1.  We have audited the attached balance sheet of DISHMAN
 PHARMACEUTICALS AND CHEMICALS LIMITED (the Company) as at March 31,
 2011, the profit and loss account and the cash flow statement of the
 Company for the year ended on that date, both 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 the 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 misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the 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 (CARO)
 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 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 (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 it 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 are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (e) 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:
 
 (i) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 (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 of the
 Company for the year ended on that date.
 
 5.  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, none of the Directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of Section 274(1)(g) of the
 Companies Act, 1956.
 
 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, 2011)
 
 1.  The nature of the Companys 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 fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 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 and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and the discrepancies noticed on physical verification of
 the inventories between the physical stocks and the book records were
 not material.
 
 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 and the year-end balance of
 the loan granted was Rs.3800 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest 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 not taken any unsecured loan from company, firm or
 party listed in the register maintained under section 301 of the
 Companies Act, 1956. Hence, the paragraphs 4(iii)(f) and 4(iii)(g) of
 the Order are not applicable to the Company.
 
 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, 2011
 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:
 
 Sr. Name of the  Nature of     Amount Period to which  Forum where the
 No    statute      dues  (Rs. in lacs)   the amount  dispute is pending
                                           relates
 
 1 The Income 
   Tax           Income Tax    1858.73  F.Y. 1999-00, The Commissioner 
                                                        of Income Tax
                                                          (Appeals) 
   Act, 1961                            F.Y. 2000-01,
                                        F.Y. 2004-05, 
                                        F.Y. 2006-07 
                                957.79  F.Y. 2005-06   Income Tax 
                                                        Appellate
                                                         Tribunal
 
 2 The Central   Excise 
                 duties         293.46  F.Y. 2003-04,   Central Excise 
                                                       and Service Tax 
                                                         Appellate 
   Excise       and service             F.Y. 2006-07,    Tribunal
   Act, 1944         tax                F.Y. 2007-08
                                 45.43  F.Y. 2009-10   The Commissioner 
                                                      (appeals) Central 
                                                            Excise
                                 58.55  F.Y. 2009-10,   Assistant 
                                                        Commissioner 
                                                        Central Excise
                                        F.Y. 2010-11
 
 3 Central Sales Sales Tax       41.73  F.Y. 2001-02 
                                          and        Joint Commissioner 
                                                      Commercial Tax
   Tax Act, 1956                        F.Y. 2002-03
                                118.81  F.Y. 2006-07   Gujarat VAT 
                                                          Tribunal
 
 4 Gujarat Sales Sales Tax      114.95  F.Y. 2001-02 
                                          and        Joint Commissioner, 
                                                        Commercial Tax
 Tax, Act                               F.Y. 2002-03
                                146.97  F.Y. 2006-07    Gujarat VAT 
                                                          Tribunal
 
 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 to the debenture holders.
 
 13.  In our opinion and according to the information and explanations
 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 explanations
 given to us, the term loans have been applied for the purposes 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 issued secured redeemable non convertible
 debentures of Rs. 750,000,000. The Company has created security in
 respect of the debentures issued.
 
 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
 
                                              (Registration No. 117365W)
 
                                                         Gaurav J. Shah
 
                                                                Partner
 
 Ahmedabad, 26th May, 2011                         (Membership No.35701)