 explanations given to us, there are no dues of wealth tax, customs
 duty, excise duty and cess which have not been deposited on account of
 dispute. Details of disputed sales tax and service tax not deposited
 are as follows:
 
 Nature              Amount         Period to which     Forum where 
 of                 (Rs in          the amount          the dispute is
 dues                lakhs)         relates             pending
 
 Sales                 899.99       1993-1994 to        Various 
                                                        appellate 
 Tax                                2007-2008           authorities
 
 Service              4501.73       2001-2002 to        Various
                                                        appellate 
 Tax                                2010-2011           authorities
 
 10.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses during the current and
 immediately preceding financial year.
 
 11.  Based on our audit procedures and on the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to financial
 institutions, banks or debenture holders.
 
 12.  According to the information and explanations given to us, the
 Company has not granted loans or advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit societies are not applicable to the Company.
 
 14.  Based on our examination of records and the information and
 explanations given to us, the Company does not deal/trade in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the Company has not given guarantees for loans taken by
 others from banks and financial institutions.
 
 16.  To the best of our knowledge and belief and according to the
 information and explanations given to us, term loans availed by the
 Company, prima facie, were applied by the Company during the year for
 the purposes for which the loans were obtained, other than temporary
 deployment, pending application.
 
 17.  According to the cash flow statement and other records examined by
 us and the information and explanations given to us, on an overall
 examination of the Balance Sheet of the Company, funds raised on short
 term basis, prima facie, have not been used during the year for long
 term investment.
 
 18.  According to the information and explanations given to us, the
 Company has created securities in respect of secured debentures issued.
 
 19.  The Company has not raised money by public issues during the year.
 
 20.  To the best of our knowledge and according to the information and
 explanations given to us, during the year no fraud on or by the Company
 was noticed or reported during the course of our audit.
 
 21.  In our opinion and according to the information and explanations
 given to us, the nature of the company''s business / activities during
 the year have been such that clauses ii, xiii and xviii of paragraph 4
 of the Companies (Auditors'' Report) Order, 2003 are not applicable to
 the Company for the year.
 
 
                                                For BRAHMAYYA & CO., 
 
                                              Chartered Accountants 
 
                                            Registration No.000511S
 
                                                     L. RAVI SANKAR
 
 Place: Chennai                                             Partner
 
 Date: 28th May, 2012                          Membership No. 25929