1.  We have audited the attached Balance Sheet of APOLLO HOSPITALS
 ENTERPRISE LIMITED as at 31st March 2012, the related Statement of
 Profit and Loss and 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.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement(s). 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.
 
 3.  We have also considered the independent audit observations of the
 divisional auditors for the Pharmacy Division, Projects Division,
 Hyderabad Division, Bilaspur Division, Mysore Division, Vizag Division,
 Pune Division, Karim Nagar Division and Mandya Division for forming an
 opinion on the accounts for the respective Divisions.
 
 4.  As required by the Companies (Auditor''s Report) Order 2003, as
 amended by the Companies (Auditor''s Report) Amendment) Order 2004,
 issued by the Central Government of India, in terms of sub-section (4A)
 of section 227 of the Companies Act, 1956, and on the basic of such
 checks of the books and records of the Company as we considered
 appropriate and according to the information and explanation given to
 us, we set out in the Annexure a statement on the matters specified in
 paragraph 4 and 5 of the said Order.
 
 5.  Further to our comments in the Annexure referred to in paragraph 4
 above, we report that:
 
 i) We have obtained all the information and explanations which to the
 best of our knowledge 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 the Company so far as appears from our examination of
 those books;
 
 iii) The Balance Sheet, the Statement of Profit and Loss and the Cash
 Flow Statement dealt with by this report are in agreement with the
 books of account ;
 
 iv) In our opinion, the Balance Sheet , the Statement of Profit and
 Loss and the Cash Flow Statement dealt with by this report comply with
 the Accounting Standards specified by the Institute of Chartered
 Accountants of India, referred to in sub-section (3C) of Section 211 of
 the Companies Act, 1956;
 
 v) On the basis of written representations received from the directors,
 as on 31st March 2012 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on 31st March 2012
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956, and
 
 vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto , give the information
 required by the Companies Act, 1956, in the prescribed manner and also
 give a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2012;
 
 b) in the case of the Statement of Profit and Loss, of the PROFIT of
 the Company for the year ended on that date; and
 
 c) in the case of the Cash Flow Statement, of the Cash Flows of the
 Company for the year ended on that date.
 
 i) a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) The Company has a programme of physical verification of its fixed
 assets by which all fixed assets are verified in a phased manner over a
 period of three years. In our opinion, this periodicity of physical
 verification is reasonable having regard to the size of the Company and
 the nature of its assets. According to the information and explanations
 given to us, no material discrepancies were observed by the management
 on such verification.
 
 c) In our opinion and according to the information and explanation
 given to us, the fixed assets that have been sold / disposed off during
 the year do not constitute a substantial part of the total fixed assets
 of the Company. Hence, the going concern assumption has not been
 affected.
 
 ii) a) Stock of medicines, stores, spares, consumables, chemicals lab
 materials and surgical instruments have been physically verified at
 reasonable intervals by the management.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of stock of
 medicines, stores, spares, consumables, chemicals lab materials and
 surgical instruments 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 explanations
 given to us and on the basis of our examination, the Company is
 maintaining proper records of inventory. Further in our opinion and
 according to the information and explanations given to us no material
 discrepancies were noticed between the physical stocks verified and
 book records.
 
 iii) In respect of loans, secured or unsecured, granted to Companies,
 firms or other parties covered in the Register maintained under Section
 301 of the Companies Act, 1956.
 
 a) The Company has given unsecured loan to its subsidiary on various
 terms and conditions. In respect of the said loan the year end balance
 is '' 234 million.
 
 b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions given
 by the Company are prima facie not prejudicial to the interest of the
 Company.
 
 c) In our opinion and according to the information and explanations
 given to us, the Company is regular in receipt of interest as per the
 terms and conditions. With respect to the principal we have been
 informed that the subsidiary Company will start repaying as and when
 the subsidiary makes positive cash flows.
 
 d) In our opinion and according to the information and explanations
 given to us, reasonable steps have been taken by the Company to recover
 the principal and interest where the amount overdue is more than rupees
 one lakh.
 
 e) The Company has not taken any loans, secured or unsecured, from
 Companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956. Hence sub clauses (e),
 (f) and (g) of clause (iii) of the Order are not applicable to the
 Company.
 
