AstraZeneca Pharma

We have audited the attached balance sheet of AstraZeneca Pharma India
 Limited (the Company) as at 31 December 2008, the 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.
 
 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 reasonable 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.
 
 As required by the Companies (Auditors Report) Order, 2003, as
 amended, 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.
 
 Further to our comments in the Annexure referred to 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 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
 of the Company as on 31 December 2008, and taken on record by the Board
 of Directors, we report that none of the directors is disqualified as
 on 31 December 2008 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 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:
 
 a.  in the case of the balance sheet, of the state of affairs of the
 Company as at 31 December 2008;
 
 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 for the
 year ended on that date.
 
 Annexure to the Auditors Report
 
 Annexure referred to in the Auditors Report to the Members of
 AstraZeneca Pharma India Limited (the Company) for the year ended 31
 December 2008. We report that:
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets.
 
 (b) The Company has a regular 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, in accordance with this
 programme, certain fixed assets were verified during the year. No
 material discrepancies were noticed on such verification.
 
 (c) Fixed assets disposed off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 (ii) (a) The inventory, except stock lying with third parties, has been
 physically verified by the management during the year. In our opinion,
 the frequency of such verification is reasonable. For stocks lying with
 third parties at the year-end, written confirmations have been
 obtained.
 
 (b) The procedures for the 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) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 (iv) In our opinion and according to the information and explanations
 given to us, and having regards to the explanation that purchases of
 certain items of inventory are for the Companys specialised
 requirements and similarly certain goods sold are for specialised
 requirements of the buyer and suitable alternative sources are not
 available to obtain comparable quotations, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business with regard to purchase of inventories and
 fixed assets and with regard to the sale of goods and services. We have
 not observed any major weakness in the internal control system during
 the course of the audit.
 
 (v) (a) In our opinion and according to the information and
 explanations given to us, 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 explanations
 given to us, the transactions made in pursuance of such contracts and
 arrangements referred to in (a) above and exceeding the value of Rs 5
 lakh with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (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 maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under Section 209(1 )(d) of the Companies
 Act, 1956 in respect of bulk drugs and formulations and are of the
 opinion that prima facie, the prescribed accounts and records have been
 made and maintained. However, we have not made a detailed examination
 of the records.
 
 (ix) (a) According to the information and explanation given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Employees State Insurance,
 Investor Education and Protection Fund, Income-tax, Wealth Tax, 
 Service Tax, Customs Duty, Excise Duty, Cess and other material 
 statutory dues, except for sales tax as mentioned below, have 
 generally been regularly deposited with the appropriate authorities
 though there has been a slight delay in a few cases.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 According to the information and explanations given to us, except for
 sales tax dues aggregating to Rs. 765,290/-, no undisputed amounts
 payable in respect of Provident Fund, Employees State Insurance,
 Investor Education and Protection Fund, Income-tax, Wealth Tax, Service
 Tax, Customs Duty, Excise Duty, Cess and other material statutory dues
 were in arrears as at 31 December 2008 for a period of more than six
 months from the date they became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of Income-tax, Wealth Tax and Cess which have not been
 deposited with the appropriate authorities on account of any dispute.
 According to the information and explanations given to us, the
 following dues of Sales tax, Customs Duty, Excise Duty and Service Tax,
 have not been deposited by the Company on account of disputes:
 
 Name of the              Nature of   
 Statute                  the dues               Amount(Rs)
 
 Central Excise           Excise duty              698,427
 Act, 1944
  
 Chapter V of             Service tax               47,712
 Finance Act,
 1994
 
 Chapter V of             Service tax              543,460
 Finance Act,
 1994
 
 Central Excise           Excise duty              406,677
 Act, 1944
 Kamataka                 Sales tax              9,251,712
 Sales Tax                and penalty
 Act, 1957
 
 Karnataka                Entry tax                 91,224
                          Sales Tax
 Act, 1957
 
 Customs Act,             Customs               21,248,482
 1962                     duty
 
 Period to which the          Forum where dispute is
 amountrelates                pending
 
 1996-1997 to                 Customs Excise and
 1999-2000                    Service tax Appellate
                              tribunal
 
 1 July 2001 to               Deputy Commissioner,
 15 August 2002               Service tax
 
 16 November 1997             Commissionrate - Service
 to 2 June 1998               Tax
 
 August 1998 to July          Customs Excise and
 1999                         Service Tax Appellate
                              Tribunal
 
 1995  -1996                  Karnataka Appellate
                              Tribunal
 
 1995 - 1996                  Joint Commissioner of
                              Commercial Taxes
                             (Appeals)
 
 2006                         Deputy Commissioner,
                              Customs, Mumbai
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 (xi) The Company did not have any outstanding dues to any financial
 institution, banks or debenture holders during the year.
 
 (xii) 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 explanation
 given to us, the Company is not a chit fund/ nidhi / mutual benefit
 fund / society.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 (xvi) The Company did not have any term loans outstanding during the
 year.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that the funds raised on short-term basis have not been
 used for long- term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to companies/firms/parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (xix) According to the information and explanations given to us, the
 Company has created a charge in respect of debentures issued during the
 year.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (xxi) We have been informed that an employee of one of the carrying and
 forwarding agents of the Company was fraudulently crediting the
 collections received from a few of the Companys customers towards
 outstanding dues from a specific customer. This was done in a manner
 such that the outstanding of any of the customers did not exceed the
 credit period.
 
 As explained to us, the Management has completed the investigation in
 this matter and has accordingly recovered the outstanding amount of Rs
 1,340,000 from the carrying and forwarding agent, thereby resulting in
 no loss to the Company. According to the information and explanations
 given to us, no other fraud on or by the Company has been noticed or
 reported during the course of our audit.
 
                                                    for BSR & Co.
                                           Chartered Accountants
 
                                                    Rajesh Arora
                                                         Partner
                                            Membership No. 76124
 Bangalore
 Date: 18 February 2009