1 We have audited the attached Balance Sheet of DIVIS LABORATORIES
 LIMITED (the Company) as at 31st March 2011, the Profit and Loss
 Account and also 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 ( the
 Order) issued by the Central Government of India in terms of Section
 227(4A) of the Companies Act, 1956 ( the Act), 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 purpose 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
 these 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 Section 211 (3C) of the Act, 1956 to the
 extent applicable.
 
 v) On the basis of the written representations received from the
 directors, as on 31.03.2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31 st March, 2011 from being appointed as 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 read in conjunction
 with the notes and accounting policies thereon give the information
 required by the Act, 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 Balance Sheet, of the state of affairs of the Company
 as at 31st March, 2011;
 
 b) in the case of 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
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDIT REPORT OF EVEN DATE ON THE
 ACCOUNTS OF DIVIS LABORATORIES LIMITED (THE COMPANY) FOR THE YEAR
 ENDED 31st MARCH 2011
 
 1 (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 have been physically verified
 by the management according to the phased programme designed to cover
 all the fixed assets on rotation basis. In respect of fixed assets
 verified according to this programme, which is considered reasonable,
 no material discrepancies were noticed on such verification. As regards
 capital works in-progress, the same will be verified by the management
 on completion of assets.
 
 (c) The fixed assets disposed off during the year did not represent
 substantial part of fixed assets of the Company, which will affect the
 going concern status of the Company.
 
 2 (a) The inventories of the Company have been
 
 physically verified by the Management during the year at reasonable
 intervals except stocks lying with others which have been verified with
 reference to confirmations, certificates and other relevant documents
 where available.
 
 (b) 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) The Company has maintained proper records of inventories and the
 discrepancies noticed on physical verification of stocks as compared to
 book records, which in our opinion were not material, have been
 properly dealt with in the books of account.
 
 3 The Company has neither granted nor taken any loans, secured or
 unsecured to/from companies, firms or other parties covered in the
 register maintained under section 301 of the Act. Consequently, the
 provisions of Clause 4(iiib), 4(iiic), 4(iiid), 4(iiif) and 4(iiig) of
 the Order are not applicable to the Company.
 
 4 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 with regard
 to purchase of inventory, 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 controls
 with regard to purchase of inventory, fixed assets and for the sale of
 goods and services.
 
 5 (a) According to the information and explanations given to us and as
 confirmed by the Company Secretary and Management of the Company, we
 are of the opinion that the particulars of contracts or arrangements
 that need to be entered into the register maintained under section 301
 of the Companies Act, 1956 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, there are no transactions made in pursuance of contracts
 or arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 and exceeding the value of Rs.5,00,000/- in
 respect of each party during the year.
 
 6 According to the information and explanations given to us, the
 Company has not accepted any deposits from the public covered by the
 directives issued by the Reserve Bank of India and the provisions of
 Section 58A and 58AA or any other relevant provisions of the Act and
 the rules framed there under. Consequently, the provisions of Clause
 4(vi) of the Order are not applicable to the Company.
 
 7 In our opinion and according to the explanations given to us, the
 Company has an internal audit system commensurate with the size and
 nature of its business.
 
 8 We have broadly reviewed the records maintained by the Company
 pursuant to the order made by the Central Government of India, 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
 records have been maintained and are being made up. We have not,
 however, made a detailed examination of the records with a view to
 determine whether they are accurate or complete.
 
 9 (a) According to the records of the Company and as per the
 information and explanations given to us, the Company is generally
 regular in depositing the undisputed statutory dues including 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 with the appropriate authorities In respect of these statutory dues,
 there are no outstanding dues as on 31.03.2011 which are outstanding
 for a period of more than six months from the date they became payable.
 
 (b) According to the records of the Company and as per the information
 and explanations given to us, there are no dues of Sales Tax, Wealth
 Tax , Excise Duty and Cess which have not been deposited on account of
 any dispute as on 31.3.2011 except Customs Duty, Service Tax and Income
 Tax, the details of which are as given under :
 
 Name of the  Period to 
              which the                    Amount  Forum where
                        Nature of dues 
 Statute      amount  
              relates                      Rs. in 
                                           lakhs   dispute is pending
 
 Customs Act  August, 
              2005      Penalty and fine 
                        for non-            0.30   Customs, Excise
                                                   & Service Tax
 1962                   fulfillment of 
                        export                     Appellate Tribunal, 
                                                   south
                        obligation against 
                        goods                      Zonal Bench, 
                                                   Bangalore
                        imported under
                        DEEC Scheme
 
