Financial Technologies (India) Ltd

To the Shareholders of Financial Technologies (India) Limited

1. We have audited the attached Balance Sheet of Financial Technologies (India)Limited as at 31st March, 2010, the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date, both annexed thereto. Thesefinancial statements are the responsibility of the Company’s Management. Ourresponsibility 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 inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the Management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, issued by theCentral Government in terms of Section 227 (4A) of the Companies Act, 1956, we enclose inthe Annexure, a statement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4. Without qualifying our report, we invite attention to the following notes toSchedule 15-II of the financial statements:

1. Note 5 regarding the treatment of (a) cancellation of investments in 562,460,000equity shares of MCX-Stock Exchange Limited ('MCX-SX') aggregating Rs. 562,460,000/- and(b) issuance of 562,460,000 transferable warrants to the Company, both pursuant to a courtapproved composite scheme of 'Reduction cum Arrangement' between MCX-SX and itsshareholders (including the Company). As stated in the note, the Company has obtainedindependent legal / tax counsels' opinion that no tax liability arises on the reductioncum arrangement and has accordingly not quantified the same. On that basis no taxliability is recognised in respect thereof.

2. Note 24 regarding investments in certain subsidiaries and joint venture companyaggregating Rs. 9,238,186,235/- and loans and advances / debtors aggregating Rs.286,620,649/- due from some of these entities which have continuing losses (share ofcumulative losses Rs. 2,519,229,714/-) against which provision for diminution of Rs.569,026,000/- is considered adequate based on their business plans and other reasons asstated in the said note.

5. 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 ourknowledge 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 theCompany so far as it appears from our examination of those books;

c. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;

d. In our opinion and read with paragraph 4 above, the Balance Sheet, the Profit andLoss Account and the Cash Flow Statement dealt with by this report are in compliance withthe Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

e. In our opinion and to the best of our information and according to the explanationsgiven 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 accountingprinciples generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2010;

ii. in the case of the profit and loss account, of the profit of the Company for theyear ended on that date; and

iii. in the case of the Cash Flow Statement, of the cash flows of the Company for theyear ended on that date.

6. On the basis of written representations received from the directors, as on 31stMarch, 2010 and taken on record by the board of directors, we report that none of thedirectors is disqualified as on 31st March, 2010 from being appointed as a director interms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

i) In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets.

b) The fixed assets of the Company are physically verified by the Management accordingto a phased programme designed to cover all items over a period of two years, which in ouropinion, is reasonable having regard to the size of the Company and nature of its assets.Pursuant to the programme, a portion of the fixed assets of the Company has beenphysically verified by the management during the year and no material discrepancies werenoticed on such verification as compared with the records of fixed assets maintained bythe Company.

c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company and such disposal has, in our opinion,not affected the going concern status of the Company.

ii) In respect of its inventory:

a) In our opinion, verification of inventories has been carried out at reasonableintervals by the management during the year.

b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification. There are no closing inventories.

iii) The Company has neither granted nor taken any loans, secured or unsecured, to/fromcompanies, firms or other parties listed in the Register maintained under Section 301 ofthe Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us, thereis an internal control system commensurate with the size of the Company and nature of itsbusiness for purchase of inventory and fixed assets and sale of goods and services.

v) In respect of contracts and arrangements entered in the register maintained inpursuance of Section 301 of the Companies Act 1956:

a) To the best of our knowledge and belief and according to the information andexplanations given to us, particulars of contracts or arrangements that needed to beentered into the register maintained under the said section have been so entered.

b) According to information and explanations given to us, where the transactions madein pursuance of such contracts or arrangements during the year are in excess of Rs.500,000, they have been made at prices, which are, prima facie, reasonable having regardto the prevailing market prices at the relevant time

vi) The Company has not accepted any deposits from the public.

vii) In our opinion, the internal audit function carried out during the year by a firmof Chartered Accountants appointed by the management is commensurate with the size of theCompany and the nature of its business.

viii) According to the information and explanations given to us, the Central Governmenthas not prescribed maintenance of cost records under clause (d) of sub-section (1) ofSection 209 of the Act. Accordingly, clause 4 (viii) of the Order is not applicable to theCompany.

ix) According to the information and explanations given to us in respect of statutoryand other dues:

a) The Company has generally been regular in depositing with the appropriateauthorities, undisputed statutory dues including provident fund, investor education andprotection fund, employees’ state insurance, income tax, sales tax, wealth tax,service tax, custom duty, excise duty, cess and any other statutory dues applicable to it.

b) According to the information and explanations given to us, there are no undisputedamounts payable in respect of the aforesaid statutory dues as at 31st March, 2010outstanding for a period more than six months from the date they became payable.

c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,Excise Duty and Cess which have not been deposited as on 31st March, 2010 on account ofdisputes are given below:

Statement of Disputed Dues

x) The Company has no accumulated losses as at the end of the financial year and it hasnot incurred cash losses during the financial year covered by our audit and in theimmediately preceding financial year.

xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in the repayment of dues to banks, financial institutions anddebenture holders.

xii) According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and any other securities and accordingly, clause 4 (xii) of the Order is notapplicable to the Company.

xiii) In our opinion and according to the information and explanations given to us, theCompany is not a chit fund or a nidhi / mutual benefit fund / society. Accordingly, clause4 (xiii) of the Order is not applicable to the Company.

xiv) In our opinion and according to the information and explanations given to us, theCompany is not dealing or trading in shares, securities, debentures and other investments.Accordingly, clause 4 (xiv) of the Order is not applicable to the Company.

xv) In our opinion and according to the information and explanations given to us, theterms and conditions of the guarantees given by the Company for loans taken by it’ssubsidiary companies from banks, are not prima facie prejudicial to the interests of theCompany.

xvi) To the best of our knowledge and belief and according to the information andexplanations given to us, in our opinion, the Company has not availed any term loansduring the year and hence clause 4 (xvi) of the Order is not applicable to the Company.

xvii)According to information and explanations given to us, and on an overallexamination of the balance sheet of the Company, funds raised on short term basis havenot, prima facie, been used for long term investment.

xviii) According to the information and explanations given to us, the Company has notmade any preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Companies Act, 1956. Accordingly, clause 4 (xviii) ofthe Order is not applicable to the Company.

xix) According to the information and explanations given to us, the Company has notissued any debentures during the year and hence, the question of creation of security orcharge in respect of debentures issued, does not arise.

xx) We have verified the end use of monies raised by public issue of Global DepositReceipts and Zero Coupon Convertible Bonds as disclosed in notes 7 and 16 (d) of Schedule15-II respectively.

xxi) To the best of our knowledge and belief and according to the information andexplanations given to us, no fraud on or by the Company was noticed or reported during theyear.