The Directors have pleasure in presenting for your consideration and
 approval the Twenty Fifth Annual Report with the Audited Financials of
 the Company fortheyearended March 31,2011
 
 FINANCIAL ACHIEVEMENTS AND DIVIDEND
 
                    For the 
                   year ended    For the 
                                year ended   For the 
                                            year ended    For the 
                                                         year ended
                    March 31, 
                      2011       March 31, 
                                   2010      March 31, 
                                               2011       March 31, 
                                                            2010   
                    (Rs.mn)      (Rs.mn)     (Rs.mn)      (Rs.mn)
                   Standalone  Standalone Consolidated Consolidated
 
 Total Income        949.44      957.07     2,012.19      1,813.37
 
 Profit before 
 Taxation            554.53      588.64       905.19        956.92
 
 Provision for 
 Taxation            180.47      195.78       212.27        215.38
 
 Net Profit after 
 Taxation            374.06      392.86       690.20*       738.49*
 
 Profit available 
 for appropriation   501.71      522.77     1,472.20      1,177.12
 
 Appropriations :
 
 General Reserve      38.00       40.00        38.00         40.00
 
 Dividend (inclusive 
 of dividend tax)    358.48      355.12       358.48        355.12
 
 •afterMinority Interest
 
 DIVIDEND
 
 During the year, your Company achieved a net profit aftertax of X
 374.06 mn. Your Directors recommend a dividend of X 1.50 per share
 efface value r2/-each.The total amount ofdividend is 1358.48 mn
 (inclusive ofdividend tax oft50.04mn)
 
 REVIEW OF OPERATIONS
 
 The year under review has been uncertain, contrary to earlier
 expectations. India faced headwinds in the form of concerns on
 inflation, interest rates, and oil price. Lower industrial growth since
 September 2010 and slowdown in foreign direct investment could
 translate into lower than expected GDP growth forFY2011 and FY2012. The
 fragile global and local economic scenarios have reflected on the
 private equity environment as well. Fund raising continues to be
 sluggish and PE fund raising by India-focused funds saw a dip of 19% on
 a year on year basis
 
 In this backdrop, the year has been one of consolidation for the
 Company. During the year your Company acquired the shares of Saffron
 Asset Advisors Private Limited (name changed to IIML Asset Advisors
 Private Limited), thus making it a subsidiary of Company. In addition
 to the above Saffron Capital Securities Limited and Saffron Capital
 Advisors Limited, both Mauritius based real estate focused managers,
 amalgamated with IL&FS Investment Advisors LLC, a Mauritius based
 wholly owned subsidiary of the Company. As a result of the foregoing,
 the total Assets Under Management (AUM) of your Company along with
 its affiliates stands increased to USD 3.2 bn and your Company
 alongwith its affiliates also has undents management Yatra Capital
 Limited which is listed on the Euronext Stock Exchange. Your Company
 will seek to leverage the listed vehicle for raising fresh listed
 private equity funds
 
 Your Company invested X 8.27 bn during FY2011, a 43% increase over the
 previous year. More importantly, your Company was also able to provide
 significant return of capital to its fund investors, with US$ 221 mn
 being realized through divestments from 15 investee companies
 
 Given that the fund raising process is episodic, the increase in
 revenues of your Company is more a step function, linked to fresh funds
 closed as also to the investment cycle for the current funds under
 management. Strategic initiatives including opening of the Dubai office
 with a view to expand business presence in the region and the Saffron
 merger are expected to fructify over the next two fiscals. Given the
 lack of demand and the greaterriskaversion of the investment community,
 investmentcycles have elongated, thereby impacting pace of fresh fund
 raises. Accordingly, the Company initiated fund raising for three new
 funds only in the latter part of 2011. The enhancement in assets under
 management of US$ 400 mn came from the amalgamation of the Saffron
 platform; however depreciation costs related to the transaction have
 resulted in a lower Profit After Tax than planned
 
 On a consolidated basis, the Income from Operations of the Company for
 the financial year 2010-2011 was X 1.9 bn. Inclusive of Income from
 Investments of X 72.39 mn and Other Income of X 39.45 mn, the Total
 Income on a consolidated basis for the Financial Year 2010-2011 was X
 2.01 bn. The resultant Profit afterTaxon consolidated
 basisforthefinancial year2010-2011 was X690.20 mn
 
