Edelweiss Capital

We have audited the accompanying balance sheet of Edelweiss Capital
 Limited (the Company) as at 31 March 2009, 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 Companys 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.
 
 1.  As required by the Companies (Auditors Report) Order, 2003 and
 amendments thereto (together referred to as 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.
 
 2.  Further to our comments in the Annexure referred to 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 purposes of the
 audit;
 
 (b) 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;
 
 (c) The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 (d) In our opinion, the balance sheet, profit and loss account and cash
 flow statement comply with the accounting standards referred to in
 sub-section (3C) of section 211 of the Companies Act, 1956;
 
 (e) On the basis of the written representations received from the
 directors of the Company as at 31 March 2009, and taken on record by
 the Board of Directors, we report that none of the directors are
 disqualified as on 31 March 2009 from being appointed as director in
 terms of clause (g) of sub-section (1) of section 274 to the Companies
 Act, 1956; and
 
 (f) In our opinion, and to the best of our information and according to
 the explanations given to us, the said financial statements, 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:
 
 (i) in the case of the balance sheet, of the state of affairs of the
 Company as at 31 March 2009;
 
 (ii) in the case of the profit and loss account, of the profit of the
 Company for the year ended 31 March 2009; and
 
 (iii) in the case of cash flow statement, of the cash flows of the
 Company for the year ended 31 March 2009.
 
                                    
 Annexure to Auditors Report - 31 March 2009
 
 (Referred to in our report of even date)
 
 We report the following:
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of three years. In our opinion, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its assets.
 
 (c) Fixed assets disposed off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 (ii) The Company is a service company. Accordingly, it does not hold
 any physical inventories. Thus, paragraph 4{ii) of the Order is not
 applicable.
 
 (iii) (a) The Company has granted unsecured loans to its subsidiary
 companies which are covered in the register maintained under section
 301 of the Companies Act, 1956. The maximum amount outstanding during
 the year was Rs. 68,905 lakhs and the year-end balance of such loans
 was Rs. 25,832 lakhs.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 on which loans have been granted to the companies listed in the
 register maintained under section 301 of the Companies Act, 1956 are
 not, prima facie, prejudicial to the interest of the Company.
 
 (c) In the case of loans granted to the companies listed in the
 register maintained under section 301, which are repayable on demand,
 the borrowers have been regular in repaying the interest as stipulated.
 
 (d) The loans granted to the companies listed in the register
 maintained under section 301 are repayable on demand. Accordingly,
 there is no overdue amount of more than Rs. 1 takh in respect of loans
 granted to any of the companies, firms or other parties listed in the
 register maintained under section 301.
 
 (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 with regard
 to purchase of fixed assets and with regards to sale of 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 system. The Company does not hold physical
 inventories.
 
 (v) (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in section 301 of the Companies Act, 1956 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 contracts and
 arrangements referred to in (a) above and exceeding the value of Rs. 5
 lakhs with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) The Central Government has not prescribed the maintenance of
 cost records under section 209(1)(d) of the Companies Act, 1956 for any
 of the services rendered by the Company.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues including Income-tax, Provident Fund, Wealth tax,
 Service tax and other material statutory dues have been generally
 regularly deposited during the year by the Company with the appropriate
 authorities. As explained to us, the Company did not have any dues on
 account of Employees State Insurance, Sales-tax, Customs Duty, Excise
 Duty, Cess, Investor Education and Protection Fund.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income-tax, Provident Fund,
 Service tax, Wealth tax and other material statutory dues were in
 arrears as at 31 March 2009 for a period of more than six months from
 the date they became payable.
 
 (c) According to the information and explanations given to us, there
 are no dues of Income-tax, Provident Fund, Wealth tax, Service tax and
 other material statutory dues which have not been deposited with the
 appropriate authorities on account of any dispute.
 
 (d) There were no dues on account of cess under section 441A of the
 Companies Act, 1956 since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to its
 bankers or debenture holders.
 
 (xii) The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) In our opinion and according to information and explanations
 given to us, the Company is not a chit fund, nidhi or mutual benefit
 fund/society.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of the
 transactions and contracts in respect of trading in securities during
 the year and timely entries have been made therein. Further, such
 securities have been held by the Company in its own name, except to the
 extent of exemption granted under section 49 of the Companies Act,
 1956.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantees for loans taken by others from banks are not prejudicial to
 the interest of the Company.
 
 (xvi) The Company did not have any term loans outstanding during the
 year.
 
 (xvii) According to the information and explanations given to us and on
 overall examination of the balance sheet of the Company, we are of the
 opinion that the funds raised on short term basis have not been used
 for long term investments.
 
 (xviii) The Company has not made any preferential allotment of shares
 to companies/firms/parties covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) According to the information and explanations given to us, the
 Company has created security or charge in respect of debentures issued
 during the year.
 
 (xx) The Company has not raised any money by public issues.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 year.
 
                                         For B S R & Associates
                                          Chartered Accountants
 
                                                   Akeel Master
 Mumbai                                                 Partner