We have audited the attached balance sheet of Bal Pharma Limited as at
 3I March 2012, the statement of profit and loss for the year ended on
 that date annexed thereto and the cash flow statement for the year
 ended on that date, which we have signed under reference to this
 report. 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 have 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 (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 section 227 (4A) of the
 Companies Act, I956 and on the basis of such checks 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.
 
 Further to our comments in the Annexure referred to in paragraph 3
 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 accounts 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 referred to in sub-section (3C) of Section 2II
 of the Companies Act, I956 to the extent applicable;
 
 (v) On the basis of the written representations received from the
 directors, as on 3I March 2012 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 3I March 2012 from being appointed as a Director in terms of clause (g)
 of sub-section (I) of section 274 of the Companies Act, I956 ; and
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts, together with the
 notes thereon and attached thereto and subject to Note no.43 regarding
 non-confirmation of balances in parties accounts and pending review of
 old balances, give in the prescribed manner the information required by
 the Act 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 3I March 2012;
 
 (b) in the case of the statement of profit and loss, of the profit 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 AUDITOR''S REPORT
 
 Annexure referred to in Paragraph 3 of the report of the Auditors to
 the members of Bal Pharma Limited for the year ended 3I March 2012:
 
 1.  The company has maintained proper records showing full particulars
 including quantitative details and situation of its fixed assets. These
 fixed assets were physically verified by management according to a
 phased programme designed to cover all the items over a period of three
 years. Pursuant to the programme, physical verification of certain
 assets was carried out during the year and we have been informed that
 no material discrepancies were noticed on such physical verification.
 Substantial part of fixed assets have not been disposed off during the
 year, which will affect its status as going concern.
 
 2.  The stock of inventory has been physically verified during the year
 by the management at reasonable intervals. In our opinion, the
 procedures of physical verification of inventory, followed by the
 management is reasonable and adequate in relation to the size of the
 Company and the nature of its business. The Company is maintaining
 proper records of inventory. The discrepancies noticed during the
 physical verification of stocks as compared to book records were not
 material; however, the same has been properly dealt with in the books
 of account.
 
 3.  (a) According to the information and explanations given to us, the
 company has not granted any loans to companies, firms or other parties
 covered in the register maintained under Section 30I of the Companies
 Act, I956. Accordingly, the provisions of clause 4(iii)(a) to (d) of
 the order are not applicable to the company and hence not commented
 upon.
 
 (b) The company has taken interest free unsecured loans, from
 companies, firms or other parties covered in the register maintained
 under Section 30I of the Companies Act, I956.  The company has taken
 interest free unsecured loan from its Managing director. The maximum
 balance outstanding during the year was Rs. 63,95,700/- and the yearend
 balance of the loan was Rs. 33,80,700/-. This loan is repayable on
 demand.
 
 (c) In our opinion and according to the explanations given to us, the
 rate of interest, wherever applicable, and other terms and conditions
 on which such loans have been taken from the companies, firms or other
 parties listed in the register maintained under section 30I of the
 Companies Act, I956 are not prima facie prejudicial to the interest of
 the company.
 
 (d) The company is regular in repayment of demand loans.
 
 4.  In our opinion, there is an adequate internal control procedure
 commensurate with the size of the Company and nature of its business,
 for the purchase of inventory and fixed assets and for the sale of
 goods and services. We have not observed any major weakness in the
 internal control system during the course of our audit.
 
 5.  In our opinion, and according to the information and explanations
 given by the management, we are of the opinion that contracts and
 arrangements referred to in section 301 of the Act have been entered in
 the register required to be maintained under that section and such
 transactions have been made at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 6.  The Company has not accepted any deposits from the public and
 consequently, the directives issued by the Reserve Bank of India and
 the provisions of Section 58A, 58AA or any other relevant provisions of
 the Act and the rules framed there under are not applicable to the
 Company
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of accounts 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 Act and are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained. We have not however
 made a detailed examination of records with a view to determining
 whether they are accurate and complete.
 
