We have audited the attached Balance Sheet of Tata Finance Limited as
 at March 31, 2004 and also the Profit 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 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 mis-statement. 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, (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.
 
 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 Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 accounts;
 
 (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 Companies Act, 1956;
 
 (v) On the basis of written representations received from the directors
 as on March 31, 2004 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 2004
 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 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 case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2004;
 
 (b) In case of the Profit and Loss Account, of the Profit for the year
 ended on that date; and
 
 (c) In case of the Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
                                                   For N.M.Raiji & Co.,
                                                  Chartered Accountants
 
                                                             J.M.Gandhi
  Mumbai, May 17, 2004.                                         Partner
                                                   Membership No: 37924
 
 ANNEXURE TO THE AUDITOR'S REPORT
 
 Annexure to the Auditor's Report of even date to the Members of Tata
 Finance Limited
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and the situation of its
 fixed assets.
 
 b) The Company has a phased programme of verification and accordingly
 certain leased assets and owned assets have been physically verified by
 the management during the year. In our opinion, the frequency of
 verification of the fixed assets by the management is reasonable having
 regard to the size of the Company and the nature of its assets. The
 discrepancies noticed have been properly dealt with in the books of
 account.
 
 (c) The assets disposed off during the year are not significant and
 therefore do not affect the going concern assumption.
 
 (ii) The Company is in the business of financing and hence it does not
 hold any finished goods, stores, spare parts and raw materials.
 
 (iii) (a) During the year, the Company has taken inter corporate
 unsecured loan from five companies listed in the register maintained
 under section 301 of the Companies Act. The aggregate amount of the
 loan taken is Rs. 24,410 lakhs out of which Rs. 22,910 lakhs have been
 repaid during the year.The Company has not granted any loans to parties
 listed in the Register maintained under section 301 of the Companies
 Act, 1956.
 
 (b) The rate of interest and other terms and conditions of the loan
 taken by the Company covered under sub-para (a) above, are not, prima
 facie, prejudicial to the interests of the Company.
 
 (c) The repayment of principal amount and payment of interest are made
 regularly.
 
 (d) There are no overdue amounts in respect of such loans.
 
 (iv) In our opinion and according to the information and explanations
 provided to us there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of plant and machinery, equipment and
 other assets and for the sale of power.
 
 (v) (a) Based on the audit procedures applied by us and according to
 the information and explanations provided by the management, we are of
 the opinion that the transactions that need to be entered into the
 register maintained under section 301 have been properly entered in the
 said register.
 
 (b) In our opinion and according to the information and explanations
 given to us/the transactions entered in the registers maintained under
 section 301 and exceeding during the year by Rupees five lakhs in
 respect of each party have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time.
 
 (vi) During the year the Company has not accepted deposits from the
 public. For deposits accepted in the earlier years the Company has
 complied with the directions issued by the Reserve Bank of India under
 the Non Banking Financial Companies Acceptance of Public Deposits
 (Reserve Bank) Directions, 1998. As per the information provided to us,
 the Company has not received any order from the Company Law Board with
 regard to the deposits.
 
 (vii) The Company has a system of internal audit which, in our opinion,
 is commensurate with its size and nature of its business.
 
 (viii) The Company is in the business of financing and hence
 maintenance of cost records under clause (d) of sub-section (1) of
 section 209 of the Act is not applicable.
 
 (ix) (a) According to the records, information and explanations
 provided to us, the Company is generally regular in depositing with
 appropriate authorities undisputed amount of provident fund, investor
 education and protection fund, employees' state insurance, income-tax,
 sales tax, wealth-tax, custom duty, excise duty, cess and other
 statutory dues applicable to it and no undisputed amounts payable were
 outstanding as at March 31,2004 for a period of more than six months
 from the date they became payable.
 
 (b) As per the information and explanation given to us, the following
 are the details of disputed income-tax, excise duty, custom duty and
 sales tax that have not been paid to the concerned authorities:
 
 Sr. NATURE OF THE                                      Unpaid Amount
 No. STATUTORY DUES  FORUM WHERE DISPUTE IS PENDING     (Rs. in Lakhs)
 
 1   Income-tax      CIT (Appeals)                          282.37
 2   Interest-tax    Income Tax Appellate Tribunal          150.35
 3   Interest-tax    CIT (Appeals)                            7.78
 4   Interest-tax    Assessing Officer                        0.56
 5   Sales tax       Commissioner of Appeals                321.44
 6   Sales tax       Appellate Tribunal                      36.07
 
 (x) The accumulated loss of the Company as at 31st March, 2004, is more
 than 50% of its net worth before such loss. The Company, has however,
 not incurred a cash loss in the current year and the immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and on the information and
 explanations given by the management, the Company has not defaulted in
 repayment of dues to any financial institution or bank.
 
 (xii) Based on our examination and according to the information and
 explanations given to us, the Company has maintained adequate documents
 and records for loans and advances secured by way of shares, debentures
 and other securities.
 
 (xiii) As explained to us.the provisions of any special statute
 applicable to Chit Fund, Nidhi or Mutual Benefit Society are not
 applicable to the Company.
 
 (xiv) The Company has generally kept adequate records of its
 transactions in securities.debentures and other investments and timely
 entries have been made therein. All the shares and securities owned by
 the. Company are held in the Company's name.
 
 (xv) On the basis of the information and explanations given to us the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions in the current year.
 
 (xvi) According to the information and explanations given to us and
 records of the Company examined by us, all term loans were applied for
 the purpose for which the loans were obtained. Loans might have been
 taken to repay other loans, which are considered as applied for the
 purpose for which the loans were obtained.
 
 (xvii) During the year, the Company has utilized short-term loans for
 financing vehicles of a tenure exceeding 1 year. In the opinion of the
 management, the utilization is for the operational activities and hence
 not for long term investments.
 
 (xviii) During the year, the Company has made a preferential allotment
 of shares to companies covered in the Register maintained under section
 301 of the Act and the price at which shares have been issued is not
 prejudicial to the interest of the Company.
 
 (xix) According to the information and explanations given to us and
 records of the Company examined by us, securities have been created in
 respect of debentures issued.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (xxi) Based on the audit procedures performed and information and
 explanations given to us by the management, we give below the details
 of frauds on the Company noticed and detected by the management during
 the year.
 
 Sr. Nature of fraud                                       Rs. in lakhs
 No.
 
 a) Unauthorised collection of instalments from customers, 
    not remitted to the Company                                  6.62
 
 b) Collection from customers misappropriated by 2 dealers 
    out of which, Rs.47 lakhs has been recovered subsequently.  48.57
 
                                                  For N.M. Raiji & Co.,
                                                  Chartered Accountants
 
                                                             J.M.Gandhi
 Mumbai, May 17, 2004.                                          Partner
                                                   Membership No: 37924