Fortis Healthcare

1.  We have audited the attached Balance Sheet of Fortis Healthcare
 Limited (the Company) as at March 31, 2008 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 our 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, 2008, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2008 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, 2008;
 
 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
 
 Re: Fortis Healthcare Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a policy of verifying the fixed assets once in two
 years. The physical verification of fixed assets having been carried
 out in the previous year, is due in the next year. The frequency of
 physical verification, 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 in the
 previous year.
 
 (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 certain companies covered in
 the register maintained under section 301 of the Companies Act, 1956.
 The maximum amount involved during the year was Rs. 12,861.91 lacs and
 the year- end balance of loans granted to such parties was Rs.
 12,861.91 lacs.
 
 (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 are re-payable on demand. As informed, the
 Company has not demanded repayment of any such loan during the year.
 The payment of interest has been regular.
 
 (d) There is no overdue amount 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)(e),(f) and (g) of the
 Companies (Auditors Report), 2003 are not applicable to the Company.
 
 (iv) As per the information and explanations given to us, certain items
 of inventory and fixed assets, due to their unique, specialized or
 proprietary nature, are purchased without inviting comparative
 quotations. Read with the above, in our opinion, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business with regard to purchase of inventory and
 fixed assets and for the sale of goods and services. 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 Companies Act, 1956,
 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 the value of Rupees five lakhs entered into
 during the financial year, because of the unique and specialized nature
 of the services involved, 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.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of sub-section (1) of section 209 of the Companies Act, 1956 for
 the products / services of the Company.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, sales- tax, customs duty, excise duty, cess
 and other material statutory dues have generally been regularly
 deposited during the year with the appropriate authorities though there
 has been a slight delay in few cases.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection 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 explanations given to us, there
 are no dues of income-tax, sales-tax, wealth -tax, service tax, custom
 duty, excise duty and cess which have not been deposited on account of
 any dispute.
 
 (x) The Companys accumulated losses at the end of the financial year
 are less than fifty percent of its net worth. The Company has not
 incurred cash loss during the year. In the immediately preceding
 financial year, the Company had incurred cash losses.
 
 (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 financial
 institution, bank or debenture holders.
 
 (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 made preferential allotment of preference
 shares to parties and companies covered in the register maintained
 under section 301 of the Act. In our opinion the price at which the
 shares have been issued is not prejudicial to the interest of the
 Company.
 
 (xix) During the year the Company has issued 600 debentures of Rs.
 10,000,000 each which have also been redeemed during the year. The
 Company had not created any security or charge in respect of these
 debentures.
 
 (xx) We have verified that the end use of money raised by public issue
 is as disclosed in Note no. 17 of Schedule 25 of the financial
 statements.
 
 (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.R. BATLIBOI & CO.
 Chartered Accountants
 
 per Raj Agrawal
 Partner
 Membership No.: 82028
 
 Place   :   New Delhi
 Date    :   June 30, 2008