Aurobindo Pharma

1.  We have audited the attached Balance Sheet of Aurobindo Pharma
 Limited as at March 31, 2008 and also 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.
 
 2.  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.
 
 3.  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.
 
 4.  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 purposes 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 and proper returns adequate for the purposes of our audit
 have been received from the branches not visited by us;
 
 iii. the Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account
 and with the returns from the branches;
 
 iv. in our opinion, the Balance Sheet, Profit and Loss Account and 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 the written representations received from the
 Directors, as on March 31, 2008, and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 March 31, 2008 from being appointed as a director in terms of clause
 (g) of sub- section (1) of Section 274 of the Companies Act, 1956;
 
 vi. without qualifying our opinion, we draw attention to Note 3(g) and
 Note 3(h) of Schedule 22 to the financial statements. Management is of
 the view that the liability to pay premium on redemption if any, of
 Foreign Currency Convertible Bonds is contingent. As the ultimate
 outcome of the matter cannot be presently determined, no provision has
 been made for liability if any, that may arise on resolution of the
 contingency;
 
 vii. 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 March 31, 2008;
 
 b.  in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 c.  in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure referred to in paragraph [ 3 ] of our report of even date
 
 Re: Aurobindo Pharma Limited
 
 i. a. The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b.  All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed no
 material discrepancies were noticed on such verification.
 
 c.  There was no substantial disposal of fixed assets during the year.
 
 ii. a. The management has conducted physical verification of inventory
 at reasonable intervals during the year.
 
 b.  The procedures of physical verification of inventory 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 and no
 material discrepancies were noticed on physical verification.
 
 iii. a. As informed, the Company has not granted any loans, secured or
 unsecured to companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956. Accordingly,
 the provisions of clauses 4 (iii) (b), 4(iii) (c), 4 (iii) (d) of the
 Companies (Auditors Report) Order 2003 (as amended) are not applicable
 to the Company.
 
 b. As informed, 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.
 Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the
 Companies (Auditors Report) Order 2003 (as amended) are not applicable
 to the Company.
 
 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
 purchase 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. According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956 that
 need to be entered into the register maintained under Section 301 of
 the Companies Act, 1956 have been so entered.
 
 b. In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year 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 made by the Central Government for the
 maintenance of cost records under Section 209(l)(d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.
 
 ix. a. Undisputed statutory dues including provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 sales-tax, wealth-tax, service tax, customs duty, excise duty, cess
 have generally been regularly deposited with the appropriate
 authorities though there has been a slight delay in a few cases.
 
 b. According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other undisputed statutory dues were outstanding, at the year end, for
 a period of more than six months.
 
 c.  According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the statute                Nature of dues        Amount
                                                           (Rs.)
 
 Income Tax Act, 1961               Tax and interest     23,533,225
 
 Central Excise Act, 1944           Duty                  1,023,093
 
 Central Excise Act, 1944           Duty                  6,633,718
 
 Central Excise Act, 1944           Duty                    396,698
 
 Central Excise Act, 1944           Duty                 10,360,039
 
 Central Excise Act, 1944           Duty                  2,459,058
 
 Central Excise Act, 1944           Duty                    666,083
 
 Central Excise Act, 1944           Duty                  7,185,910
 
 Central Excise Act, 1944           Duty                    605,759
 
 Central Excise Act, 1944           Duty                  4,910,442
 
 Central Excise Act, 1944           Duty                    193,248
 
 Central Excise Act, 1944           Duty                 41,931,459
 
 Period to which the   Forum where dispute is
 amount relates        pending
 
 2003-04               Commissioner of Income Tax (Appeals)
 
 2002-03               Joint Commissioner - Hyderabad
 
 2004-05               Joint Commissioner - Hyderabad
 
 2005-06               Asst. Commissioner - Hyderabad
 
 2007-08               Commissioner - Hyderabad
 
 2006-07               Asst. Commissioner - Hyderabad
 
 2006-07               Joint Commissioner - Hyderabad
 
 2006-08               Addl. Commissioner - Hyderabad
 
 2003-04               Addl. Director General DRI, Delhi
 
 2006-07               Deputy Commissioner - Hyderabad
 
 2007-08               Asst. Commissioner - Hyderabad
 
 2002-06               Commissioner - Chennai
 
 x. The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 xi. Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 xii. According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted 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 (Auditors Report) Order, 2003 (as amended)
 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 (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 xv. According to the information and explanations given to us, the
 Company has given guarantee for loans taken by others from bank or
 financial institutions, the terms and conditions whereof in our opinion
 are not prima-facie prejudicial to the interest of the Company.
 
 xvi. Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 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 preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Companies Act, 1956.
 
 xix. The Company does not have any outstanding debentures during the
 year.
 
 xx. The Company has not raised any money by way of public issue during
 the year.
 
 xxi. Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
                                             For S. R. BATLIBOI & CO.
                                              Chartered Accountants
 
                                                      Per
                                                   RAHUL ROY
                                                    Partner
                                             Membership No. 53956
 Kolkata, June 18, 2008.