We have audited the attached Balance Sheet of ANU''S LABORATORIES
 LIMITED as at March 31, 2011, the Profit and Loss Account and also the
 Cash Flow Statement 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 responsible assurance about whether the financial
 statements are free of material misstatement. An audit 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 issued
 by the Central Government of India in terms of Sub-section (4A) of
 section 227 of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order to the extent applicable.
 
 2.  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 our knowledge 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 the Company, so far as appears from our examination of
 those 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 and Profit and Loss Account dealt
 with by this report comply with the accounting standards referred to in
 sub-section (3C) of Section 211 of the Companies Act, 1956 to the
 extent applicable.
 
 e.  On the basis of written representations received from the
 directors/companies, as on March 31, 2011, and taken on record by the
 Board of Directors, we report that none of the Directors is
 disqualified as on March 31, 2011 from being appointed as a director in
 terms of clause (g) of sub-section (1) of Section 274 of the Companies
 Act, 1956.
 
 f.  Attention is invited to Note 7 of Schedule N of accounts relating
 to the liability of interest and required disclosures under the Micro,
 small and Medium Enterprises Development Act, 2006. The Company is in
 the process of compiling information regarding measurement and
 disclosures prescribed under the Act. In view of the above, we are
 unable to comment on the impact of the same on the accounts.
 
 g.  In our opinion and to the best of our information and according to
 the explanation given 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 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 for the
 year ended on that date; and
 
 iii. In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure to Auditors’ Report
 (Referred to in paragraph 1 of our Report of even date)
 
 i. a. The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b.  The fixed assets have been physically verified by the management in
 accordance with regular programme of verification which, in our
 opinion, is reasonable having regard to the size of the Company and
 nature of its assets. The discrepancies noticed on such verification
 were not material and have been properly dealt with in the books of
 account.
 
 c.  Fixed assets disposed off during the year were not substantial.
 According to the information and explanations given to us, we are of
 the opinion that the disposal of fixed assets has not affected the
 going concern status of the company.
 
 ii. a. The inventories have been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 b.  The procedure of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 c.  In our opinion and according to the information and explanation
 given to us, the Company is maintaining proper records of inventory.
 The discrepancies noticed on verification between physical stocks and
 the book records were not material and have been properly dealt with in
 the books of account.
 
 iii. The Company has not granted or taken loans, secured or unsecured
 to/from companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956. Accordingly,
 sub-clause (b), (c), (d), (f) & (g) are not applicable.
 
 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 for the
 purchases of inventory and fixed assets and for the sale of goods and
 services. During the course of our audit, no major
 
 weakness has been noticed in the internal control system in respect of
 these areas.
 
 v. a. As per information and explanation and on basis of records
 maintained by the Company we are of the opinion that particulars of
 contracts or arrangements referred to in Section 301 of the Act have
 been entered in the register required to be maintained under that
 section.
 
 b. In our opinion and according to the information and explanation
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the registers maintained under Section 301 of
 the Companies Act, 1956 have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits from the public
 during the year. Therefore, the provisions of Clause 4(vii) of the
 Order are not applicable to the Company.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii. We have broadly reviewed the books of account relating to
 materials, labour and other items of cost maintained by the Company
 pursuant to the Rules made by the Central Government for the
 maintenance of cost records under Section 209 (1)(d) of the Companies
 Act, 1956 and we are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained.
 
 ix. a. According to the records of the Company, provident fund,
 employees'' state insurance, income tax, sales tax, wealth tax, service
 tax, customs duty, excise duty, cess and other material statutory dues
 applicable to it have generally been regularly deposited during the
 year with the appropriate authorities though there has been a small
 delay in a few cases. According to the information and explanation
 given to us, the undisputed amount payable in respect of Income Tax for
 the financial year 2009-10 of Rs.400.83 lakhs were in arrears as at
 March 31, 2011 for a period of more than six months from the date on
 which they became payable.
 
 b.  According to the information and explanations given to us, the
 details of dues of sales tax, income tax which have not been deposited
 on account of any dispute are given below:
 
 Nature of    Name of            Amount  Period to     Forum where
 due          the statute   Rs. Million  which amount  dispute
                                         relates       is pending
 
 Sales Tax    Sales Tax Act       10.00  A.Y. 2001-02  ADC (CT)
 
 Sales Tax    Sales Tax Act        6.77  A.Y. 2003-04  ADC (CT)
 
 Sales Tax    Sales Tax Act       18.27  A.Y. 2004-05  ADC (CT)
 
 Sales Tax    Sales Tax Act       22.10  A.Y. 2005-06  ADC (CT)
 
 x. The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses during the financial
 year covered by our audit and the immediately preceding financial year.
 
 xi. In our opinion and according to the information and explanation
 given to us, the Company has not defaulted in repayment of dues to a
 financial institution or bank.
 
 xii. Based on our examination of the records and the information and
 explanations given to us, the Company has not granted any loans and
 advances 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 or a nidhi/ mutual
 benefit fund/society. Therefore the provisions of clause 4(xiii) of the
 Companies (Auditor''s Report) Order, 2003 are not applicable to the
 Company.
 
 xiv. In our opinion the Company is not dealing in or trading in shares,
 securities, debentures and other investments.  Accordingly, the
 provisions of clause 4 (xiv) of the Companies (Auditor''s Report) Order,
 2003 are not applicable to the Company.
 
 xv. According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 xvi. In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purpose for which
 they were raised.
 
 xvii. According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that 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 to
 parties and companies covered in the register maintained under Section
 301 of the Companies Act, 1956.
 
 xix. In respect of the end-use of money raised by public issue as
 disclosed in the schedules to the financial statements, in our opinion
 and based on the explanations given to us and certified by the
 management, the Company has utilized an amount of Rs.7,264.01 lakhs for
 purposes as stated/specified in the offer document for the issue. The
 unutilized money of Rs.757.99 lakhs have been in usage for working
 capital.
 
 xx. 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 Karumanchi & Associates
                                             Chartered Accountants
                                              Firm Regn.No.001753S
 
                                                      K. Peddabbai
                                                           Partner
                                               Membership No.25036
 
 Hyderabad, May 28, 2011