Modern Shares - Limited Review For The Quarter Ended June 30, 2007

Modern Shares & Stockbrokers Ltd has informed that in the limited review report of the Company for the quarter ended June 30, 2007, the Auditors of the Company have made the following observations:

1. The Company has provided the employee benefits in the nature of gratuity, leaveencashment, etc. on estimated basis and not in the manner prescribed in Accounting Standard (AS) 15 (revised) on Employee Benefits issued by the Institute of Chartered Accountants of India, applicable for the Company with effect from April 01, 2007. Accordingly the consequential impact of the same on the profit for the quarter is unascertainable.

2. The Company has made provision for tax at the current tax rate based on theincome for the quarter. However, in terms of the Guidance Note No. GN(A)24 (issued 2006) on Measurement of Income-tax Expense for Interim Financial Reporting in the context of Accounting Standard 25 issued by the Council of the Institute of Chartered Accountants of India, the Company has to estimate the taxable income for the year, calculate the tax thereon and then determine the weighted average tax rate. This rate is to be applied on the income for the current quarter for the purpose of tax expense. The effect of the deviation on the provision for tax for the quarter is not ascertainable.

During our review of unaudited financial results, it was observed that in segment wise reporting, under Segment Revenue the Company has not reported Other revenue. The amount is Rs 3.46 lacs. Consequently, segment revenue and the amount shown under unallocated expenses net of unallocated income is understated by the said amount.