Motilal Oswal Financial Services

We have audited the attached Balance Sheet of MOTILAL OSWAL FINANCIAL
 SERVICES LIMITED as at 31st March, 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
 companys management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 We have 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 misstatements. 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 presentation of
 financial statements.  We believe that our audit provides a reasonable
 basis for our opinion.
 
 As required by the Companies (Auditors Report) Order, 2003 and amended
 by the Companies (Auditors Report) (Amendment) order 2004, issued by
 the Central Government of India in terms of Section 227(4A) of the
 Companies Act, 1956, on the basis of such checks of the books and
 records as we considered appropriate and the information and
 explanations given to us during the course of the audit, we annex
 hereto a statement on the matters specified in paragraphs 4 and 5 of
 the said Order, to the extent they are applicable to the Company.
 
 Further to our comments in the Annexure referred to above, we report
 that:
 
 a) 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.
 
 b) In our opinion proper books of account as required by law have been
 kept by the company so far as appears from our examinations of those
 books.
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account.
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 Cash Flow Statement comply, in all material respect, with the
 accounting standards referred to in sub-section (3C) of section 211 of
 the Companies Act, 1956 to the extent they are applicable to the
 Company.
 
 e) On the basis of the written representations received from the
 directors as on 31st March, 2009 and taken on record by the Board of
 Directors of the Company, we report that none of the directors are
 disqualified as on 31st March, 2009 from being appointed as a director
 in terms of clause (g) of sub-section (1) of section 274 of the
 Companies Act, 1956.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 significant accounting policies and the other 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;
 
 (i) in so far it relates to the Balance Sheet, of the state of affairs
 of the company as at 31st March 2009,
 
 (ii) in so far it relates to Profit and Loss Account, of the profit of
 the company for the year ended on that date.
 
 (iii) in so far it relates to the Cash Flow Statement, of the cash
 flows for the year ended on that date.
 
 ANNEXURE TO AUDITORS REPORT
 
 ANNEXURE REFERRED TO IN PARAGRAPH I OF OUR REPORT OF EVEN DATE TO THE
 MEMBERS OF MOTILAL OSWAL FINANCIAL SERVICES LIMITED ON THE FINANCIAL
 STATEMENT FOR THE YEAR ENDED MARCH 31, 2009
 
 i) a) The Company has maintained proper records showing full
 particulars including guantitative details and situation of fixed
 assets.
 
 b) All the fixed assets were physically verified by the management in
 the previous year in accordance with a planned Programme of verifying
 them once in three years which, in our opinion, is reasonable having
 regard to the size of the company and nature of its assets. As informed
 to us, no material discrepancies were noticed on such verification.
 
 c) Based on the information and explanation given by the management and
 on the basis of audit procedures performed by us, we are of the opinion
 that the Company has not disposed off substantial part of its fixed
 assets during the year.
 
 ii) a) As informed to us, the inventories (shares), which are held in
 dematerialized form, have been verified by the management with the
 supporting evidence during the year. In our opinion, the freguency of
 verification is reasonable.
 
 b) The procedures of verification of inventory (shares) followed by the
 management are reasonable and adeguate in relation to size of the
 company and the nature of its business.
 
 c) On the basis of our examination of the records of inventory
 (shares), we are of the opinion that the Company is maintaining proper
 records of inventory (shares). We are informed that no discrepancies
 were noticed on verification between the dematerialized stocks and the
 book records.
 
 iii) a) As informed to us, the Company has granted unsecured loans to
 its four Subsidiary Companies listed in the register maintained under
 Section 301 of Companies Act, 1956. The maximum amount involved during
 the year is Rs.7063.17 lakhs and the year-end balance of loan granted
 to subsidiaries was Rs.5.88 lacs.
 
 b) In our opinion and according to the information and explanation
 given to us, the rate of interest and other terms and condition for
 such loans are not prima facie prejudicial to the interest of the
 company.
 
 c) The loans given are repayable on demand and company has received the
 principal amount and interest accordingly.
 
 d) Since there is no stipulation as regards repayment schedules clause
 4 (iii) (d) is not applicable.
 