 On a standalone basis, the Income from Operations of the Company for
 the financial year 2010-2011 was X 852.77 mn. Inclusive of Income from
 Investments of ? 61.64 mn and Other Income of ? 35.03 mn, the Total
 Income of the Company for the Financial Year 2010-2011 was ? 949.44 mn.
 The total Expensesfortheyearweret394.90mn and the resultant
 ProfitafterTaxforthe financial year2010-2011 wast 374.06mn
 
 FUTURE OUTLOOK
 
 The emerging weak and uncertain economic data points to a possible
 downgrading of the growth forecasts for FY2012. Scaling down of FY2012
 growth expectations by 0.5-1.0% is already being sounded out by various
 agencies, with the Government reaffirming that it would be willing to
 sacrifice growth in the interest of reigning in inflation
 
 However, notwithstanding the challenging macro-economic environment,
 India continues to present a compelling investment opportunity. In
 order to address this opportunity, your Company has started marketing
 of three new funds. Leveraging its parentage, the Company would in this
 fiscal launch a variety of funds covering the infrastructure lifecycle.
 The new Funds collectively target to raise US bn overthe next 12-18
 months, with some achieving a First Close during this fiscal.
 Achallenging global investment environment would dictate the Companys
 ability to raise new Funds within the planned timelines. Despite having
 a competitive advantage and performance recognition among global
 investors, the active divestment of olderfunds coupled with longer lead
 times forfund raising are expected to keep assets under management flat
 
 DIRECTORS
 
 Mr Arun Saha and Mr Vibhav Kapoor retire by rotation at the ensuing
 Annual General Meeting of the Company and being eligible offer
 themselves for re-appointment. Mr Jitender Balakrishnan was appointed
 as an Additional Director of the Company at the Board Meeting held on
 July 30, 2010 and Mr Ramesh Bawa and Mr Siddharth Mehta were appointed
 as Additional Directors of the Company at the Board Meeting held on
 February 11, 2011. Since Mr Jitender Balakrishnan, Mr Ramesh Bawa and
 Mr Siddharth Mehta were appointed as Additional Directors of the
 Company they hold office upto the date of ensuing Annual General
 Meeting of the Company and being eligible offers themselves for
 appointment. The Company has received a notice under Section 257 of the
 Companies Act, 1956 proposing appointment of Mr Jitender Balakrishnan,
 Mr Ramesh Bawa and MrSiddharth Mehta as Directors of the Company.
 During the yearMrAlokBhargava resigned and ceased to beaDirectorand
 consequently ceased to be an Executive Director of the Company with
 effect from July 15, 2010. DrArchana Hingorani was appointed as an
 Executive Director of the Company for a period of five years with
 effect from July 17, 2006. With the tenure of Dr Hingorani as an
 Executive Director coming to an end on July 16, 2011, the Board of
 Directors of the Company at its meeting held on April 21, 2011 approved
 the re-appointment of DrArchana Hingorani as an Executive Director of
 the Company for a further period of five years with effect from April
 21, 2011, subject to the approval of the members. The resolution for
 re-appointment of Dr Hingorani as an Executive Directorof the
 Companyforafurtherperiod of fiveyears with effect fromApril21,2011 is
 being placed before the members in the ensuing Annual General Meeting
 
 STATUTORYAUDITORS
 
 The Statutory Auditors of the Company M/s Deloitte Haskins & Sells,
 Chartered Accountants, Mumbai, retire at the conclusion of the ensuing
 Annual General Meeting and have expressed their willingness to continue
 as Auditors, if re-appointed, at the ensuing Annual General Meeting of
 the Company
 
 The Company has also received a certificate from M/s Deloitte Haskins &
 Sells under Section 224(1 B) of the Companies Act, 1956 confirming
 their eligibility for re-appointment. M/s Deloitte Haskins & Sells,
 Mumbai, have also confirmed to the Company that the firm is subjected
 to the Peer Review Process of the Institute of Chartered Accountants of
 India
 