 9.  a) According to the information and explanations given to us and on
 the basis of our examination of books of account, the Company has been
 generally regular in depositing undisputed statutory dues including
 Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax,
 Wealth Tax, Customs duty, Excise duty, Cess and any other material
 statutory dues during the year with the appropriate authorities.
 However, there have been delays in remitting undisputed statutory dues
 with these authorities. Further, an amount of Rs. 184,828/- required to
 be deposited during the year in Investor Education and Protection fund
 towards unclaimed dividend of financial year 2003-04 has not been
 deposited as at 31 March 2012.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees''
 State Insurance, Sales Tax, Income Tax, Wealth Tax, Service Tax,
 Customs Duty, Excise Duty, Cess and other material statutory dues were
 in arrears as at 31 March 2012 for a period of more than six months
 from the date they became payable. However an amount of Rs. 184,828/-
 required to be deposited in Investor Education and Protection fund
 towards unclaimed dividend of financial year 2003-04 was in arrears as
 at 31 March 2012 for a period of more than six months from the date it
 became payable.
 
 c) According to the information and explanations given to us, there are
 no amounts in respect of Provident Fund, Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Customs Duty, Excise duty and Cess that have not been
 deposited with appropriate authorities on account of any dispute other
 than those mentioned in Annexure I to this report.
 
 10.  The Company has no accumulated losses. The Company has not
 incurred cash losses in the financial year under report and in the
 immediately preceding financial year.
 
 11.  The Company has not defaulted in repayment of dues to its bankers
 or to any financial institution. The Company did not have any
 outstanding debentures during the year.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of Shares, debentures and other securities.
 Accordingly, clause 4(xii) of the Order is not applicable.
 
 13.  The Company is not a chit fund, nidhi or mutual benefit fund/
 society. Accordingly, clause 4(xiii) of the Order is not applicable.
 
 14.  Accordingly to the information and explanations given to us, the
 Company is not dealing or trading in Shares, securities, debentures and
 other investments. Accordingly clause 4(xiv) of the Order is not
 applicable
 
 15.  Based on the information and explanations given to us, the Company
 has not given any guarantee for loans taken by others from bank or
 financial institutions.
 
 16.  In our opinion and according to information and explanations given
 to us and on the basis of examination of books of accounts, the term
 loans obtained by the Company were applied for the purpose for which
 such loans were obtained.
 
 17.  According to the information and explanations given to us, and on
 an overall examination of 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 investments.
 
 18.  The Company has not made any preferential allotment of Shares to
 parties and companies covered in the register maintained under section
 30I of the Act during the year. Accordingly, clause (xviii) of the
 Order is not applicable.
 
 19.  The Company has not issued any debentures. Hence the requirements
 of clause (xix) of paragraph 4 of the Order are not applicable to the
 Company.
 
 20.  The company has not raised any money by way of public issue during
 the year.
 
 21.  During the course of our examination of the books of account
 carried out in accordance with the generally accepted auditing
 practices in India and according to the information and explanations
 given to us, we have neither come across any instance of fraud on or by
 the Company, noticed or reported during the year, nor have we been
 informed of such case by the Management.
 
 Annexure 1 as referred to para 9 of annexure to the Auditor''s Report
 
 Name of the 
 Statute       Nature 
               of dues      Amount in    Period to
                                         which         Forum where
                                                       dispute is 
                                                       pending 
                             Rs.         Amount
                                         relates
 
 The Central 
 Excise 
 Act, I944    Central
              Excise Duty 
              and penalty    8,68,598   2000-01       Customs, Excise,
                                                      Service Tax 
                                                      Appellate, Mumbai
 
 The Kerala 
 General 
 Sales Tax    Local Sales 
              tax            7,49,720   2002-03       The Deputy 
                                                      Commissioner
 Act,1963                                            (Appeals), Ernakulam
 
 
 
 
                                       For T D JAIN AND D I SAKARIA
 
                                              Chartered Accountants
 
                                      Firm registration no: 00249IS
 
                                                           T D JAIN
 
 Bangalore                                                  Partner
 
 10th August, 2012                                    M. No.: 12034