Indiabulls Securities

1.  We have audited the attached Balance Sheet of Indiabulls Securities
 Limited (the Company) as at March 31,2008, the Profit and Loss
 Account and also 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) the difference between the amount to be issued as equity share
 capital and the book value of net assets taken over amounting to Rs.
 185,582,833 has been debited to Capital Redemption Reserve of the
 company, pursuant to the Composite Scheme of Arrangement as sanctioned
 by the Honourable High Court of Judicature at New Delhi, as is
 explained in Note B 2 of Schedule O of Notes to the Financial
 Statements. Having regards to this, in our opinion and to the best of
 our information and according to the explanations given to us, the said
 accounts, read with the significant accounting policies and notes
 thereon, 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.
 
 Indiabulls Securities Limited
 
 1) In our opinion and according to the information and explanations
 given to us, the nature of the Companys business / activities during
 the year is such that clauses ii, viii, xiii, xviii, xix, xx of the
 Companies (Auditors Report) Order, 2003 are not applicable to the
 Company.
 
 2) 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.  Verification of fixed assets is being conducted in a phased program
 by the management designed to cover all assets over a period of three
 years, which in our opinion is reasonable having regard to the size of
 the Company and the nature of assets. According to the information and
 explanations given to us no material discrepancies were noticed on such
 verification.
 
 c.  Although some part of the fixed assets have been disposed off
 during the year, in our opinion and according to the information and
 explanations given to us, the ability of the Company to continue as a
 going concern is not affected.
 
 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 not granted any loans to any company, firm or other
 party covered in the register maintained under section 301 of the
 Companies Act, 1956. Accordingly sub clauses (a), (b), (c) and (d) of
 clause (Hi) of the Order are not applicable.
 
 b.  The company has taken unsecured loans from three companies. As at
 the year end the outstanding balances of such loans taken aggregated to
 Rs. 1,810,000,000 from three companies and the maximum amount involved
 during the year was Rs. 18,040,000,000.
 
 c.  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.
 
 d.  The payment of principal amount and interest in respect of such
 loans are regular/ as per stipulations.
 
 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 those mentioned in Para 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, except
 that in respect of purchase and sale of services, no comparison of
 prices could be made as the Company informed us that there are no
 prevailing market prices / alternate sources of supply. There were no
 transactions in respect of purchase and sale of goods and materials.
 
 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 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 function 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, Income Tax, Service Tax, Wealth Tax 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, Employees State Insurance, 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 Aof 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 are no disputed dues payable in respect of
 Sales tax, Income tax, Customs Duty, Wealth Tax, Excise Duty, Service
 Tax and Cess.
 
 9) The Company does not have any accumulated losses. The Company has
 not incurred cash losses during the financial year covered by our audit
 and the immediately preceding financial year.
 
 10) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the payment of dues to
 banks. The Company has not obtained any borrowings either from
 Financial institutions or by way of debentures.
 
 11) In our opinion the Company has not granted loans and advances on
 the basis of security, pledge of shares, and other securities or by way
 of debentures.
 
 12) Based on our examination of the records and evaluation of the
 related internal controls, the Company has maintained proper records of
 transactions and contracts in respect of its dealing in shares,
 securities, and 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. There were no transactions with respect
 to debentures.
 
 13) In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks and financial institution.
 
 14) 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, prima-facie applied by the Company during
 the year for the purposes for which the loans were obtained, other than
 temporary deployment pending application.
 
 15) 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.
 
 16) 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 year.
 
                                       For Deloitte Haskins & Sells
                                            Chartered Accountants
 
                                                 K.A. Katki
                                                   Partner
 Mumbai, April 28,2008                       Membership No.038568