1.  We have audited the attached Balance Sheet of Indiabulls Financial
 Services 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, both 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.
 
 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 misstatement. 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 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 (Auditors Report) Order, 2003 (CARO)
 issued by the Central Government of India in terms of Section 227(4A)
 of the Companies Act, 1 956, 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 Profit and Loss Account 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, 1 956;
 
 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:
 
 (a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 (b) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (c) 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, 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 Companies Act, 1956.
 
 Annexure to the Auditors Report
 (Referred to in paragraph 3 of our report of even date)
 
 i.  Having regard to the nature of the Companys
 business/activities/result, clauses ii, viii, xiii 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 fixed assets.
 
 (b) Some of the fixed assets were physically verified during the year
 by the Management in accordance with a 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 under
 Section 301 of the Companies Act,l 956, according to the information
 and explanations given to us:
 
 (a) The Company has granted loans to Eleven Companies. At the year-end,
 the outstanding balances of such loans granted aggregated to Rs.
 40,150,000 from four Companies and the maximum amount involved during
 the year was Rs. 5,458,420,000 from eleven Companies.
 
 (b) The rate of interest and other terms and conditions of such loans,
 wherever stipulated, are, in our opinion, prima facie not prejudicial
 to the interests of the Company.
 
 (c) The receipt of principal amounts and interest on loans classified
 as non-performing asset / doubtful / bad loans, if any, are as
 stipulated under the Non Banking Financial (Non - Deposit Accepting or
 Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007. In
 respect of other loans, the receipts of principal amounts and interest
 have, during the year, been regular / as per stipulations.
 
 (d) In respect of overdue amounts exceeding Rs.l lakh remaining
 outstanding as at the year-end, the Management has taken reasonable
 steps for the recovery of the overdue principal amount.
 
 In respect of loans, secured or unsecured, taken by the Company from
 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 taken loans from six Companies during the year. At
 the year-end, the outstanding balance of such loan taken aggregated Rs.
 626,200,000 from four Companies and the maximum amount involved during
 the year was Rs. 1,420,000,000 from six Companies.
 
 (b) The rate of interest and other terms and conditions of such loans,
 wherever stipulated, are, in our opinion, prima facie not prejudicial
 to the interests of the Company.
 
 (c) The payments of principal amounts and interest in respect of such
 loans are regular / as per stipulations.
 
 iv In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased are of special nature and suitable alternative sources are
 not readily available for obtaining comparable quotations, there is an
 adequate internal control system commensurate with the size of the
 Company and the nature of its business with regard to purchases of
 fixed assets and the sale of services. There were no transactions in
 respect of purchase of inventory and sale of goods during the year.
 During the course of our audit, we have not observed any major weakness
 in such internal control system.
 
 v.  In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act 1 956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to in Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transactions is in excess of Rs. 5 lakhs in
 respect of any party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time except that in respect of certain purchase
 and sale of services, for which comparable quotations are not available
 and in respect of which we are unable to comment.
 
 vi.  According to the information and explanations given to us, the
 Company has not accepted any deposit from the public during the year
 within the meaning of Section 58A and 58AA or any other relevant
 provisions of the Companies Act, 1956.
 
 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 the information and explanations given to us, in
 respect of Statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 statutory dues, including Provident Fund, Employees State Insurance,
 Income-Tax, Wealth Tax, Service Tax, Cess and any other material
 statutory dues with the appropriate authorities. During the year, there
 were no dues payable in respect of Investor Education and Protection
 Fund, Sales tax, Custom Duty and Excise Duty.
 
 (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 as at March 31, 2011 for a period of more than six
 months from the date they became payable.
 
 (c) There are no disputed dues payable in respect of Sales Tax, Wealth
 Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been
 deposited as on March 31, 2011. Details of dues of Income-tax which
 have not been deposited as on March 31, 2011 on account of disputes is
 given below:
 
 Statute    Nature of       Forum where       Period to     Amount
               Dues          Dispute is       which the    involved
                               pending        amount         (Rs.) 
                                              relates
 
 Income     Disallowance    Commissioner        Year       33,821,339
 Tax, 1961     u/s 14A      of Income tax      Ended
                            (Appeals)-XV,     March 31, 
                              New Delhi.       2008
 
 
 ix.  The Company does not have any accumulated losses as at the end of
 the financial year. The Company has not incurred cash losses in the
 financial year covered by our audit and the immediately preceding
 financial year.
 
 x. In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks, financial institutions and debenture holders.
 
 xi.  In our opinion the Company has maintained adequate records where
 it has granted loans and advances on the basis of security by way of
 pledge of shares. The Company has not granted loans and advances on the
 basis of security by way of debentures and other securities.
 
 xii.  Based on our examination of the records and evaluation of the
 related internal controls, the Company has maintained proper records of
 the transactions and contracts in respect of its other investments and
 timely entries have been made therein. The aforesaid securities have
 been held by the Company in its own name, except to the extent of the
 exemption granted under Section 49 of the Companies Act, 1956. During
 the year, the Company has not dealt in shares, securities and
 debentures.
 
 xiii.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks, are not prima facie
 prejudicial to the interests of the Company. During the year, the
 Company has not provided guarantees for loans taken by others from
 financial institutions.
 
 xiv.  In our opinion and according to the information and explanations
 given to us, term loans have been applied for the purposes for which
 they were obtained, other than temporary deployment pending
 application.
 
 xv.  According to the information and explanations given to us, and on
 the basis of the maturity profile of assets and liabilities with a
 residual maturity of one year, as given in the Asset Liability
 Management report, funds raised on short term basis have, prima facie,
 not been used during the year for long term investment.
 
 xvi.  According to the information and explanations given to us, the
 Company has not made any preferential allotment of shores during the
 year to parties and companies covered in the Register maintained under
 Section 301 of the Companies Ad, 1956.
 
 xvii.  According to the information and explanations given to us, in
 respect of Redeemable, Non- Convertible Secured Debentures issued by
 the Company during the period covered by our report, the Company has
 issued 30,775 debentures of Rs. 1,000,000 each. The Company has created
 security in respect of the debentures issued except, in case of 4,100
 debentures of Rs. 1,000,000 each, for which as per the information and
 explanations given to us, the Company is in the process of creating
 security in respect of such debentures issued.
 
 xviii.  The Company has not raised any money by way of public issues
 during the year.
 
 xix.  To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no material fraud
 on the Company has been noticed or reported during the year.
 
 
                                        For Deloitte Haskins & Sells
 
                                               Chartered Accountants 
 
                                         (Registration No. 11 7366W)
 
 
 
                                                        K. A. Katki
         
                                                            Partner 
 Mumbai, April 22, 2011                     (Membership No. 038568)