 INCREASE IN SHARE CAPITAL
 
 During the year your Company allotted 2,598,660 Equity Shares of ? 21-
 each on the exercise of Options issued under the Employee Stock Option
 Plans 2004 & 2006
 
 CORPORATE GOVERNANCE
 
 Pursuant to Clause 49 of the Listing Agreement with the Stock
 Exchanges, Report on Corporate Governance along with the Management
 Discussion and Analysis and Auditors Certificate on compliance with
 the Corporate Governance requirements have been included in this Annual
 Report as separate sections
 
 SUBSIDIARY COMPANIES
 
 Your Company has the following subsidiaries IL&FS Asian Infrastructure
 Managers Limited, IL&FS Urban Infrastructure Managers Limited, IIML
 AssetAdvisors Private Limited and IL&FS Investment Advisors LLC,
 Mauritius
 
 The Company had in the past obtained exemption from the Central
 Government under Section 212 of the Companies Act, 1956, from attaching
 the Accounts of each of the Subsidiary Companies of the Company to its
 Balance Sheet. However the Ministry of Corporate Affairs vide General
 Circular No 2/2011 file no 51/12/2007-CL-lll dated February 8, 2011,
 had issued directions under Section 212(8) of the Companies Act, 1956
 to grant a general exemption from attaching the financials along with
 the Directors Report and the Auditors Report of the subsidiary
 companies to the financials of the holding company on fulfillment of
 certain conditions. In compliance with the said circular of the
 Ministry of Corporate Affairs, the Company has attached a summary of
 the financial statements of each of the Subsidiary Companies
 
 As per Clause 32 of the Listing Agreement the consolidated financial
 statements of the Company with its Subsidiaries form part of the Annual
 Report. The copies of the audited annual accounts of the Companys
 Subsidiaries and other related documents, can also be sought by any
 member of the Company or its Subsidiaries on making a written request
 to the Company Secretary in this regard. The Annual Accounts of the
 Subsidiary Companies are also available for inspection by any
 memberatthe Companys and/or the concerned Subsidiaries registered
 office
 
 Review of Operations of Subsidiary Companies
 
 IL&FS Asian Infrastructure Managers Limited :
 
 IL&FS Asian Infrastructure Managers Limited (IAIML) has been set up to
 manage Pan Asia Project Development Fund, India (the Fund). The Fund
 has been set up in order to support initiatives for development of
 infrastructure projects in the Asian region. The Fund has a corpus of r
 1,125 mn.  IAIML is playing an active role in managing and monitoring
 the investments made by the Fund. The performance of these investments
 has been satisfactory
 
 The Income from Operations of IAIML for the financial year2010-2011 was
 X 20.04 mn. Inclusive of Income from Investments and Otherlncome of X
 3.45 mn, the Total Income for Financial Year 2010-2011 was X 23.49 mn.
 The total Expenses of IAIML for the year were X 19.05 mn and the
 resultant Profit aftertaxfortheyearwast 3.96mn
 
 IL&FS Urban Infrastructure Managers Limited:
 
 IL&FS Urban Infrastructure Managers Limited (IUIML) functions as the
 Asset Managerfor the Pooled Municipal Debt Obligations (PMDO) Facility.
 The objective of the PMDO Facility is to provide long tenure term loans
 to meet the debt requirements of urban infrastructure projects across
 cities in India. The total corpus of the PMDO Facility is X 27,500 mn
 
 As part of the efforts of increasing the total corpus available, a new
 lender Indian Overseas Bank has joined the consortium with a commitment
 of X 2,500 mn. Further the existing lenders have also increased their
 commitment amounts. Accordingly, the total corpus is expected to be
 increased to X 47,775 mn. The Memorandum of Agreement for the revised
 commitment amount is expected to be signed in the first quarterof
 FY2012
 
 lUIMLs role as an Asset Manager is to identify and appraise the
 eligible projects and obtain sanctions of the lenders and thereafter
 assist the lenders to disburse, monitor and administerthe loan assets
 until repayment
 
 By March 31, 2011, projects for a term loan of X 30,783.35 mn have been
 sanctioned from the PMDO facility and the assets under management
 amounted tor 8,747 mn
 
