1.  We have audited the attached Balance Sheet of Biocon Limited (''the
 Company'') as at March 31, 2012 and also the 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 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 (Auditor''s 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,
 
 iii. The balance sheet, statement of profit and loss and cash flow
 statement dealt with by this report are in agreement with the books of
 account,
 
 iv.  In our opinion, the balance sheet, statement of profit and loss
 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, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2012 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 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 March 31, 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 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: Biocon Limited (''the Company'')
 
 (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, intended to cover all the fixed assets of the Company
 over a period, which in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. No material
 discrepancies were noticed on such verification.
 
 (c) There was no disposal of a substantial part of fixed assets during
 the year.
 
 (ii) (a) The inventory has been physically verified by the management
 during the year. In our opinion, the frequency of verification is
 reasonable. Inventories lying with outside parties have been confirmed
 by them as at year end.
 
 (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.
 Discrepancies noted on physical verification of inventories were not
 material, and have been properly dealt with in the books of account.
 
 (iii) (a) Company has granted unsecured loans to four companies covered
 in the register maintained under section 301 of the Companies Act, 1956
 (''the Act''). The maximum amount involved during the year was Rs 2,123
 million and the balance outstanding at March 31, 2012 from such parties
 was Rs 1,729 million.
 
 (b) In our opinion and according to the information and explanations
 given to us, and having regard to management''s representation that
 interest free loans given to certain wholly-owned subsidiaries of the
 Company are in the interest of the Company''s business, the rate of
 interest, wherever applicable, and other terms and conditions for such
 loans are not prima facie prejudicial to the interest of the Company
 
 (c) In respect of loans granted, repayment of the principal amount is
 as stipulated and payment of interest, wherever applicable, has been
 regular.
 
 (d) There is no overdue amount of loans granted to companies, firms or
 other parties listed in the register maintained under section 301 of
 the Act.
 
 (e) According to information and explanations given to us, 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 Act. Accordingly, the provisions of clause 4(iii)(e) to (g) of the
 Companies (Auditor''s Report) Order, 2003 (as amended) (''the Order'') are
 not applicable to the Company and hence not commented upon.
 
 (iv) I n our opinion and according to the information and explanations
 given to us, as well as taking into consideration the management
 representation that certain items of fixed assets are of special nature
 for which alternative quotations are not available, there is an
 adequate internal control system commensurate with the size of the
 Company and the nature of its business, for the purchase of fixed
 assets and inventory and for the sale of goods and services. During the
 course of our audit, we have not observed any major weakness or
 continuing failure to correct any major weakness in the internal
 control system of the Company 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 Act that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) I n respect of transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees five lakhs entered into
 during the financial year, because of the unique and specialized nature
 of the items involved and absence of any comparable prices, we are
 unable to comment whether the transactions were made at 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(1)(d) of the Act, related
 to the manufacture of biotechnology products, and are of the opinion
 that prima facie, the prescribed accounts and records have been made
 and maintained.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities 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 and other material statutory dues applicable to
 it.
 
 (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 material statutory dues were outstanding, at the year end, for a
 period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, custom duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the statute   Nature of dues   Amount   Period to which 
                                                 the amount
 
 
                                       (Rs.in 
                                        Million)    relates
 
 The Central Excise 
 Act, 1944            Excise Duty         1*       1994-1995 
 
 The Central Excise 
 Act, 1944            Excise Duty         89       2005-2008 
 
 The Central Excise 
 Act, 1944            Excise Duty         10       2010-2011
 
 
 The Customs 
 Act, 1962            Customs Duty         4       2004-2005 
 
 
                                          (3*)   
                                          and 
                                                   2007-2008
 The Customs 
 Act, 1962           Customs Duty          23*     2008-2009, 
           
 
                                                   2010-2011
 
                                                     and
 
                                                   2011-2012
 
 Karnataka VAT 
 Act, 2003          Value added tax         6      2005-2006
 Appeals, 
 Bangalore
 
                                           (1*)
 
 Income-tax
 Act, 1961          Income Tax              4*     1996-1997 
 
 Income-tax 
 Act, 1961          Income Tax              4*     1997-1998 
 
 Income-tax 
 Act, 1961          Income Tax              90     2002-2008
 (Appeals)
 
                                           (82*)
 Name of the 
 Director           Forum where dispute 
                    is pending
 
 The Central 
 Excise Act,1944    Assistant Collector 
                    Central Excise
 The Central 
 Excise Act,1944    Cutoms, Excise and
                    service Tax Appellate 
                    Triubunal Chennai
 
 The Central 
 Excise Act,1944    Commissioner Appeals 
                    Chennai
 The Customs 
 Act,1962           Cutoms. Excise and 
                    service Tax Appellate 
                    Tribunal Chennai
 The Customs        Commissioner Appeals 
                    Banngalore
 
 Karnataka VAT
 Act,2003           Joint Commissioner 
                    Appeals Bangalore 
 Act,1962 
 
 Income -tax 
 Act,1961           Supreme Court
 
 Income -tax
 Act,1961           High Court of Karnataka
 
 Income -tax        Commissioner of Income
 Act,1961           Tax (Appeals)     
 
 * These amounts are paid in protest.
 
 (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 financial institution
 and banks. The Company does not have any borrowing by way of debenture.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced before 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 Order are not applicable to the Company
 
 (xiv) I n 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 Order 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 banks 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 the 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 any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Act.
 
 (xix) The Company did not have any outstanding debentures during the
 year
 
 (xx) The Company has not raised any money through a 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 year.
 
 For S.R. BATLIBOI & ASSOCIATES
 
 Firm registration number: 101049W
 
 Chartered Accountants
 
 
 per Aditya Vikram Bhauwala
 
 Partner
 
 Membership No.: 208382
 
 Bangalore
 
 April 27, 2012