1.  We have audited the attached Balance Sheet of MOTILAL OSWAL
 FINANCIAL SERVICES LIMITED (the Company) as at March 31, 2011 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 by the Companies (Auditors Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of The Companies Act, 1956 of India (the Act) and on
 the basis of such checks of the books and records of the Company as we
 considered appropriate and according to the information and
 explanations given to us, we give 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 paragraph 3 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 the written representations received from the
 directors, as on March 31, 2011, and 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 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, 2011;
 
 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 Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO AUDITORS REPORT
 
 Referred to in paragraph 3 of the Auditors Report of even date to the
 members of MOTILAL OSWAL FINANCIAL SERVICES LIMITED on the financial
 statements for the year ended March 31, 2011
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets of the Company have been physically verified by
 the management during the year and no material discrepancies between
 the book records and the physical assets have been noticed. In our
 opinion, the frequency of verification is reasonable.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 (ii) (a) As informed to us, the inventories (shares) which are held in
 dematerialized form, have been verified by the management. In our
 opinion, the frequency of verification is reasonable.
 
 (b) The procedures of verification of inventories (shares) followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory (shares). We
 are informed that no material discrepancies were noticed on physical
 verification between the dematerialised stocks and the book records.
 
 (iii) (a) The Company has granted unsecured loan to seven subsidiary
 companies covered in the register maintained under Section 301 of the
 Companies Act, 1956. The maximum amount involved during the year was
 Rs. 866,189.58 (in thousands) and the year-end balance of loans granted
 to such parties was Rs. Nil.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (c) The loans are repayable on demand and whenever the loans are called
 for the Company has received the principal amount and interest
 accordingly.
 
 (d) Since there is no stipulation as regards repayment schedule, clause
 4(iii)(d) is not applicable.
 
 (e) As informed, the Company has not taken any loans, secured or
 unsecured from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Consequently sub-clause (f) and (g) of clause 4(iii) are not
 applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there exists an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory (shares) and fixed assets
 and for the sale of service. During the course of our audit, we have
 not observed any continuing failure to correct major weakness in
 internal control system of the Company.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of contracts or arrangements
 referred to in Section 301 of the Companies Act, 1956 that need to be
 entered into the register maintained under Section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 thereunder.
 
 (vii) In our opinion, the Company has an adequate internal audit system
 commensurate with the its size and nature of its business.
 
 (viii) Since the Company is engaged in service sector, clause 4(viii)
 in respect of maintenance of Cost records is not applicable to Company.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, employees state insurance,
 income-tax, wealth-tax, service tax, customs duty, cess and other
 material statutory dues applicable to it. As explained to us, the
 provisions regarding sales-tax and excise duty are presently not
 applicable to the Company.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441A 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) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, customs duty, cess and other undisputed
 statutory dues were outstanding, at the year end, for a period of more
 than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, wealth-tax, service tax, customs duty, and cess on account
 of any dispute, are as follows:
 
 Name of the statute        Nature of dues           Amount
                                                   (Rs. in Thousands)       
 
 Income Tax Act, 1961         Income Tax               Rs. 656.17 
 
 
 Name of the statute        Period to which the      Forum where
                             amount relates         dispute is pending
 
 Income Tax Act, 1961          A.Y. 2007-08           CIT (Appeal)
 
 
 
 (x) There are no accumulated losses as at March 31, 2011. Further, the
 Company has not incurred cash losses during the financial year covered
 by our audit and the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to a
 financial institution, bank or debenture holders.
 
 (xii) We are of the opinion that the Company has maintained adequate
 records where the Company has granted loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) According to the information and explanation given to us, we are
 of the opinion that the Company has maintained proper records in
 respect of trading transactions and contracts of shares, securities,
 debentures and other investments and timely entries have been made
 therein. Further, the investments have been held by the Company, in its
 own name.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantee given by the
 Company, for one of its subsidiaries for obtaining loan from banks or
 financial institutions during the year, is not prejudicial to the
 interest of the Company.
 
 (xvi) The Company has not obtained any term loans.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that funds amounting to Rs. 155,443.26 (in thousands) raised on
 short-term basis have been used for long-term investment. The Companys
 short term liabilities and provisions are increased to the extent of
 the stated amount. In the absence of relevant details, we are unable to
 comment upon their utilisation.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties and companies covered in the register maintained under
 Section 301 of the Act.
 
 (xix) According to the information and explanations given to us, during
 the year the Company had issued and redeemd unsecured non convertible
 debentures.
 
 (xx) During the year, the Company has not raised any money by way of
 public issue.
 
 (xxi) During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
 
                                                 For Haribhakti & Co.
                                                Chartered Accountants
                                      Firms Registration No. 103523W
 
 
                                                         Rakesh Rathi
                                                              Partner
                                                 Membership No. 45228
 
 
 Place: Mumbai 
 Date : April 30, 2011