Cipla

1.  We have audited the attached Balance Sheet of Cipla Limited as at
 31st March 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 Company’s
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We have conducted our audit in accordance with the auditing
 standards generally accepted in India. These 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 the 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
 (hereinafter referred to as “the Order”) issued by the Central
 Government of India in terms of section 227(4A) of the Companies Act,
 1956, and on the basis of such checks of the books and records of the
 Company as we considered appropriate and according to the information
 and explanations given to us, 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 in paragraph 3
 above, we report that:
 
 a.  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;
 
 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
 those books;
 
 c.  The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in section 211(3C) of the Companies
 Act, 1956;
 
 e.  On the basis of the written representations received from the
 Directors of the Company as on 31st March 2009 and taken on record by
 the Board of Directors of the Company, we report that none of the
 Directors is disqualified as on 31st March 2009, from being appointed
 as a Director in terms of section 274(1)(g) of the Companies Act, 1956;
 and
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements, together
 with the notes thereto, 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 the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  a.  The Company has generally maintained proper records showing
 full particulars including quantitative details and situation of fixed
 assets, other than the situation of furniture and fixtures and office
 equipment where the situation recorded is the location of the Company’s
 different establishments.
 
 b.  The Company has a policy of physically verifying its fixed assets
 periodically, which in our opinion is reasonable having regard to the
 size of the Company and the nature of its business. During the year,
 some of the fixed assets have been physically verified by the
 management and discrepancies noticed during the physical verification
 and the assets scrapped during the year has been properly dealt with in
 the books of account.
 
 c.  The fixed assets that have been sold/disposed of during the year do
 not constitute a substantial part of the total fixed assets of the
 Company. Hence, the going concern concept has not been affected.
 
 2.  a.  The inventory has been physically verified by the management at
 reasonable intervals during the year.
 
 The verification was done on the basis of the perpetual inventory
 system operated by the Company. In case of materials lying with third
 parties, certificates confirming such inventory have been obtained by
 the Company from most of the third parties.
 
 b.  In our opinion and on the basis of the information and explanations
 given to us, the procedures for 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.  On the basis of our examination of the inventory records, in our
 opinion, the Company has maintained proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to the book records were not material and have been properly dealt with
 in the books of account.
 
 3.  a.  As informed to us, the Company has not granted any loans,
 secured or unsecured to companies, firms or other parties listed in the
 Register maintained under section 301 of the Companies Act, 1956.
 Therefore, requirements of clauses (iii-b), (iii-c) and (iii-d) of
 paragraph 4 of the Order are not applicable to the Company.
 
 b.  The Company has taken loans from three parties covered in the
 Register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs.68.64 crore and the
 year-end balance of loans taken from such parties was Rs.68.64 crore.
 
 c.  In our opinion, the rate of interest and other terms and conditions
 on which the loans referred in point 3b above have been taken are not,
 prima facie, prejudicial to the interest of the Company.
 
 d.  The loans referred to in point 3b above are due for repayment along
 with interest in the next financial year and no interest was payable on
 such deposits during the year. The Company has provided for the
 interest payable on the loans upto 31st March 2009. Hence, there was no
 default in repayment of the loans or the interest payable on such
 loans.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is generally adequate internal control system
 commensurate with the size of the Company and the nature of its
 business for purchase of inventory and fixed assets and for the sale of
 goods and services. Further, on the basis of our examination of the
 books and records of the Company, and according to the information and
 explanations given to us during the course of audit, no major weakness
 has been noticed in these internal control systems.
 
 5.  a.  In our opinion and according to the information and
 explanations given to us, the particulars of contracts or agreements
 referred to in section 301 of the Companies Act, 1956 have been 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, the transactions made in pursuance of such contracts or
 agreements and exceeding the value of rupees five lakhs in respect of
 any party during the year have been made at prices, which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  The Company has accepted deposits under section 58A of the
 Companies Act, 1956. In our opinion and according to the information
 and explanations given to us, the Company has complied with the
 provisions of section 58A and other relevant provisions of the
 Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,
 1975 with regard to the deposits accepted by the Company.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its 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 the
 maintenance of cost records under section 209(1)(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 accounts and records with a
 view to determine whether they are accurate or complete.
 
 9.  a.  According to the information and explanations provided to us
 and the records of the Company examined by us, in our opinion, the
 Company was regular in depositing undisputed 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 Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Customs Duty and Excise Duty were in arrears as at
 31st March 2009 for a period of more than six months from the date they
 became payable.
 
 c.  According to the information and explanations given to us and based
 on the records of the Company examined by us, as on 31st March 2009,
 there were no dues in respect of Income Tax, Wealth Tax, Service Tax,
 Customs Duty and Cess that have not been deposited with the appropriate
 authorities on account of dispute.
 
 The particulars of dues towards Excise Duty and Sales Tax that have not
 been deposited on account of dispute as at 31st March 2009 and the
 forum where these disputes are pending are as follows:
 
 Name of the         Nature of dues       Financial years
 statute                                  to which the
                                          matter pertains
 
 The Central          Excise Duty         1999-00 to
 Excise Act, 1944                         2007-08
 
 State Sales Tax      Sales Tax           2001-02 to
 Acts                                     2008-09
 
 Forum where the       Amount
 dispute is pending    Rs. in crore
 
 CESTAT/                39.45
 Commissioner
 (Appeals)
 
 State Sales Tax         0.49
 Tribunal
 
 10.  The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses in the current year or
 in the immediately preceding financial year.
 
 11.  According to the information and explanations given to us and
 based on our observations during the audit, the Company has not
 defaulted in repayment of dues to any financial institution or bank.
 
 12.  According to the information and explanations given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13.  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.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in shares,
 securities, debentures or other investments. Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable to the
 Company.
 
 15.  According to the information and explanations given to us and the
 representations made by the management, the Company has not given any
 guarantee for loans taken by others from banks or financial
 institutions.
 
 16.  The Company has not obtained any term loans.
 
 17.  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.
 
 18.  The Company has not made preferential allotment of shares to
 parties and companies covered in the Register maintained under section
 301 of the Companies Act, 1956.
 
 19.  The Company has not issued any debentures.
 
 20.  The Company has not raised any money through a public issue during
 the year.
 
 21.  During the course of our examination of the books of account and
 records of the Company, and according to the information and
 explanations given to us, no fraud on or by the Company has been
 noticed or reported by the Company during the year.
 
 For R.S. Bharucha & Co.,                     For R.G.N. Price & Co.,
 Chartered Accountants                          Chartered Accountants
 
 M.R. Amin                                              R. Rangarajan
 Partner                                                      Partner
 Membership No. 114010                           Membership No. 41883
 
 Mumbai, 15th July 2009                        Mumbai, 15th July 2009