JM Financial

1.  We have audited the attached balance sheet of JM FINANCIAL LIMITED
 as at March 31,2009 and also 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 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 (as
 amended) (hereinafter referred to as the Order) issued by the Central
 Government in terms of Section 227 (4A) of the Companies Act, 1956,
 (hereinafter referred to as the Act) 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 it 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 Section 211 (3C) of the Act;
 
 v.  On the basis of the written representations received from the
 directors as on March 31,2009 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31,2009 from being appointed as a director in terms of Section
 274( I )(g) of theAct.
 
 vi. Without qualifying our report, we draw attention to note 12 of Part
 II of Schedule N, regarding provision for Directors commission of Rs.
 45 lakh for the previous year and managerial Remuneration of Rs. 36
 lakh (previous year-Nil) made in the accounts, which is in excess of
 the limits prescribed by the Act but payment whereof is not made
 pending the approval of Central Government.
 
 vii. 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 Act 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 31,2009;
 
 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 cash flow statement, of the cash flows of the Company
 for the year ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date of JM
 FINANCIAL LIMITED as at March 31, 2009
 
 I) According to the information and explanations given to us and in
 view of the nature of activities carried on as also having regard to
 the transactions entered into by the Company, clauses 4 (ii) relating
 to inventories,4(viii) relating to cost records, 4(xiii) relating to
 chit company/nidhi company,4(xiv) relating to dealing in or trading in
 shares, 4(xvi) relating to end use of term loan and 4(xx) relating to
 use of funds of public issue of the Order are not applicable to it.
 
 ii) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets have been physically verified by management at
 reasonable intervals. As informed, no material discrepancies were
 noticed on such verification.
 
 (c) The Company has not disposed off substantial part of its fixed
 assets during the year.
 
 iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to/from the companies, firms, or other parties covered in
 the register maintained under Section 301 of the Act, Hence clause 4
 (iii)(b) to (g) of the Order are not applicable to the Company.
 
 iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of fixed assets and sale of securities. During the course of
 audit, no major weakness has been noticed in the internal control
 system in respect of these areas.
 
 v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of all contracts or
 arrangements that need to be entered into the register maintained under
 Section 301 of theAct have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, there were no transaction exceeding Rupees Five Lakh in
 respect of any party during the year in pursuance of contracts or
 arrangements that need to be entered in the Register maintained under
 section 301 of the Act.
 
 vi) In our opinion and according to the information and explanations
 given to us, no deposits from the public within the meaning of Reserve
 Bank of India Directives and Sections 58A, 58AA or any other relevant
 provisions of the Act and the rules framed there under, have been
 accepted by the Company. We are informed by the management that no
 order has been passed by the Company Law Board, National Company Law
 Tribunal or Reserve Bank of India or any court or any other Tribunal.
 
 vii) In our opinion, the Company has internal audit system which is
 commensurate with the size of the Company and the nature of its
 business.
 
 viii) (a) The Company is regular in depositing undisputed Provident
 Fund, Employees State Insurance, Income Tax, Service Tax, Cess and
 Investors Education and Protection Fund with appropriate authorities
 and there are no arrears thereof as at March 3 1,2009 for a period of
 more than six months from the date they become payable. We are informed
 that statutory dues like Sales Tax, Custom Duty, Excise Duty and other
 statutory dues are not applicable to the Company.
 
 (b) According to the information and explanations given to us, there
 are no outstanding dues of Provident Fund, Employees State Insurance,
 Income Tax, Wealth Tax and Service Tax not deposited on account of any
 dispute.
 
 ix) The Company has no accumulated losses at the end of the financial
 year and it has not incurred any cash losses in the current and
 immediately preceeding financial year.
 
 x) Based on our audit procedures and as per the information and
 explanations given to us, we are of the opinion that the Company has
 not defaulted in repayment of dues to financial institutions or banks.
 
 xi) According to the information and explanations given to us and based
 on the documents and records produced to us, the Company has not
 granted any loans and advances on the basis of security byway of pledge
 of shares, debentures and other securities.
 
 xii) According to the information and explanations given to us, the
 Company has not given guarantee for loans taken by others from banks or
 financial institutions except for a subsidiary amounting to Rs. 42.50
 crore.the terms and condition of which are not prima facie prejudicial
 to the interest of the Company.
 
 xiii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short term basis have been used for long term
 investment.
 
 xiv) The Company has not made preferential allotment of shares to
 parties or companies covered in the register maintained under Section
 301 of the Act.
 
 xv) According to the information and explanations given to us, no
 debentures have been issued during the year.
 
 xvi) During the course of our examination of the books and records of
 the Company, carried out in accordance with the auditing standards
 generally accepted in India, we have neither come across any instances
 of fraud on or by the Company, noticed or reported during the course of
 our audit nor have we been informed of such case by the management.
 
                               For and on behalf of
                               Khimji Kunverji & Co
 
                               Chartered Accountants
 
                               Shivji K.Vikamsey
 
                               Partner
 
                               Membership No. 2242
 Place: Mumbai
 
 Date: July 6, 2009