 iv) In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that some of the
 items purchased are of a special nature and suitable alternative
 sources do not exist for obtaining comparable quotations, there are
 adequate internal control procedures commensurate with the size of the
 Company and the nature of its business for the purchase of stores,
 medicines and fixed assets and for sale of goods and services. During
 the course of our audit, we have not observed any major weaknesses in
 the internal control system.
 
 v) a) In our opinion, the particulars of contracts or arrangements
 referred to in Section 301 of the Companies Act, 1956 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 such contracts or
 arrangements have been made at prices which are reasonable, having
 regard to the prevailing market prices.
 
 vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by the
 Reserve Bank of India and provisions of Section 58A, Section 58AA and
 other relevant provisions of the Companies Act, 1956 and Companies
 (Acceptance of Deposits) Rules, 1975 with regard to the deposits
 accepted from the public including unclaimed deposits matured in
 earlier years that are outstanding during the year. To the best of our
 knowledge and according to the information and explanations given to
 us, no order has been passed by the Company Law Board, National Company
 Law Tribunal or Reserve Bank of India or any Court or any other
 Tribunal on the Company in respect of the aforesaid deposits.
 
 vii) The Company has firms of Chartered Accountants, including a
 Private Limited Company as Internal Auditors for its various Divisions
 and pharmacies. On the basis of the reports submitted by them to the
 management, in our opinion, the internal audit system is reasonable
 having regard to the size and nature of its business.
 
 viii) According to the information and explanations given to us, the
 Central Government has not prescribed the maintenance of cost records
 under Section 209(1) (d) of the Companies Act, 1956 for any of the
 activities of the Company.
 
 ix) a) According to the information and explanations given to us, the
 Company is regular in depositing with appropriate authorities
 undisputed statutory dues including Provident Fund, Investor Education
 and Protection Fund, Employees- State Insurance, Income Tax, Sales Tax,
 Service tax , Customs Duty, Cess, Wealth Tax and other statutory dues
 applicable to it. To the best of our knowledge and according to the
 information and explanations given to us, there are no arrears of
 outstanding statutory dues as at 31st March 2012 for a period of more
 than six months from the date they became payable. To the best of our
 knowledge and belief and according to the information and explanations
 given to us, excise duty is not applicable to this Company.
 
 b) According to the information and explanations given to us and the
 records of the Company examined by us, there are no dues disputed with
 respect to Cess, Wealth Tax and Service tax. The particulars of Sales
 tax, Customs duty and Income tax which have not been deposited on
 account of any dispute are as follows:
 
                                                       Amount
 Name of the statute       Nature of the dues         (Rs in million)
                                                       31.03.2012
 
 Andhra Pradesh            Sales tax                      1.41
 General Sales Tax
 
 Customs Act, 1962         Customs duty                  99.70
 
 Value Added Tax Act,      Value Added Tax                2.27
 2004
 
 Income Tax Act, 1961      Income Tax                   191.14
 
                                                         28.04
 
                                                         40.85
 
                                                        136.76
 
 TOTAL                                                  500.17
 
 
 Name of the Statute    Period to which the    Forum where 
                        amount relates         dispute is pending
 
 Andhra Pradesh         Assessment Years       @ Appellate Tribunal 
 General Sales Tax      2002-03, 2003-04,      Hyderabad
                        2004-05, 2010-11
 
 Customs Act,1962       1996,1997              # Assistant Collector
                                               of Customs (Chennai & 
                                               Hyderabad)
 
 Value Added Tax Act    2008-09,               ##Deputy
 2004                   2009-10, 2010-11       Commissioner of
                                               Commercial Tax 
                                              (Enforcement), Mysore
 
 Income Tax Act,1961    Assessment Years       Department has gone 
                        2001-2002, 2004-05,    on appeal to ITAT 
                        2006-2007, 2007-2008
 
                        Assessment Year        Department has filed
                        1996-1997, 1997-1998,  appeal before Madras
                        1999-2000, 2000-2001   High Court 
 
                        Assessment Year        CIT (Appeals)
                        2008-2009 & 2009-2010
 
                        Assessment Year        @@Honorable
                        2000-2001              Supreme Court
 
