Biocon

1. We have audited the attached Balance Sheet of Biocon Limited (the
 Company) as at March 31, 2009 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;
 
 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;
 
 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, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 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, 2009;
 
 (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.
 
 Re: BIOCON LIMITED
 
 (i) The Company has maintained proper records showing full particulars,
 including quantitative details and situation, of fixed assets. Fixed
 assets have been physically verified by the management during the year
 in accordance with a regular programme of verification, intended to
 cover all the fixed assets of the Company over a period of two years,
 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. There was no disposal
 of fixed assets during the year.
 
 (ii) The management has conducted physical verification of inventory at
 reasonable intervals during the year. The procedures of physical
 verification of inventory (except for goods in bond and in transit)
 followed by the management are 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 and there were no material
 discrepancies noticed on physical verification.
 
 (iii) As informed, the Company has granted unsecured loans to three
 companies listed in the register maintained under Section 301 of the
 Companies Act, 1956 (the Act). The maximum amount involved during the
 year was Rs 2,237,590 thousands and the balance outstanding as at March
 31, 2009 is Rs 2,024,938 thousands. In our opinion and according to the
 information and explanations given to us, the rate of interest, where
 applicable, and other terms and conditions of the loans given by the
 Company, are not prima facie prejudicial to the interest of the
 Company. In respect of loans granted, repayment of the principal amount
 is as stipulated and payment of interest, wherever applicable, has been
 regular. Based on our audit procedures and the information and
 explanation made available to us, there is no overdue amount of the
 loan granted by the Company to the companies listed in the register
 maintained under Section 301 of the Companies Act, 1956. The Company
 has not taken/granted any other loans from/to companies, firms or other
 parties listed in the register maintained under Section 301 of the Act.
 
 (iv) In 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, no major weakness has been noticed in the internal
 control system in respect of these areas.
 
 (v) 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. In respect of transactions made in pursuance of such contracts
 or arrangements exceeding value of Rupees five lakhs entered into
 during the financial year, because of the unique and specialized nature
 of items involved and absence of any comparable prices, we are unable
 to comment whether the transactions are 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, and
 are of the opinion that prima facie, the prescribed accounts and
 records have been made and maintained.
 
 (ix) 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 have generally been
 regularly deposited with the appropriate authorities.
 
 According to the information and explanations given to us, there were
 no undisputed dues 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
 statutory dues which were outstanding, at the year end for a period of
 more than six months from the date they became payable.
 
 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 In thousands)
 
 The Central Excise Act, 1944       Excise duty              633*
 The Central Excise Act, 1944       Excise duty              859
 The Customs Act, 1962              Customs duty           1,491
 The Customs Act, 1962              Customs duty           1,514*
 The Central Excise Act, 1944       Excise duty           88,209
 Finance Act, 1994                  Service tax            1,437
 Karnataka Tax on Entry of          Entry tax              1,537
 Goods Act, 1979
 Income-tax Act, 1961               Income tax             2,077*
 
 Period to which the              Forum where dispute is pending
 amount relates
 
 1994-1995                    Assistant Collector of Central Excise.
 2005-2006                 Customs, Excise and Service Tax Appellate
                                  Tribunal, Chennai
 2004-2005                 Customs, Excise and Service Tax Appellate
                                  Tribunal, Chennai
 2004-2005                 Customs, Excise and Service Tax Appellate
                                  Tribunal, Chennai
 April 2005 till March     Customs, Excise and Service Tax Appellate
 2008                             Tribunal, Chennai
 2004-2005                 Customs, Excise and Service Tax Appellate
                                  Tribunal, Chennai
 2002-2003                 The Company is in the process of filing an
                                 appeal with High Court
 1993-1994                 High Court of Karnataka.
 
 Name of the statute          Nature of dues                     Amount
                                                      (Rs in thousands)
 
 Income-tax Act, 1961          Income tax                      2,874*
 Income-tax Act, 1961          Income tax                      2,952*
 Income-tax Act, 1961          Income tax                      3,879*
 Income-tax Act, 1961          Income tax                      4,040*
 Income-tax Act, 1961          Incometax                        1071*
 Income-tax Act, 1961          Incometax                      17,619
                                                         *(14,968paid)
 
 Income-tax Act, 1961          Incometax                      30,551*
 Income-tax Act, 1961          Income tax                     18,940*
 Income-tax Act, 1961          Incometax                      15,062
 
 
 Period to which the             Forum where dispute is pending
 amount relates
 
 1994-1995                        Supreme Court
 1995-1996                        Supreme Court
 1996-1997                        Supreme Court
 1997-1998                        High Court of Karnataka.
 1999-2000                       Commissioner of Income Tax (Appeals)
 2002-2003                       Commissioner of Income Tax (Appeals)
 2003-2004                       Commissioner of Income Tax (Appeals)
 2004-2005                       Commissioner of Income Tax (Appeals)
 2005-2006                       Commissioner of Income Tax (Appeals)
 
 * These amounts are paid
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred any cash losses in the current and
 immediately preceding financial year.
 
 (xi) Based on our audit procedures and on 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) As informed to us, 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) As informed to us, 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 banks or
 financial institutions, the terms and conditions whereof in our opinion
 are not prima - facie prejudicial to the interest of the Company.
 
 (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 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 Companies Act, 1956.
 
 (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 course of our audit.
 
 For S.R. BATLIBOI & ASSOCIATES
 Chartered Accountants
 
 per Sunil Bhumralkar
 Partner
 Membership Mo.: 35141
 
 Bangalore
 April 28, 2009