India Infoline Ltd

To,

The Members,

India Infoline Limited,

Mumbai

We have audited the attached Balance Sheet of India Infoline Limited as at March31, 2011, and Profit and Loss account and also the Cash Flow Statement for the year endedon that date, annexed thereto. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financialstatements based on our audit.

We have 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 misstatement. 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 management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

In accordance with the provisions of Section 227 of the Companies Act, 1956, we reportthat:

1. As required by the Companies (Auditor’s Report) Order, 2003, issued by theCentral Government of India under sub-section (4A) of section 227 of the Companies Act,1956, and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanation given to us, weenclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of thesaid Order.

2. 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 ourknowledge and belief were necessary for the purpose of our audit;

ii) In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of the books;

iii) The balance sheet, profit and loss account and also cash flow statement dealt withby this report are in agreement with the books of account;

iv) In our opinion, the balance sheet, profit and loss account and also cash flowstatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representations received by the Company from its Directorsas on March 31, 2011 and taken on record by the Board of Directors, we report that none ofthe Director is disqualified as on March 31, 2011 from being appointed as a Director interms of the clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts, read together with the significant accounting policies andnotes appearing thereon, give the information required by the Companies Act, 1956, in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

a. In the case of the balance sheet, of the state of affairs of the Company as at March31, 2011;

b. In the case of the profit and loss account, of the profit for the year ended on thatdate; and

c. In the case of the cash flow statement, of the cash flows for the year ended on thatdate.

Annexure

referred to in paragraph 1 of our report dated May 7, 2011, to the members of IndiaInfoline Limited.

1. (a) The Company has maintained adequate records to show full particulars, includingquantitative details and situation of the fixed assets.

(b) The Company has formulated a programme of physical verification of its fixed assetsin a phased manner. In accordance with this program, a physical verification of certainfixed assets has been carried out by management during the year and there are no materialdiscrepancies observed between assets physically verified and book balances. In ouropinion, the periodicity of verification is reasonable having regard to the size of theCompany and the nature of its assets.

(c) The Company has not disposed off any substantial part of its fixed assets so as toaffect its going concern status.

2. The Company is not carrying on any manufacturing or trading activity. Therefore, theprovisions of sub clause (a), (b), and (c), of clause (ii) of paragraph 4 of the Order arenot applicable to the Company.

3. (a) The Company has granted loan to One Company and loan to One Party covered in theregister maintained under Section 301 of the Companies Act, 1956. The maximum amountsinvolved during the year were Rs. 851,213,864/- and the year-end balance of loans grantedto such Company/Party was Rs. 631,228,837/-.

(b) In our opinion, the rate of interest and other terms and conditions of such loangiven is not, prima facie, prejudicial to the interest of the Company.

(c) There are no stipulations as to repayment of principal and interest amounts.

(d) There is no overdue amount in excess of Rs. 100,000 in respect of loan granted toCompany listed in the register maintained under Section 301 of the Companies Act, 1956since repayment schedule is not stipulated.

(e) The Company has not taken any loans from the companies, firms or other partiescovered in the register maintained under Section 301 of the Companies Act, 1956.Accordingly, the provisions of sub-clause (e), (f) and (g) of clause (iii) of paragraph 4of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, thereare adequate internal control systems commensurate with the size of the Company and natureof its business, for the purchase of fixed assets and sale of services. Further, on thebasis of our examination of the books and records of the Company, and according to theinformation and explanations given to us, we have neither come across nor have we beeninformed of any continuing failure to correct major weaknesses in the aforesaid internalcontrol systems.

5. (a) In our opinion and according to the information and explanations given to us,the particulars of contracts or arrangements that need to be entered into a Register inpursuance of Section 301 of the Companies Act, 1956 and those brought to our notice, havebeen so entered.

(b) In our opinion and according to the information and explanations given to us, thetransactions in pursuance of such contracts or arrangements entered in the registermaintained under section 301 of the companies Act, 1956 and exceeding the value of rupeesfive lakhs in respect of any party during the year, have been made at prices which are notcomparable since the prevailing market prices of such services, in view of the management,are not readily available.

6. The Company has not accepted any deposits from the public of the nature, whichattracts the provisions of Section 58A, 58AA or any other relevant provision of theCompanies Act, 1956 and the rules made there under. Therefore, the provision of clause(vi) of paragraph 4 of the Order is not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with its sizeand nature of its business.

8. As per the information and explanations given to us, in respect of the class ofindustry the Company falls under, the maintenance of cost records has not been prescribedby the Central Government under section 209 (1) (d) of the Companies act, 1956. Therefore,the provision of clause (viii) of paragraph 4 of the Order is not applicable to theCompany.

9. (a) According to the information and explanations given to us and the records of theCompany examined by us, in our opinion, the Company is generally regular in depositingundisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Employees’ State Insurance, Income tax, Sales tax, Wealth tax, Service tax,Customs duty, Excise duty, Cess and other material statutory dues as and whereverapplicable to the Company, with the appropriate authorities. Based on the informationfurnished to us, there are no undisputed statutory dues as on March 31, 2011, which areoutstanding for a period exceeding six months from the date they became payable.

(b) According to the information and explanations given to us and records of theCompany examined by us, the particulars of sales tax/excise duty/service tax/incometax/custom duty/ wealth tax/cess as at March 31, 2011 which have not been deposited onaccount of a dispute pending, and amount involved and the forum where dispute is pendingas under;

10. At the end of the financial year, the Company has neither accumulated losses norhas incurred any cash loss during the financial year and in the immediately precedingfinancial year.

11. Based on our audit procedures and according to the information and explanationsgiven to us, we are of the opinion that the Company has not defaulted in repayment of itsdues to its financial institution, bank and debenture holders.

12. According to the information and explanations given to us, since the Company hasnot granted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities, in our opinion, the Company need not maintain relevantdocuments and record.

13. The Company is not a chit fund or a nidhi / mutual benefit fund / society.Therefore, the provisions of sub clause (a), (b), (c) and (d) of clause (xiii) ofparagraph 4 of the Order are not applicable to the Company.

14. Based on our examination of the records and evaluation of the related internalcontrols, the Company has maintained proper records of transactions and contracts inrespect of dealing or trading in shares, securities, debentures and other investments, asapplicable, and timely entries have been made therein. The aforesaid shares, securities,debentures and other investments have been held by the Company in its own name, except tothe extent of the exemption granted under Section 49 of the Companies Act, 1956.

15. The Company has granted Corporate Guarantees to Banks/ Financial Institutions inrespect of loans availed by its subsidiary companies. Based on the information andexplanations given to us, we are of the opinion that the terms and conditions on which theguarantees are given are prima facie, not prejudicial to the interest of the Company.

16. In our opinion, and according to the information and explanation given to us, theterm loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that no funds raised onshort-term basis have been used for long-term investments.

18. According to the information and explanations given to us, the Company has not madepreferential allotment of shares to parties and companies covered in the Registermaintained under section 301 of the Companies Act, 1956.

19. The Company has issued unsecured debentures during the year. Since, thesedebentures are unsecured the Company is not required to and has not created a charge inrespect of these debentures.

20. The Company has not raised any money through a public issue during the year.Therefore, the provision of clause (xx) of paragraph 4 of the Order is not applicable tothe Company.

21. 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, andaccording to the information and explanation given to us, we have neither come across anyinstance of material fraud on or by the Company, noticed or reported during the year norhave we been informed of such case by management.