 Total                        -                    -
 
 @ Refer Clause (i) (c) Note 30 - Notes forming part of Accounts Refer
 Clause (i) (c) Note 30 - Notes forming part of Accounts
 
 # Refer Clause (i) (c) Note 30 - Notes forming part of Accounts
 
 ## Refer Clause (i) (c) Note 30 - Notes forming part of Accounts
 
 x) In our opinion and according to the information and explanations
 given to us, the Company has no accumulated losses as at 31st March
 2012. The Company has also not incurred cash losses in such financial
 year and in the immediately preceding financial year.
 
 xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of any dues to
 financial institutions, banks and debenture holders.
 
 xii) In our opinion and according to 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 and according to the information and explanations
 given to us, the Company is not a Chit Fund, Nidhi, Mutual Benefit Fund
 or Society and hence Clause (xiii) of the Companies(Auditor''s Report)
 Order, 2003, as amended by the Companies (Auditor''s Report) (Amendment)
 Order, 2004 is not applicable to the Company.
 
 xiv) Based on our examination of the records and evaluation of the
 related internal controls, we are of the opinion that proper records
 have been maintained of the transactions and contracts relating to
 shares, securities, debentures and other investments dealt in by the
 Company and timely entries have been made in the records. We also
 report that the Company has held and dealt with shares, securities,
 debentures and other investments in its own name.
 
 xv) In our opinion and according to the information and explanations
 given to us, the Company has given guarantees for loans taken by Joint
 Venture Companies, subsidairies ,from banks and financial institutions,
 the terms and conditions whereof are not prejudicial to the interest of
 the Company.
 
 xvi) In our opinion and according to the information and explanations
 given to us, the Company has availed term loans and a portion of these
 loans have been applied for the purpose for which the loans have been
 obtained pending utilization of the term loan for the stated purpose,
 the funds have been temporarily invested in Mutual Funds and Short Term
 Deposits.
 
 xvii) In our opinion and according to the information and explanations
 given to us, the Company has not used any funds raised on short term
 basis for long term investments.
 
 xviii)The Company has issued and allotted 3,089,242 equity share of
 nominal value of Rs 5/- each at premium of Rs 380.88 per share on 10th
 December 2011 to a Promoter covered in the register maintained under
 section 301 of the Companies Act,1956. The issue price is at minimum
 price of Rs 385.88 fixed in accordance with the guidelines for
 preferential issues of the Securities Exchange Board of India (Issue of
 Capital and Disclosure Requirements) Regulations 2009. Accordingly the
 party has paid the balance 75% of the consideration @ Rs 385.88 per
 warrant.
 
 The Company has issued and allotted 3,276,922 warrants convertible into
 equity shares nominal value of Rs. 5/- each at a premium of Rs 467.46
 per share on 5th February 2011 to a Promoter covered in the register
 maintained under section 301 of the Companies Act, 1956. The issue
 price is at minimum price of Rs 472.46 fixed in accordance with the
 guidelines for preferential issues of the Securities Exchange Board of
 India (Issue of Capital and Disclosure Requirements) Regulations 2009.
 Accordingly the party has paid 25% of the consideration @ Rs 472.46 per
 warrant on the date of allotment. The Balance 75% is payable on the
 exercise of option for conversion within 18 months of date of
 allotment.
 
 xix) The Company has issued 10.30% Secured Redeemable Non-convertible
 debentures in the year 2010-11 and 10.15% Secured Redeemable
 Non-convertible debentures during the year on which a pari-passu first
 charge on all fixed assets of the Company has been created.
 
 xx) During the year the management has not raised money through public
 issue and hence we offer no comments on the same.
 
 xxi) According to the information and explanations given to us, by the
 Company, no fraud on or by the Company has been noticed or reported,
 during the year.
 
 17, Bishop Wallers Avenue (West),       For M/s.S.VISWANATHAN
 
 CIT Colony, Mylapore,                   Chartered Accountants
 
 Chennai - 600 004.                      Firm Registration No. 004770S
 
                                         V.C. KRISHNAN
 
 Place: Chennai                          Partner
 
 Date : 29th May 2012                    Membership No. 022167