1. We have audited the attached Balance Sheet of Biocon Limited (‘the
 Company) as at March 31, 2011 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, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 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, 2011;
 
 (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: BIOCON LIMITED (‘the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b) 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. Based on the
 information and explanation provided to us, 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 there
 were no material discrepancies noticed on physical verification.
 
 (iii) (a) 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. 3,061,806 thousands and the balance outstanding at March 31, 2011
 is Rs. 1,801,779 thousands.
 
 (b) 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.
 
 (c) In respect of loans granted, repayment of the principal amount is
 as stipulated and payment of interest, wherever applicable, has been
 regular.
 
 (d) 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 Act.
 
 (e) The Company has not taken any loans from 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. During the course of our
 audit, we have not observed any continuing failure to correct major
 weakness in internal control system of the Company.
 
 (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) 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) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, or employees state insurance,
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and other material statutory dues applicable to it have generally
 been regularly deposited with the appropriate authorities.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under Section 441 A of the Act, we are not in a
 position to comment upon the regularity or otherwise of the Company in
 depositing the same.
 
 (b) 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 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.
 
 (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    Amount      Period to 
                               dues         (Rs. in     which the 
                                         thousands)     amount 
                                                        relates
 
 The Central Excise Act, 1944  Excise Duty     633*     1994-1995
 
 The Central Excise Act, 1944  Excise Duty      859     2005-2006
 
 The Central Excise Act, 1944  Excise Duty   88,209     April 2005 
                                                        till March 2008
 
 The Central Excise Act, 1944  Excise Duty    0,414     2010-2011
 
 The Customs Act, 1962         Customs Duty   3,005     2004-2005
                                            (1514*)
 
 The Customs Act, 1962         Customs Duty 21,606*     2010-2011
 
 VAT Act                       VAT            5,583     2005-2006
                                            (1164*)
 
 Income-tax Act, 1961          Income Tax    3,879*     1996-1997
 
 Income-tax Act, 1961          Income Tax    4,040*     1997-1998
 
 Income-tax Act, 1961          Income Tax   17,619*     2002-2003
 
 Income-tax Act, 1961          Income Tax   12,713*     2003-2004
 
 Income-tax Act, 1961          Income Tax   18,940*     2004-2005
 
 Income-tax Act, 1961          Income Tax   15,062*     2005-2006
 
 Income-tax Act, 1961          Income Tax    24,625     2006-2007
                                          (17,838*)
 
 Income-tax Act, 1961          Income Tax       837     2007-2008
 
 
 Name of the statute           Forum where dispute is pending
 
 The Central Excise Act, 1944  Assistant Collector of Central Excise. 
 
 The Central Excise Act, 1944  Customs, Excise and Service Tax Appellate
                               Tribunal, Chennai
 
 The Central Excise Act, 1944  Customs, Excise and Service Tax Appellate
                               Tribunal, Chennai
 
 The Central Excise Act, 1944  Commissioner Appeal, Chennai
 
 The Customs Act, 1962         Customs, Excise and Service Tax Appellate
                               Tribunal, Chennai
 
 The Customs Act, 1962         Commissioner Appeal Bangalore
 
 VAT Act                       Joint Commissioner Appeal Bangalore
 
 Income-tax Act, 1961          Supreme Court
 
 Income-tax Act, 1961          High Court of Karnataka
 
 Income-tax Act, 1961          Commissioner of Income Tax (Appeals)
 
 Income-tax Act, 1961          Commissioner of Income Tax (Appeals)
 
 Income-tax Act, 1961          Commissioner of Income Tax (Appeals)
 
 Income-tax Act, 1961          Commissioner of Income Tax (Appeals)
 
 Income-tax Act, 1961          Commissioner of Income Tax (Appeals)
 
 Income-tax Act, 1961          Commissioner of Income Tax (Appeals)
 
 
 * These amounts are paid in protest.
 
 (xi) 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.
 
 (xii) 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 financial institution
 and banks. The Company does not have any borrowing by way of debenture.
 
 
 (xiii) 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.
 
 (xiv) 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.
 
 (xv) 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.
 
 (xvi) 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.  
 
 (xvii) The Company did not have any term loans outstanding during the
 year.
 
 (xviii) 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.
 
 (xix) 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.
 
 (xx) The Company did not have any outstanding debentures during the
 year.
 
 (xxi) The Company has not raised any money through a public issue
 during the year.
 
 (xxii) 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
 Firm registration number: 101049W 
 Chartered Accountants
 
 
 
 per Aditya Vikram Bhauwala
 Partner
 Membership No.: 208382
 
 
 Bangalore 
 April 28, 2011