1.  We have audited the attached Balance Sheet of Fern Care Pharma
 Limited (the Company) 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 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 (as
 amended) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 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 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 purposes 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 ou examination of those
 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 sub-section (3C) of section 211 of the
 Companies Act, 1956.
 
 v. On the basis of the 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.
 
 vi. 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;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2009;
 
 b) in the case of the 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 referred to in paragraph 3 of our report of even date
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) Most of the fixed assets were physically verified by the management
 in the previous year in accordance with a planned programme of
 verifying them once in four years which, in our opinion, is reasonable
 having regard to the size of the Company and the nature of its assets.
 As informed, no material discrepancies were noticed on such
 verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) The procedures of 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) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) The Company has granted loan to a firm covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 85,841,029 and the
 year- end balance of loans granted along with interest to such parties
 was Rs. 85,841,029.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The loans granted along with interest are re-payable on demand. As
 informed, the company has not demanded repayment of any such loan
 during the year, thus, there has been no default on the part of the
 parties to whom the money has been lent.
 
 (d) There is no overdue amount more than Rupees one lakh of loans
 granted to companies, firms or other parties listed in the register
 maintained under section 301 of the Companies Act, 1956.
 
 (e) As informed, the Company has not taken any loans, secured or
 unsecured from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Accordingly, the provisions of clause 4(iii) (f) and (g) of the
 Companies (Auditors Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (iv) In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that other than the
 items of special nature for which comparable quotations are not
 available or where the Company has approved vendors for certain
 products and accordingly, not obtained quotations, there is an adequate
 internal control system commensurate with the size of the company and
 the nature of its business for purchase inventory and fixed assets,
 sale of goods and service. During the course of our audit, no major
 weakness has been noticed in the internal control system in respect of
 these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) In respect of transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs entered into during
 the financial year, having regard to the explanation in paragraph (iv)
 above because of the unique and specialized nature of the items
 involved and absence of any comparable prices, we are unable to comment
 whether the transactions were made at prevailing market prices at the
 relevant time.
 
 (vi) The Company has not accepted any deposits from the public during
 the year
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) 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(l)(d) of the Companies
 Act, 1956 in respect of cosmetics and toiletries and are of the opinion
 that prima facie, the prescribed accounts and records have been made
 and maintained.  However, we have not made a detailed examination of
 the records.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including provident
 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. As explained to us, the Company did
 not any dues on account of Investors Education and Protection Fund.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, employees
 state insurance, income-tax, wealth-tax, service tax, sales-tax,
 customs duty, excise duty, cess and other undisputed statutory dues
 were outstanding, at the year end, for a period of more than six months
 from the date they became payable.
 
 (c) According to the information and explanation given to us, the dues
 outstanding of excise duty on account of dispute are as follows:
 
 Name of the  Nature of dues  Amount   Period to   Forum where dispute is
                                                   pending
 statute                      (Rs)                 which the
                                                   amount 
                                                   relates
 
 Central 
 Excise 
 Act,      Excise Duty demand  25,935,492  October 
                                           2007 to   Customs, Excise 
                                                     & Service   Tax
 1944      on clearance of 
           goods                          January 
                                          2008       Appellate Tribunal, 
                                                     New Delhi
           without getting
           registered
 
 * excluding interest and penalty
 
 According to the information and explanation given to us, there are no
 dues of income tax, sales-tax, wealth tax, service tax, customs duty
 and cess which have not been deposited on account of any dispute.
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a bank and financial
 institution. The Company has not issued any debentures.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) 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 Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) 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.
 
 (xviii)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.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money through public issue during
 the year. Consequently, the provisions of clause 4 (xx) of the
 Companies (Auditors Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 
                                         For S.V. GHATALIA & ASSOCIATES
                                                  Chartered Accountants
 
                                                        per Sudhir Soni
                                                                Partner
                                                  Membership No.: 41870
 Place: Mumbai
 Date: June 10, 2009