We have audited the accompanying balance sheet of Edelweiss Capital
 Limited (the Company) as at 31 March 2011, 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 (the Act), 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 Act;
 
 (e) On the basis of the written representations received from the
 directors of the Company as at 31 March 2011, and taken on record by
 the Board of Directors, we report that none of the directors are
 disqualified as on 31 March 2011 from being appointed as director in
 terms of clause (g) of sub section (1) of section 274 to the Act; 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 2011;
 
 (ii) in the case of the profit and loss account, of the profit of the
 Company for the year ended 31 March 2011; and
 
 (iii) in the case of cash flow statement, of the cash flows of the
 Company for the year ended 31 March 2011.
 
 Annexure to Auditors Report - 31 March 2011
 (Referred to in our report of even date)
 
 (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. No material discrepancies were
 noticed on such verification.
 
 (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) During the year, the Company has granted unsecured demand
 loan to one subsidiary company which is covered in the register
 maintained under section 301 of the Act. The maximum amount outstanding
 during the year was Rs. 415.59 lakhs and the year- end balance of such
 loans was Rs. 137.35 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 Act are not, prima facie,
 prejudicial to the interest of the Company.
 
 (c) The loan granted to the aforementioned company is repayable on
 demand. According to the information and explanations given to us, the
 borrower has been regular in the payment of 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 lakh in respect of loans
 granted to any of the companies, firms or other parties listed in the
 register maintained under section 301.
 
 (e) The Company has not taken any loans from companies, firms or other
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956.
 
 (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 regard 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.
 
 (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 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 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 Act for any of the
 activities conducted 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 Provident Fund, Income-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, Wealth-tax, Custom Duty, Excise
 Duty, Cess and Investor Education and Protection fund.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Income- tax,
 Service tax and other material statutory dues were in arrears as at 31
 March 2011 for a period of more than six months from the date they
 became payable.
 
 (c) According to the information and explanations given to us, other
 than those stated in Appendix I to this report 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 made effective 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) The Company has maintained proper records of the transactions and
 contracts in respect of dealing in securities and timely entries have
 been made therein. Further, such securities and investments have been
 held by the Company in its own name except to the extent of exemption
 granted under section 49 of the Act.
 
 (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) In our opinion and according to the information and explanations
 given to us, the term loans taken by the company have been applied for
 the purpose for which they were raised.
 
 (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 Act.
 
 (xix) According to the information and explanations given to us, the
 Company has not issued any secured debentures during the year.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (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
                                   Firms Registration No.: 116231W
 
 
 
                                                       Akeel Master
                                                            Partner
                                             Membership No.: 046768
 
 
 Mumbai
 16 May 2011