Dishman Pharmaceuticals & Chemicals

1.  We have audited the attached Balance Sheet of Dishman
 Pharmaceuticals and Chemicals Limited 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 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. 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 finan- cial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by man- agement, 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 by the Companies (Auditor’s Report) (Amend- ment) Order, 2004
 (together ‘the Order’) issued by the Central Government in terms of
 Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure
 a statement on the matters specified in paragraphs 4 & 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 agree- ment 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 sub – section (3C) of Section 211
 of the Companies Act, 1956;
 
 (e) On the basis of 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;
 
 (f) 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 March 31, 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company 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 on the accounts
 of Dishman Pharmaceuticals and Chemicals Limited for the year ended on
 March 31, 2009)
 
 1.  The nature of the Company’s activities and other relevant facts are
 such that item (xiii) and (xiv) of paragraph 4 of the Order are not
 applicable to the Company.
 
 2.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the fixed assets were physically verified by
 the management in a phased periodical manner, which in our opinion is
 reasonable, having regard to the size of the Company and nature of its
 assets. No material discrepancies were noticed on such physical
 verification.
 
 (c) The Company has not disposed off substantial part of the fixed
 assets during the year.
 
 3.  (a) As informed to us, the inventories have been physically
 verified during the year by the management. In our opinion, the
 
 frequency of verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification of inventories.
 
 4.  (a) The Company has granted unsecured loan to a company listed in
 the register maintained under section 301 of the
 
 Companies Act, 1956. The maximum amount involved during the year was
 Rs.35 lacs and the year-end balance of the loan granted to the company
 was Rs. NIL.
 
 (b) In our opinion and according to the information and explanations
 given to us, the aforesaid loan is interest free and other terms and
 conditions of the loan are not prima facie prejudicial to the interest
 of the Company.
 
 (c) In respect of the loan given by the Company, the terms of repayment
 of principal and interest have not been stipulated and hence the
 question of overdue amount does not arise.
 
 (d) The Company has taken unsecured loans from two companies listed in
 the register maintained under section 301 of the Companies Act, 1956.
 The maximum amount involved during the year was Rs. 137.25 lacs and the
 year-end balance of loans taken from such companies was Nil.
 
 (e) In our opinion and according to the information and explanations
 given to us, the aforesaid loans are interest free and other terms and
 conditions are not prima facie prejudicial to the interest of the
 Company.
 
 (f) In respect of loans taken by the Company, the terms of repayment
 have not been stipulated.
 
 5.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for
 purchase of inventory and fixed assets and for sale of goods and
 services. We have not observed any continuing failure to correct major
 weaknesses in such internal control system.
 
 6.  In respect of contracts or arrangements required to be entered in
 the register maintained in pursuance of Section 301 of the Companies
 Act, 1956, to the best of our knowledge and belief and according to the
 information and explanations given to us:
 
 (a) Particulars of contracts or arrangements have been so entered.
 
 (b) The transactions made in pursuance of such contracts or
 arrangements have been made at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 7.  According to the information and explanations given to us, the
 Company has not accepted any deposits from the public.  Therefore, the
 provisions of Clause (vi) of paragraph 4 of the Order are not
 applicable to the Company.
 
 8.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 9.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the notification of the Central Government for
 maintenance of the cost records under section 209(1) (d) of the
 Companies Act, 1956 and on the basis of such review, we are of the
 opinion, that prima facie, the prescribed accounts and records have
 been made and maintained.  We have not, however, carried out a detailed
 examination of the same.
 
 10.  In respect of statutory dues:
 
 (a) According to the information and explanations given to us, the
 Company is generally regular in depositing undisputed statutory dues,
 including provident fund, employees’ state insurance, income tax,
 wealth tax, service tax, custom duty, cess and other material statutory
 dues with the appropriate authorities during the year. According to the
 information and explanations given to us, no undisputed amounts payable
 in respect of the aforesaid dues were outstanding as at March 31, 2009
 for a period of more than six months from the date of becoming payable.
 
 (b) The disputed statutory dues that have not been deposited on account
 of disputed matters pending before appropriate authorities are as
 under:
 
 11.  The Company does not have accumulated losses at the end of the
 financial year. The Company has not incurred cash losses during the
 financial year covered by the audit and in the immediately preceding
 financial year.
 
 12.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institution or bank or debenture holders.
 
 13.  In our opinion and according to the information and explanation
 given to us, no loans and advances have been granted by the Company on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 14.  The Company has given guarantees for loans taken by others from
 banks and financial institutions. In our opinion and according to the
 information and explanations given to us, the terms and conditions
 thereof are not prima facie prejudicial to the interest of the Company.
 
 15.  In our opinion and according to the information and explanation
 given to us, the term loans have been applied for the purpose for which
 they were raised.
 
 16.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, funds
 raised on short-term basis have, prima facie, not been used during the
 year for long term investment.
 
 17.  During the year, 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.
 
 18.  The Company has not issued any debentures during the year.
 
 19.  The Company has not raised any money by way of public issue during
 the year.
 
 20.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company was noticed or reported during the year.
 
                                For Deloitte Haskins & Sells
                                       Chartered Accountants
                                            (Gaurav J. Shah)
 
 Place: Ahmedabad                                   Partner
 Date : 25th May 2009                   Membership No.35701