We have audited the attached balance sheet of Reliance Capital Limited
 (''the Company''), as at March 31, 2011, the profit and loss account and
 the cash flow statement of the Company for the year ended on that date,
 annexed thereto. These financial statements are the responsibility of
 the Company''s management.  Our responsibility is to express an opinion
 on these financial statements based on our audit.
 
 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 from material misstatement. An audit also 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.
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 (''the
 Order'') as amended, issued by the Central Government of India in terms
 of sub-section (4A) of Section 227 of the Companies Act, 1956 (''the
 Act''), we enclose in the Annexure a statement on the matters specified
 in paragraphs 4 and 5 of the said order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 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 purpose 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 examination of the
 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, 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 Act.
 
 e) on the basis of 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 of the Company are disQualified as at
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Act;
 
 f) in our opinion and to the best of our information and according to
 explanations given to us, the said financial statements together with
 the notes thereon, 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:
 
 (i) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 (ii) in the case of the profit and loss account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the cash flow statement, of the cash flow of the
 Company for the year ended on that date.
 
 Annexure to Auditors'' Report (Referred to in our report of even date)
 (i) 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) The Company has a program of physical verification of its fixed
 assets by which all fixed assets are verified in a phased manner over a
 period of three years. In accordance with this program, certain fixed
 assets were verified during the year and no material discrepancies were
 noticed on such verification. In our opinion, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its assets.
 
 (c) As per information and explanation given to us, during the year,
 the Company has not disposed off any substantial part of fixed assets
 that would affect the going concern.
 
 (ii) The Company is a service company, primarily engaged in lending and
 investing activities. Accordingly, it does not hold any physical
 inventories. Thus, paragraph 4 (ii) of the Order is not applicable to
 the Company.
 
 (iii) According to the information and explanations given to us, the
 Company has neither granted nor taken any loan secured/unsecured
 to/from companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956. Accordingly,
 provisions of clauses (iii) (a) to (iii)(g) of paragraph 4 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 with regard
 to purchase of fixed assets and with regard to sale of services. In our
 opinion and according to the information and explanations given to us,
 there is no continuing failure to correct major weaknesses in internal
 control system.
 
 (v) According to the information and explanations given to us, there
 are no contracts or arrangements referred to in section 301 of the
 Companies Act, 1956 that need to be entered in the register required to
 be maintained under that section. Accordingly, clause (v) of the Order
 is not applicable to the Company.
 
 (vi) The Company has not accepted deposits from public hence directives
 issued by the Reserve Bank of India and the provisions of Section 58A
 and 58 AA or any other relevant provisions of the Act, and rules framed
 there under are not applicable for the year under audit.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 (viii) According to the information and explanations given to us, The
 Central Government has not prescribed maintenance of cost records under
 Section 209(1) (d) of the Act, in respect of activities carried on by
 the Company. Hence the provisions of clause 4 (viii) of the Order is
 not applicable to the Company.
 
 (ix) (a) According to the records of the Company, the Company has been
 generally regular in depositing with appropriate authorities undisputed
 statutory dues including Investor Education Protection Fund,
 Income-tax, Sales-tax, Wealth tax, Service Tax, Custom Duty, Excise
 Duty and other material statutory dues, as applicable, except in case
 of Professional Tax and Provident Fund in which cases there were a few
 delays in payment of the said dues. There were no dues on account of
 Cess under section 441A of the Companies Act ,1956, since the date from
 which the aforesaid section comes into force has not yet been notifed
 by the Central Government According to the information and explanations
 given to us, there are no undisputed amounts payable outstanding as at
 March 31, 2011 for a period of more than six months from the date they
 became payable.
 
 (b) According to the information and explanation given to us, there are
 no such statutory dues, which have not been deposited on account of any
 dispute, except in respect of sales tax under Gujarat Sales Tax Act,
 1969 of Rs. 4,75,916 for the period 2001-02 which is pending before the
 Gujarat Sales Tax Tribunal, Ahmedabad and sales tax under Madhya
 Pradesh Sales Tax Act, 1969 of Rs. 4,30,472 for the period 1996-97 which
 is pending before Appellate Deputy Commissioner of the Commercial Tax,
 Indore Division - I .
 
 (x) The Company neither has accumulated losses nor has it incurred any
 cash losses during the current financial year and in the immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and the information and explanation
 given by management, we are of the opinion that the Company has not
 defaulted in repayment of dues to a financial institution, bank or
 debenture holders.
 
 (xii) In our opinion and according to the information and explanations
 given to us, adequate documents and records have been maintained by the
 Company in respect of loans and advances granted 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, a nidhi or a
 mutual benefit society/society. Therefore, the provisions of clause 4
 (xiii) of the Order is not applicable to the Company.
 
 (xiv) The Company has maintained proper records of transactions and
 contracts in respect of trading in shares, securities, debentures, and
 other investments and timely entries have been made therein. All
 shares, securities, debentures and other investments have been held by
 the Company in its own name except certain securities which are kept as
 collateral security for margin requirement on behalf of its
 subsidiaries.
 
 (xv) The Company has given guarantees for loans taken by others from
 banks or financial institutions. According to the information and
 explanations given by the management, in our opinion the terms and
 conditions of the guarantees given by the Company for loans taken by
 others from banks or financial institutions are not prejudicial to the
 interest of the Company.
 
 (xvi) According to the information and explanation given to us, the
 term loans taken by the Company have been applied for the purpose for
 which they were raised except in few cases where the loans have been
 taken towards the year end the amounts of which are lying in bank
 accounts and were subsequently utilized for the purpose for which loans
 have been taken.
 
 (xvii) According to information and explanation given to us and on an
 overall examination of the Balance Sheet of the Company as at March 31
 2011, no funds raised on short- term basis have been used for long-term
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 during the year to a company, covered in the register maintained under
 Section 301 of the Act.
 
 (xix) The Company has created securities and /or charges in respect of
 secured debentures issued and redeemed during the year except in case
 of Non Convertible Debentures amounting to Rs. 416 crore for which the
 Company is in the process of creation of securities.
 
 (xx) The Company has not raised any money by way of public issue during
 the year.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 For CHATURVEDI & SHAH                         For B S R & Co.
 
 Chartered Accountants                  Chartered Accountants
 
 Firm Reg. No.: 101720W                Firm Reg. No.: 101248W
 
 Lalit R. Mhalsekar                              Akeel Master
 
 Partner                                              Partner
 
 Membership No.: 103418                Membership No.: 046768
 
 Mumbai                                                Mumbai
 
 Dated: May 30, 2011                      Dated: May 30, 2011