 Customs Act  January, 
              2007      Penalty for non-
                        fulfillment         10.00  Customs, Excise & 
                                                   Service Tax
 1962                   of export 
                        obligation                 Appellate Tribunal,
                                                   south
                        against goods 
                        imported                   Zonal Bench, Chennai
                        under DEEC Scheme
 
 Customs Act  June, 
              2006 to   Customs duty 
                        foregone             8.00  Customs, Excise &
                                                   Service Tax
 1962         July, 
              2007      on materials used for      Appellate Tribunal, 
                                                   south
                        manufacture of 
                        non-exci                   Zonal Bench, 
                                                   Bangalore
                        -sable goods,
                        penalty for
                        non-payment of 
                        customs duty and 
                        penalty for
                        improper 
                        utilisation of
                        Cenvat Credit
 
 Customs Act  August, 
              2007 to   Penalty for non-
                        payment              8.00  Customs, Excise & 
                                                   Service Tax
 1962         July, 
              2008      of customs duty and        Appellate Tribunal,
                                                   south
                        penalty for 
                        improper                   Zonal Bench, 
                                                   Bangalore
                        utilisation of 
                        Cenvat Credit
 
 Customs Act  August, 
              2008 to   Penalty for non-
                        payment              2.00  Commissioner
                                                   of Central Excise
 1962         December 
              2008      of customs duty and       (Appeals), 
                                                   Visakhapatnam
                        penalty for improper
                        utilisation of 
                        Cenvat Credit
 
 Service Tax  April, 
              2006 to   Penalty on Service 
                        Tax                 22.69  Customs, Excise
                                                   & Service Tax
 Under the    December 
              2006                                 Appellate Tribunal,
                                                   south
 Finance Tax,                                      Zonal Bench, 
                                                   Bangalore
 1994
 
 Income Tax   2005-06   Interest for delay   0.41  Additional 
                          in                       Commissioner of
 Act, 1961              payment of advance         Income Tax, 
                                                   Range - I,
                        fringe benefit tax         Hyderabad.
                        demanded on 
                        completion
                        of assessment
 
 10. As per the information and explanations given to us and on an
 overall examination of the financial statements of the company for the
 current and immediately preceding financial year, we report that the
 Company does not have any accumulated losses at the end of the current
 financial year nor incurred cash losses in the current and immediately
 preceding financial year.
 
 11. According to records of the Company, during the year the Company
 has not defaulted in repayment of dues to financial institutions or
 banks or debenture holders.
 
 12. As per the information and explanations given to us, as the Company
 has not granted any loans and advances on the basis of security by way
 of pledge of shares, debentures and other securities to any body during
 the year.
 
 13. In our opinion, as the Company is not a chit fund or a nidhi or
 mutual benefit fund or society, the provisions of Clause 4 (xiii) of
 the Order are not applicable to the Company for this year.
 
 14.In our opinion, as the Company is not dealing in or trading in
 Shares, Securities, debentures and other investments.
 
 15. As per the information and explanations given to us, the Company
 has not given any guarantees for loans taken by others from banks or
 financial institutions.
 
 16. According to records of the Company, the Company has not raised any
 term loans during the year and in respect of term loans raised in
 earlier years, the same have been applied for the purposes for which
 they were raised in the corresponding years.
 
 17. According to records and on an overall examination of the balance
 sheet of the company, we report that the funds raised on short term
 basis have not been used for long term investments.
 
 18. As per the information and explanations given to us, the Company
 has not made any preferential allotment of shares to parties covered in
 the Register maintained under section 301 of the Act during the year.
 
 19. As the Company has not issued any debentures during the year, which
 requires the creation of security or charge, the provisions of Clause
 4(xix) are not applicable to the Company.
 
 20. As the Company has not raised any money by public issues during the
 year, the provisions of Clause 4(xx) are not applicable to the Company.
 
 21. During the course of our examination of the books and records of
 the Company carried out in accordance with the generally accepted
 auditing practices in India, and as per the representation given by the
 Company and relied on by us, we have neither come across any instance
 of material fraud on or by the Company, noticed or reported during the
 year, nor have we been informed of such cases by the management.
 
 
 
                                For P.V.R.K. NAGESWARA RAO & CO.,
 
                                Chartered Accountants
 
                                Firms Registration Number : 002283S
 
                                P.V.R.K. NAGESWARA RAO
 
 Hyderabad                      Partner
 
 20-05-2011                     Membership No. 18840