 Thelncome from Operations of lUIMLfor the financial year 2010-2011 wast
 89.21 mn. Inclusive of Income from Investments and Otherlncome of X
 1.79 mn, the Total Income for Financial Year2010-2011 wasf91 mn. The
 total Expenses of lUIMLfortheyearweref 64.34 mn and the resultant
 ProfitafterTaxforthe yearwas X17.76 mn
 
 IIML Asset Advisors Private Limited (formerly known as Saffron Asset
 Advisors Private Limited):
 
 IIMLAsset Advisors Private Limited (IAAPL) is in the business of
 providing advice on investments, finance, management and consultancy
 and acts as the India Advisorto two Mauritius based real estate funds
 
 The Income from Operations of IAAPL for the financial year 2010-2011
 was X 305.36 mn. Inclusive of Other Income of X 0.89 mn, the Total
 Income for FinancialYear 2010-2011 wast 306.25 mn. The total Expenses
 of IAAPL fortheyearweret 255.83mn and the resultant
 ProfitafterTaxforthe yearwas X 32.30 mn
 
 IL&FS Investment Advisors LLC:
 
 IL&FS InvestmentAdvisors LLC, Mauritius (HAL) acts as the Investment
 Managerto IL&FS India Realty Fund LLC, IL&FS India Realty Fund II LLC.
 Tara India Fund III LLC, K2 Property Limited and Saffron India Real
 Estate Fund I
 
 The Total Income of HAL for the financial year 2010-2011 was USD 30.90
 mn. The total Expenses of HAL for the year were USD 24.94 mn and the
 resultant Profit after Taxforthe yearwas USD 5.73 mn
 
 DEPOSITS
 
 YourCompany has notaccepted any deposits from the
 publicfortheyearunderconsideration
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The particulars regarding foreign expenditure and earnings appearas
 Item Nos. 8(ii) and 8(iii) respectively, of Schedule 13B to the
 Accounts
 
 Since the Company does not own any manufacturing facility, the other
 particulars in the Companies (Disclosure of Particulars in the Report
 of Board of Directors) Rules, 1988 are not applicable
 
 PERSONNEL
 
 Your Directors wish to place on record their appreciation of the
 services rendered by the employees of the Company at all levels. The
 particulars of the employees as required under Section 217(2A) of the
 Companies Act, 1956 read with Companies (Particulars of Employees)
 Rules, 1975 forms part of the Directors Report for the year ended
 March 31,2011. However, as perthe provisions of Section 219(1)(b)(iv)of
 the Companies Act, 1956, the Directors Report and Accounts are being
 sent to all shareholders of the Company, excluding the statement of
 particulars of employees under Section 217(2A) of the Act. Any
 shareholder interested in obtaining a copy of the said statement may
 write to the Company Secretary at the Registered Office of the Company
 
 DETAILS OF EMPLOYEE STOCK OPTION PLANS
 
 The detailed disclosures as per SEBI (Employee Stock Option Scheme and
 Employee Stock Purchase Scheme) Guidelines, 1999 of the ESOP Schemes of
 the Company are annexed to the Directors Report
 
 DIRECTORSRESPONSIBILITYSTATEMENT
 
 Your Directors wish to state that:
 
 (a) in the preparation of the annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 (b) they had selected such accounting policies and applied them
 consistently and made judgements and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company attheend of the financial yearand of the profitof the
 Company for thatyear;
 
 (c) they had taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 CompaniesAct,1956forsafeguardingtheassetsof the Company and for
 preventing and detecting fraud and otherirregularities;
 
 (d) they had prepared the annual accounts on a going concern basis
 
 ACKNOWLEDGEMENT
 
 Relationship with Members, Investors of the funds under management,
 Reserve Bank of India, Securities and Exchange Board of India, other
 Regulatory authorities, investee companies and our bankers remained
 excellent during the year under review. Your Directors are grateful for
 the support extended by them and lookforward to receiving
 theircontinued support and encouragement
 
                                      For and on behalf of the Board
 
 Place : Mumbai
 
 Date : April 21, 2011                                     S M DATTA
 
                                                            Chairman