1) We have audited the attached Balance Sheet of ELDER PHARMACEUTICALS
 LIMITED as at March 31, 2011, the related Profit and Loss Account of
 the Company 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. 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.
 
 31 As required by the Companies (Auditors'' Report) Order, 2003, issued
 by the Central Government of India under sub-section (4AJ of the
 section 227 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 give
 in the Annexure a
 statementonthe-fiiaUeiS''apweWreit''iH''pw''ByiupliB''itMiiiU 5uRhesaid
 Order.
 
 4) Further to our comments in the Annexure referred to 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 purpose 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 the
 books;
 
 c) The Balance Sheet, Profit and Loss Account and the Cash Flow
 Statement referred to in this report are in agreement with the books of
 account;
 
 d) In our opinion, the Cash Flow Statement, Profit and Loss Account and
 the Balance Sheet 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 representation received from the
 Directors and taken on record by the Board of Directors, we report that
 none of the said Directors is disqualified as on SI^March, 2011 from
 being appointed as 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 with the 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, 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.
 
 Annexure to the Auditors'' Report.
 
 (Referred to paragraph 3 of our report of even date)
 
 1) a) The Company has maintained proper records to show full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) As explained to us, the management during the year has physically
 verified the fixed assets 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) In our opinion, the Company has not disposed of a substantial part
 of its fixed assets during the year and the going concern status of the
 Company is not affected.
 
 2) a) As explained to us, the management at regular intervals during
 the year, has physically verified inventories.
 
 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 nature of its business.
 
 c) The Company has maintained proper records of inventories. As
 explained to us, there was no material discrepancies noticed on
 physical verification of inventory.
 
 3I a) The Company has not granted unsecured loans, to any company
 listed in the register maintained under section 301 of the Companies
 Act, 1956.
 
 b) In our opinion and according to the information and explanation
 given to us, the rate of interest and other terms and conditions of
 loan given are prima facie not prejudicial to the interest of the
 Company.
 
 c) The loan outstanding at the year end is at call and has not been
 recalled during the year. The Company is generally regular in payment
 of interest.
 
 d) There are no overdue amounts exceeding T 1.00 lac.
 
 el According to the information and explanations given tous, the
 Company has not taken loans from the parties listed in the register
 maintained under section 301 of the Companies Act, 1956.
 
 A) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory, fixed assets and for the sale
 of goods. During the course of our audit, we have not observed any
 major weakness in internal controls.
 
 5) a) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance 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) Based on the information and explanations given to us, we are of the
 opinion that the transactions made in pursuance of the contracts or
 agreements entered in the register maintained under section 301 of the
 Companies Act, 1956 and exceeding the value of Rs.5 lakhs in respect of
 any party during the year have been made at reasonable prices, having
 regard to the prevailing market price at the relevant time.
 
 6) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of sections
 58A and 58AA of the Companies Act, 1956 and Companies (Acceptance of
 Deposits) Rules, 1975 with regard to the deposits accepted from the
 public.
 
 7) The Company has an internal audit system commensurate with the size
 and the nature of its business.
 
 8) The Central Government has prescribed maintenance of Cost Records
 under Section 209(1 )(d) of the Companies Act, 1956 in respect of
 certain manufacturing activities of the Company. We have broadly
 reviewed the accounts and records of the Company in this connection 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 same.
 
 9) al According to the records of the Company, undisputed statutory
 dues including Provident Fund, Investor Education and
 Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
 Wealth Tax, Customs Duty, Excise Duty, Cess and other statutory dues
 have been regularly deposited with the appropriate authorities.
 
 b) The disputed statutory dues that have not been deposited on account
 of matters pending before appropriate authorities are as under.
 
 No. Name of the 
     Statute          Nature of 
                      the dues            Forum where dispute    Amount
                                          is pending (Rs. Lacs)
 
 1   Income Tax   Block assessment dues   High Court, Mumbai     216.53
 
 2   Income Tax   Assessment dues         High Court, Mumbai      23.66
 
 3   Income Tax   Assessment dues         Commissioner of 
                                          Income Tax              28.39
 
 4   Customs Act  Adjudication Order      Customs, Excise & 
                                          Service Tax             25.00
                                          Appellate Tribunal
 
 5   Sales Tax    Assessment dues         Asst.Commissioner 
                                          Commercial              17.56
                                          Tax, Bihar
 
 10) The Company has no accumulated losses and has not incurred any cash
 losses during the financial year covered by our audit or in the
 immediately preceding financial year.
 
 11) According to information and explanations given to us and based on
 the documents and records produced before us, the Company has not
 defaulted in repayment of dues to banks as at the balance sheet date.
 
 12) In our opinion and 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 and according to the information and explanations
 given to us, the nature of activities of the Company does not attract
 any special statute applicable to chit fund and nidhi/ mutual benefit
 fund/ society.
 
 14) According to information and explanations given to us and based on
 the documents and records produced before us, the Company is''not
 dealing or trading in shares, securities, debentures and other
 investments.
 
 15) According to the information and explanations given to us and the
 records examined by us , the terms and conditions of the guarantee
 given by the Company for loans taken by others from a bank are not
 prejudicial to the interest of the Company.
 
 16) To the best of our knowledge and belief and according to the
 information and explanations given to us, term loans availed by the
 Company were, prima facie, applied by the Company during the year for
 the purpose for which the loans were obtained
 
 17) According to the Cash Flow statement and other records examined by
 us and the information and explanations given to us, on overall basis,
 funds raised on short term basis, have prima facie, not been used
 during the year for long term investments.
 
 18) The Company has not made any preferential allotment of shares to
 parties or companies covered in the register maintained under section
 301 of the Companies Act,1956.
 
 19) As per information and explanations given to us and based on
 records examined by us the Company has created charge in respect of
 debentures issued during the year.
 
 20) To the best of our knowledge and belief and according to the
 information and explanations given to us, the Company has not raised
 any money through a public issue during the year.
 
 21) In our opinion and according to the information and explanations
 given to us, no fraud on or by the Company has been noticed or reported
 during the year, which causes the financial statements to be materially
 misstated.
 
 For S S KHANDELWAL & CO.
 
 Chartered Accountants
 
 (Registration No. 105064W)
 
 SS KHANDELWAL
 Proprietor
 
 Membership No. 31487
 
 Mumbai, 
 
 12th August, 2011