1.  We have audited the attached Balance Sheet of IL&FS INVESTMENT
 MANAGERS LIMITED (the Company) as at March 31, 2011, the Profit and
 Loss Account and the Cash Flow Statement of the Company 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 ouraudit.
 
 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 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
 ourauditprovidesareasonablebasisforouropinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (CARO)
 issued by the Central Government of India 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.  Furtherto ourcomments 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
 ouraudit;
 
 (b) in ouropinion, properbooks of account as required by law have been
 keptbythe Company so far as it appears from our examination of those
 books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in ouropinion, the Balance Sheet, the Profitand Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with theAccounting Standards referred to Section 211 (3C)of the
 CompaniesAct, 1956.
 
 (e) 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:
 
 (i) in the case of the BalanceSheet,of the state of affairs of the 
 Company as at March31,2011:
 
 (li) in the case of the Profit and LossAccount, of the profit for the
 year ended on that date and
 
 (lii) in the case ofthe Cash Flow Statement, ofthe cash flows for
 theyearendedonthatdate.
 
 5.  On the basis ofthe written representations received from the
 Directors as on March 31, 2011 taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of Section
 274(1 )(g) of the CompaniesAct, 1956.
 
 Annexure to the Auditors Report
 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 Companys 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 ouropinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in ouropinion, 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
 undeletion 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.
 377,303,253 during the year with one such party. At the year-end.  the
 outstanding balance of such deposit was Rs. 313,365,753 and the maximum
 amount involved during the year was Rs!  373,365,753.
 
 (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 31,2011.
 
 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 ouraudit, we have notobserved any majorweakness 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
 (excluding 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 58Aand 58AAof 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 Service Tax
 and income tax and regular in depositing undisputed dues.  including
 Provident Fund, Investor Education and Protection Fund, Employees
 State Insurance, 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,
 Cess and other material statutory dues in arrears, outstanding as at
 March 31,2011 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 31,2011 on account of any dispute are given below:
 
 Name of       Nature of    Forum where  Period ofwhich      Amount
 statute       the dues     dispute     the amount relates    (Rs.)
 
 Income Tax 
 Act, 1961    Income Tax 
              in demand    CIT (A) and 
                          ITAT (Appeals)     2003-2007     12,187,094
 
 (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
                                             (Registration No. 117366W)
  
                                                            A. B. JANI
 
 Mumbai, April 21, 2011                                        Partner
 
                                                 (Membership No. 46488)