1.  We have audited the attached Balance Sheet of APOLLO HOSPITALS
 ENTERPRISE LIMITED as at 31st March 2011, the related Profit and Loss
 Account and the Cash Flow statement for the year ended on that date
 annexed thereto. These financial statements are the responsibility of
 the Companys 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 (Auditors Report) Order 2003, as
 amended by the Companies (Auditors 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 basis of such
 checks of the books and records of the Company as we considered
 appropriate and according to the information and explanations given to
 us, we set out in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 5.  In the absence of any notification from the Central Government with
 respect to the Cess payable under Section 441A of the Companies Act,
 1956, no quantification is made. Hence, no opinion is given on Cess
 unpaid or paid, as per the provisions of Section 227(3) (g) of the
 Companies Act, 1956.
 
 6.  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 Profit and Loss Account 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 Profit and Loss Account 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 subsection (3C) of Section 211 of
 the Companies Act, 1956;
 
 (v) On the basis of written representations received from the
 directors, as on 31st March 2011 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March 2011 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 2011;
 
 (b) in the case of the Profit and Loss Account, 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.
 
 Annexure to the Auditors Report
 
 (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 Rs. 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 inter- est of the
 company.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company is regu- lar 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 par- ties 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 commen- surate 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 Com- panies 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 Audi- tors for its various
 divisions and pharmacies. On the basis of the reports submitted by them
 to the man- agement, 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
 activi- ties 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 Edu-
 cation 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 2011 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 informa- tion
 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 ex- amined 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:
 
 Name of the      Nature of  (Rs.in million)  Period to which the 
 statute          the dues     31-03-2011     amount relates
 
 Andhra Pradesh                               Assessment Years 2002-03,
 General Sales    Sales tax       1.65        2003-04,2004-05,2010-11
 Tax
 
 Customs Act,     Customs        99.70        1996, 1997
 1962             duty 
 
 Value Added      Value Added     2.27        2008-09, 2009-10, 2010-11
 Act, 2004        Tax
 
                                 10.34        Assessment Year 2002-03
 
                                              Assessment Years 
                                              1997-1998, 2001-2002,
                                193.44        2004-05, 2006-2007,
 Income Tax       Income Tax                  2007-2008
 Act, 1961
 
                                  6.89        1999-2000
 
                                 37.03        2008-2009
 
                                136.76        Assessment Year 2000-2001
 
 TOTAL                          488.08
 
 
 
 Name of the Statute      Forum where dispute is pending
 
 Andhra Pradesh           @Appellate Tribunal
 General Sales Tax        Hyderabad 
 
 Customs Act, 1962        # Assistant Collector of Customs
 
                          (Chennai a Hyderabad) 
 
 Value Added Tax          ##Deputy Commissioner of Commercial Tax
 Act, 2004                (Enforcement), Mysore 
 
                          Income Tax Appellate Tribunal 
                          (ITAT) has reverted the case 
                          back to the Assessing Officer
 
                          Department has gone on 
 Income Tax Act, 1961     appeal to ITAT
 
                          Department has filed appeal 
                          before Madras High Court
 
                          CIT (Appeals)
 
                          Honorable Supreme Court
 
 
 ® Refer Clause (3) (i) Schedule (J) - Notes forming part of Accounts #
 Refer Clause (3) (g) Schedule (J) - Notes forming part of Accounts ##
 Refer Clause (3) (c) Schedule (J) - Notes forming part of Accounts
 
 (x) In our opinion and according to the information and explanations
 given to us, the Company has no ac- cumulated losses as at 31st March
 2011. The Company has also not incurred cash losses in the 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 de- faulted 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(Auditors Report)
 Order, 2003, as amended by the Companies ( Auditors Report) (
 Amendment) Order, 2004 is not appli- cable 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, 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 loans 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 1.54 million equity
 warrants convertible into equity shares nominal value of Rs. 10/- each
 at premium of Rs 761.76 per share on 12th June 2010 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 771.76 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 @ 771.76 per warrant on the date of allotment. The
 balance 75% is payable on the exercise of option for conversion within
 18 months from date of allotment. Consequent to the splitting of one
 equity share of Rs.10/- into two equity shares of Rs.5/- each the
 warrants outstanding as on 31st March 2011 is 3.08 million.
 
 The Company has issued and allotted 3.27 million equity warrants
 convertible into equity shares nominal value of Rs. 5/- each at 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 Ex-
 change Board of India (Issue of Capital and Disclosure Requirements)
 Regulations 2009. Accordingly the party has paid 25% of the
 consideration @ 472.46 per warrant on the date of allotment. The
 balance 75% is payable on the exercise of option for conversion within
 18 months from date of allotment.
 
 (xix) The Company has issued 10.30% Secured Redeemable Non-Convertible
 debentures to Life Insurance Corporation of India (LIC) 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 com- ments on the same.
 
 (xxi) According to the information and explanations given to us, by the
 Company, no fraud on or by the Com- pany has been noticed or reported,
 during the year.
 
 
                                          For M/s. S. VISWANATHAN
                                          Chartered Accountants
                                          Firm Registration No: 004770S
 
 17, Bishop Wallers Avenue (West),
 Mylapore,
 Chennai - 600 004.
 
 
                                          V.C. KRISHNAN
                                          Partner
                                          Membership No.: 022167
 
 
 Place: Chennai 
 Date :24th May 2011