1.  We have audited the attached Balance Sheet of INDIABULLS FINANCIAL
 SERVICES LIMITED (the Company) as at March 31, 201 2, 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
 per- form 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 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 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.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 i.  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;
 
 ii.  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;
 
 iii. 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;
 
 iv.  in our opinion, the Balance Sheet, the Statement of Profit and
 Loss 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;
 
 v.  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, 201 2;
 
 (b) in the case of the Statement of Profit and Loss, 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, 2012 taken on record by the Board of 
 Directors, we report that 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.
 
 i.  Having regard to the nature of the Company''s
 business/activities/result, clauses ii, viii and xiii of CARO are not
 applicable.
 
 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) 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. Ac- cording 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 granted loans to five Companies during the year. At
 the year-end, the outstanding balances of such loans granted aggregated
 to Rs. Nil from five Companies and the maximum amount involved during
 the year was Rs.  4,319,150,000 from five 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 receipts of principal amounts and interest have, during the
 year, been regular / as per stipulations.
 
 (d) There are no overdue amounts in excess of Rs. 1 lakh in respect of
 loans granted to companies, firms or other parties listed in the
 Register maintained under Section 301 of the Companies Act, 1956.
 
 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, 1 956, according to the
 information and explanations given to us:
 
 (a) The Company has taken loans from four Companies during the year. At
 the year-end, the outstanding balance of such loan taken aggregated
 Rs. Nil from four Companies and the maximum amount involved during
 the year was Rs.  626,200,000 from four 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, 1956, 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 transaction 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
 dues, including Provident Fund, Employees'' State Insurance,
 Income-Tax, Wealth Tax, Service Tax, Cess and other material statutory
 dues applicable to it with the appropriate authorities.
 
 (b) There were no undisputed amounts pay- able in respect of
 Income-tax, Wealth Tax, Cess and other material statutory dues in
 arrears as at March 31, 2012 for a period of more than six months from
 the date they became payable.
 
 (c) There are no disputed dues payable in respect of Wealth Tax,
 Service Tax and Cess which have not been deposited as on March 31, 201
 2. Details of dues of Income-tax which have not been deposited as on
 March 31, 201 2 on account of disputes are given below:
 
             Nature of    Forum where Dis-      Period to 
                                                which the       Amount
 Statute                                                        involved
             Dues         pute is pending       amount relates 
                                                                 (Rs.)
 
 The         Disallowance Commissioner of       Year ended 
                                                March 31,      33,821,339
 Income-
 Tax Act,    u/s 14A      Income tax 
                         (Appeals)-             2008
 1961                     XV, New Delhi.
 
 The 
 Income-
 Tax        Disallowance  Commissioner of       Year ended 
                                                March 31,      12,301,239
 Act, 1961  u/s14A        Income tax 
                         (Appeals)-             2009
                          XV, New Delhi.
 
 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 pledge 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 dealing in securities,
 debentures and other investments and timely entries have been made
 therein. The aforesaid securities have been held by the Company in its
 own name. During the year, the Company has not dealt in shares.
 
 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, the 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 shares during the
 year to parties and companies covered in the Register maintained under
 Section 301 of the Companies Act, 1956.
 
 xvii.  According to the information and explanations given to us, in
 respect of Secured Redeemable, Non-Convertible Debentures (NCDs) issued
 by the Company during the period covered by our report, the Company has
 issued 25,940 debentures of Face value Rs 1,000,000 each. The Company
 has created security in respect of the debentures issued except, as at
 the year end, the Company was in the process of creating the charge /
 security on assets for 9,430 NCDs of Face value Rs. 1,000,000 each
 amounting to Rs. 9,430,000,000. Subsequent to the year end, the said
 charge has been created.
 
 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 fraud on the
 Company has been noticed or reported during the year.
 
 
                                          For Deloitte Haskins & Sells
 
                                                 Chartered Accountants
 
                                            (Registration No. 11 7366W)
 
                                                          A. Siddharth
 
                                                               Partner
 
                                                (Membership No. 031467)
 
 Mumbai, April 27, 2012