1.  We have audited the attached Balance Sheet of IL&FS INVESTMENT
 MANAGERS LIMITED (the Company) as at March 31, 2012, the
 Statement of Profit and Loss and the Cash Flow Statement of the Company
 for the year ended on that date, both 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.
 
 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 about whether the
 financial statements are free of material misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the 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
 (CARO) issued by the Central Government in terms of Section 227(4A) 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.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 (a) 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;
 
 (b) 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;
 
 (c) the Balance Sheet, the Statement of Profit and Loss and the Cash
 Flow Statement dealt with by this report are in agreement with the
 books of account;
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (e) in our opinion and to the best of our information and according to
 the explanations given to us, they 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:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2012;
 
 (ii) in the case of the Statement of Profit and Loss, of the profit of
 the Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5.  On the basis of the written representations received from the
 Directors as on March 31, 2012 taken on record by the Board of
 Directors, none of the Directors is disqualified as on March 31, 2012
 from being appointed as a director in terms of Section 274(1)(g) of the
 Companies Act, 1956.
 
 Re: IL&FS INVESTMENT MANAGERS LIMITED
 
 (Referred to in paragraph (3) of our report of even date)
 
 (i) Having regard to the nature of the Company''s activities clauses
 (ii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii),
 (xix) and (xx) of CARO are not applicable to the Company
 
 (ii) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets
 
 (b) The fixed assets were physically verified during the year by the
 Management in accordance with a regular programme of verification
 which, in our opinion, provides for physical verification of all the
 fixed assets at reasonable intervals. According to the information and
 explanations given to us, no material discrepancies were noticed on
 such verification
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company
 
 (iii) In respect of loans, secured or unsecured, granted by the Company
 to companies, firms or other parties covered in the Register maintained
 under Section 301 of the Companies Act, 1956, according to the
 information and explanations given to us:
 
 (a) The Company has placed inter corporate deposits aggregating Rs
 260,000,000 during the year with one such party. At the year-end, the
 outstanding balance of such deposit was Rs 260,000,000 and the maximum
 amount involved during the year was Rs 313,365,753
 
 (b) The rate of interest and other terms and conditions of such loans
 are, in our opinion, prima facie not prejudicial to the interests of
 the Company
 
 (c) The receipts of principal amounts and interest have been regular
 
 (d) There are no overdue amounts over Rs 100,000 remaining outstanding
 as at March 31, 2012 from the date that they became due for payment
 
 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 and accordingly, clauses (f) and (g) of the
 paragraph 4(iii) of CARO 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 with regard
 to purchase of fixed assets and the sale of services. During the course
 of our audit, we have not observed any major weakness in such internal
 control system
 
 (v) To the best of our knowledge and belief and according to the
 information and explanations given to us, there were no contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956 that
 needed to be entered in the register maintained under the said section
 (except for the deposit reported under paragraph (iii) above).
 Accordingly sub clause (b) of clause (v) is not applicable
 
 (vi) According to the information and explanation given to us, the
 Company has not accepted any deposits from the public covered under the
 provisions of Section 58A and 58AA of the Companies Act, 1956 and the
 rules framed there under, during the year
 
 (vii) In our opinion, the internal audit functions carried out during
 the year by a firm of Chartered Accountants appointed by the Management
 have been commensurate with the size of the Company and the nature of
 its business
 
 (viii) According to information and explanation given to us in respect
 of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 dues of Income Tax and has been regular in depositing other undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Sales Tax, Wealth Tax, Service Tax, Custom
 Duty, Excise Duty, Cess and other material statutory dues applicable to
 it with the appropriate authorities during the year
 
 (b) There were no undisputed amounts payable in respect of Income-tax,
 Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory
 dues in arrears, outstanding as at March 31, 2012 for a period of more
 than six months from the date they became payable
 
 (c) Details of disputed Income-tax dues which have not been deposited
 as on March 31, 2012 on account of any dispute are given below:
 
 Name of statute Nature of the dues Forum where dispute Period of which
 the amount relates Amount (Rs.) is pending Income Tax Act 1961 Income
 tax in demand. CIT (A) Assessment year 2008-09 4,778,656
 
 (ix) According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the Register maintained under Section 301 of
 the Companies Act,1956
 
 (x) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud by the Company and
 no fraud on the Company has been noticed or reported during the year
 
                                      For DELOITTE HASKINS & SELLS
 
                                             Chartered Accountants 
 
                                    (Firm Registration No.117365W)
 
                                                  Kalpesh J. Mehta
 
                                                           Partner
 
 Place : Mumbai                             (Membership No. 48791)
 
 Date : May 3, 2012