Indiabulls Real Estate

1) We have audited the attached Balance Sheet of Indiabulls Real Estate
 Limited (the Company) as at March 31,2008, the Profit and Loss
 Account and the Cash Flow Statement 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 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 disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by 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 issued
 by the Central Government of India in terms of sub-section (4A) of
 Section 227 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 above, we report
 that:
 
 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 appears from our examination of
 those books;
 
 iii) the balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv) in our opinion, the balance sheet, profit and loss account and cash
 flow statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 v) on the basis of written representations received from Directors as
 on March 31,2008 and taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on March 31,2008
 from being appointed as a Director in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956;
 
 vi) 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 31,2008;
 
 b) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 c) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 Annexure Auditors Report
 
 1) In our opinion and according to the information and explanations
 given to us, the nature of the Companys business / activities during
 the year are such that clauses (ii), (viii), (x), (xii), (xiii), (xiv)
 and (xix) are not applicable to the Company.
 
 2) In respect of Fixed Assets
 
 a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 b) 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) During the year, the Company has not disposed off any of the fixed
 assets.
 
 3) In respect of loans, secured or unsecured, granted or taken by the
 Company to or 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 granted loans to six companies. At the year-end, the
 outstanding balances of such loans granted aggregated to Rs. 11,351,000
 from three companies and the maximum amount involved during the year
 was Rs. 7,779,568,148 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 interest of the Company.
 
 c) The receipt 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.
 
 e) According to the information and explanations given to us, the
 Company has not taken loans from any of the companies, firms or other
 parties covered in the register maintained under Section 301 of the
 Companies Act, 1956.
 
 4) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of Fixed Assets and for the sale of services and we have not
 observed any continuing failure to correct major weaknesses in such
 internal controls. There were no transactions in respect of purchase of
 inventory and sale of goods during the year.
 
 5) 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 Section 301
 that needed to be entered into the register, maintained under the said
 section have been so entered.
 
 b) According to the information and explanations given to us, where
 each of such transactions, (excluding loans reported in Paragraph 3
 above), 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.
 
 6) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from public
 within the meaning of Section 58A and 58AA or any other relevant
 provisions of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules, 1975, with regard to the deposits accepted from the
 public. No order has been passed by the Company Law Board or National
 Company Law Tribunal or Reserve Bank of India or any Court or any other
 Tribunal.
 
 7) 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.
 
 8) According to the information and explanations given to us, in
 respect of Statutory dues:
 
 a) The Company has been regular in depositing undisputed statutory
 dues, including Provident Fund, Employees State Insurance, Income Tax,
 Wealth Tax and Service Tax and any other material statutory dues with
 the appropriate authorities during the year. During the year there were
 no dues payable in respect of Investor Education and Protection Fund,
 Sales Tax, Custom Duty, Excise Duty and Cess. Further, since the
 Central Government has till date not prescribed the amount of Cess
 payable under Section 441 A of the Companies Act, 1956, we are not in a
 position to comment upon the regularity or otherwise of the Company in
 depositing the same.
 
 b) During the year there were no disputed dues payable in respect of
 Sales Tax, Income Tax, Customs duty, Wealth Tax, Service Tax, Excise
 duty and Cess.
 
 9) 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. There are no loans from financial institutions and unsecured
 debenture holders.
 
 10) 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 and financial
 institutions, are not prima facie prejudicial to the interests of the
 Company.
 
 11) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were applied by the Company during the year for
 the purposes for which the loans were obtained.
 
 12) According to the information and explanations given to us, and on
 an overall examination of the Balance Sheet of the Company, funds
 raised on short-term basis have, prima facie, not been used during the
 year for long-term investment.
 
 13) According to the information and explanations given to us, the
 price at which the Company has made preferential allotment of shares to
 parties and companies covered in the Register maintained under Section
 301 of the Companies Act, 1956, is not prima facie prejudicial to the
 interests of the Company.
 
 14) We have verified the end use of money raised by way of Public Issue
 as disclosed in the Notes to the Financial Statements.
 
 15) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 was noticed or reported during the year.
 
                                            For Ajay Sardana Associates
                                                  Chartered Accountants
 
                                                           Ajay Sardana
                                                                Partner
 Mumbai, May 12,2008                              Membership No. 089011