Explanation
The correct indirect speech conversion is: Ali told me that I was his best friend. The reporting verb " said to " is changed to " told " in the indirect speech. The conjunction "that" is added before the reported clause. The pronoun "you" (second person) changes to "I" (first person) as the statement is being reported to another person. The present tense "are" changes to the past tense "was" because the reporting verb is in the past tense. The possessive adjective "my" changes to "his" to reflect the change in perspective.