 e) As informed to us, the Company has not taken any loan, 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 (iii) are not applicable.
 
 iv) In our opinion and according the information and explanation given
 to us, there are adeguate internal control procedures commensurate with
 the size of the Company and nature of its business with regard to
 purchase of fixed asset and inventory (securities) and sales of
 services. During the course of audit, we have not observed any
 continuing failure to correct major weaknesses in internal controls.
 
 v) a) According to the information and explanation given to us, we are
 of the opinion that the particulars of contract or arrangement referred
 to in section 301 of the Companies Act 1956 that need to be entered
 into the register maintained under that section have been so entered.
 
 b) In our opinion and according to the information and explanation
 given to us, the transactions made in pursuance of such contracts or
 arrangement exceeding value of rupee five lakhs have been entered into
 during the financial year at prices which are reasonable having regard
 to the prevailing market price at the relevant time.
 
 vi) During the year the Company has not accepted any public deposit
 conseguently clause 4 (vi) is not applicable.
 
 vii) In our opinion, the Company has an adeguate internal audit system
 commensurate with the size of the Company and nature of its business.
 
 viii) The company belongs to the service sectors industry therefore
 clause 4(viii) is not applicable.
 
 ix) a) According to the records of the Company and according to the
 information and explanations provided to us, the Company has been
 regular in depositing undisputed statutory dues including Provident
 Fund, Investor Education and Protection Fund, Employee state insurance,
 Income Tax, Sales Tax, Wealth Tax, Service Tax, Cess and other material
 statutory dues applicable to it, with the appropriate authorities.
 
 b) According to the information and explanations given to us, there are
 no undisputed amounts payable in respect of Provident Fund, Investor
 Education Protection Fund, Employee state insurance, Income tax, Wealth
 Tax, Service Tax, Sales Tax, Cess and other material statutory dues
 which are outstanding as at March 31, 2009 for the period of more than
 six months from the date they become payable
 
 c) According to the information and explanations given to us, there are
 no dues of Income tax, Sales tax, Wealth tax, Service tax, cess which
 have not been deposited on account of any disputes.
 
 x) The Company has been registered for less than five years.
 Consequently clause 4(x) is not applicable.
 
 xi) Based on our audit procedures and as per the information and
 explanation given to us we are of the opinion that company has not
 defaulted in the repayment of dues to a financial institution, banks,
 or debenture holder.
 
 xii) Based on our examination of documents and records, 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 nidhi/ mutual
 benefit fund/ society therefore clause 4(xiii) is not applicable.
 
 xiv) Based on our audit procedures and according to the information and
 explanation provided to us by the management, we are of the opinion
 that the Company has maintained proper records in respect of the
 trading transactions and contracts of shares, securities, debentures
 and other investment. Also, the Company has accounted such transaction
 on date of transactions further, the investments have been held by the
 Company in its own name.
 
 xv) According to the information and explanations given to us, the
 Company has given guarantee of Rs. 4.7 crores for bank guarantee taken
 by one of the subsidiary companies, from banks, the terms and
 conditions thereof, in our opinion, are not prejudicial to the interest
 of the Company.
 
 xvi) The company has not raised any term loan during the year therefore
 clause 4 (xvi) is not applicable.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet and cash flow of the
 company, prima facie no fund raised on short term basis have been used
 for long term investment.
 
 xviii) The company has not made any preferential allotment of shares to
 parties and companies covered in the registers maintain under section
 301 of the Companies Act, 1956.
 
 xix) According to the information and explanations given to us, during
 the period covered by our audit report, the company had issued 75
 debentures of Rs.1 crore each. Debentures issued were unsecured. All
 the above debentures have been redeemed during the year.
 
 xx) During the year company had not raised any money by way of Public
 Issue.
 
 xxi) Based upon the audit procedures performed and the information and
 explanations provided to us by the management, we report that no fraud
 on or by the company has been noticed or reported during the course of
 our audit.
 
 
                                                 For HARIBHAKTI & CO.,
                                               Chartered Accountants
 
                                                        Rakesh Rathi
                                                             Partner
                                               Membership No. 045228
 
 Place: Mumbai
 Date: 11th May, 2009