Cadila Healthcare

1.  We have audited the attached Balance Sheet of Cadila Healthcare
 Limited (the company) as at 31st March, 2009, and also the Profit and
 Loss Account and the Cash Row 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 by the Companies (Auditors Report) (Amendment) Order, 2004
 issued by the Central Government of India in terms of section 227(4A)
 of the Companies Act, 1956 we enclose in the Annexure, a statement on
 the matters specified in paragraph 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 (a) We have obtained alt the information and explanations, which to the
 best of our knowledge and belief, were necessary for the purposes of
 our audit;
 
 (b) 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 the
 books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) 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;
 
 (e) On the basis of the written representations received from the
 directors as on 31st March, 2009 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956 and
 
 (0 In our opinion, and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 significant accounting policies and notes thereon, 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:
 
 (i) In the case of the Balance Sheet, of the state of affairs of the
 company as at 31st March, 2009; (ii) In the case of the Profit and Loss
 Account, of the profit for the year ended on that date and (iii) In the
 case of Cash Flow Statement, of the cash flows for the year ended on
 that date,
 
 Annexure to the Auditors Report
 
 With reference to the Annexure referred to in paragraph 3 of the
 Auditors Report to the members of Cadila Healthcare Limited on the
 accounts for the year ended 31st March, 2009, we report that:
 
 1.  (a) The company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 
 assets.
 
 (b) Some of the fixed assets were physically verified during the year
 by the management in accordance with programme of verification, which
 in our opinion provides for physical verification of all the fixed
 assets at reasonable intervals. According to the information and
 explanations given to us no material discrepancies were noticed on such
 verification.
 
 (c) Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 2.  (a) The inventory has been physically verified by the management
 during the year. In our opinion, the frequency of such verification
 
 is reasonable.
 
 (b) In our opinion the procedures for the physical verification of
 inventory followed by management are reasonable and adequate in
 relation to the size of the company and the nature of its business.
 
 (c) The company has maintained proper records of inventory. No material
 discrepancies were noticed on physical verification of inventory.
 
 3.  (a) 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,
 clause (iii)(b) to (iii)(d) of paragraph 4 of the Order are not
 applicable to the company for the current year.
 
 (b) 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, clause (iii)(f) and (iii)(g)
 of paragraph 4 of the Order are not applicable to the company for the
 current year.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is 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, we have not observed any
 continuing failure to correct major weaknesses in internal control
 system.
 
 5.  (a) To the best of our knowledge and belief and according to the
 information and explanations provided by the management, the
 
 particulars of contracts or arrangements referred to in Section 301 of
 the Companies Act, 1956, have been so entered in the register required
 to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, transactions made in pursuance of such Contracts or
 Arrangements and exceeding Rs. Five Lacs in respect of any party during
 the year, have been made at prices, which are reasonable having regard
 to prevailing market prices at the relevant time.
 
 6.  To the best of our knowledge and belief and according to the
 information and explanations given to us, the company has complied with
 the directives issued by the Reserve Bank of India and provisions of
 sections 58A, 58AA or other relevant provisions of the Companies Act,
 1956 and the rules framed there under with regard to deposits accepted
 from the public. We are informed that no order has been passed by the
 Company Law Board or National Company Law Tribunal or Reserve Bank of
 India or any court or any other Tribunal in this regard.
 
 7.  The company has an internal audit system which, in our opinion, is
 commensurate with size and the nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 company pursuant to the Rules made by the Central Government
 
 for 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. We have
 not, however, made a detailed examination of the records with a view to
 determining whether they are accurate or complete.
 
 9. (a) According to the information and explanations given to us and on
 the basis of our examination of the books of account, the company has
 been generally regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income-tax, Sales-tax, Wealth tax. Service
 tax, Custom duty, Excise duty, cess and any other statutory dues during
 the year with the appropriate authorities. There are no undisputed dues
 payable in respect of such statutory dues which have remained
 outstanding as at 31st March, 2009 for a period of more than six months
 from the date they became payable.
 
 10.  The company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 11.  The company has not defaulted in repayment of dues to a financial
 institution or banks or debenture holders.
 
 12.  The company has not granted any loans and advances on the basis of
 security by way of pledge of shares during the year.
 
 13.  The company is not a chit fund/nidhi/mutual benefit fund/society.
 Hence, the provisions of clause 4(xiii) of the Companies (Auditors
 Report) Order, 2003 is not applicable to the company.
 
 14.  According to the information and explanations given to us, the
 company is not dealing or trading in shares, securities, debentures and
 other investments. Hence, the provisions of clause 4(xiv) of the
 Companies (Auditors Report) Order, 2003 is not applicable to the
 company.
 
 15.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of guarantees/letter of comfort
 given by the company for loans taken by subsidiaries and a joint
 venture company from banks are not prima facie, prejudicial to the
 interest of the company.
 
 16. Term loans obtained by the company were applied for the purpose for
 which the loans were obtained.
 
 17. According to the Cash Row Statement and other records examined by
 us and the information and explanations given to us, on an overall
 basis, funds raised on short term basis have not, prima facie, been
 used during the year for long term investment
 
 18. The company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Companies Act, 1956 during the year.
 
 19. There are no debentures issued and outstanding during the year
 under audit, hence, the question of creating the Securities/charges
 thereon does not arise.
 
 20. The company has not raised any money by public issues during the
 year. Hence, the provisions of clause 4(xiv) of the Companies
 (Auditors Report) Order, 2003 is not applicable to the company.
 
 21. To the best of our knowledge and belief, and according to the
 information and explanations given to us, no fraud on or by the company
 was noticed or reported during the year.
 
                                    For Mukesh M. Shah & Co., 
                                        Chartered Accountants
 
 Place: Ahmedabad.                            Mukesh M. Shah
 Date : April 28,2009.                               Partner
                                        Membership No. 30190