1.  We have audited the annexed Balance Sheet of FORTIS MALAR HOSPITALS
 LTD (the Company) as on 31st March 2011, and also the Profit and Loss
 Account and the Cash flow statement of the Company for the year ended
 on 31st March 2011 and annexed thereto.
 
 2.  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.
 
 3.  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 mis- statement. 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.
 
 4.  As required by the Companies (Auditors Report) order, 2003, issued
 by Government of India in terms of sub-section (4A) Section 227 of the
 Companies Act, 1956, we enclose an annexure which is a statement of the
 matters specified in paragraph 4 and 5 of the said order.
 
 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 appears from our examinations of
 those books.
 
 c.  The Balance Sheet, Profit and Loss Account and the Cash flow
 statement dealt with by the report are in agreement with the books of
 accounts.
 
 d.  In our opinion the Balance Sheet, the Profit and Loss Account and
 the Cash flow statement dealt with by this report comply with the
 Accounting Standards referred to in Section 211 (3C) of the Companies
 Act, 1956.
 
 e.  On the Basis of written representation received from the directors,
 as on 31st March 2011 and taken on record by the Board of Directors, we
 report that none of the directors, as on 31st March 2011, is
 disqualified from being appointed as a director in terms of Section
 274(1) (g) of the Companies Act, 1956
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, read together 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 for the
 year ended on that date; and
 
 iii. In the case of Cash Flow Statement, of the Cash Flow for the year
 ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH (4) OF OUR REPORT OF EVEN DATE
 
 I) The Company is in the process of updating the fixed assets register.
 The Company has a regular programme of verification of fixed asset
 which in our opinion is reasonable having regard to the size of the
 Company and the nature of its assets. According to the information and
 explanations given to us, in accordance with this programme a section
 of the fixed assets have been physically verified by the management
 during the current period, no material discrepancies were noticed on
 such verification.  Removal of obsolete and irrepairable assets having
 a original cost Rs. 59,331,032, as explained in the note No. 10 of
 Schedule No. 15 has not affected the going concern concept.
 
 ii) a) The inventory of consumable stores have been verified by the
 management. In our opinion the frequency of verification is reasonable
 
 b) The procedures of physical verification of inventories followed by
 the management are reasonable in relation to the size of the company
 and nature of its business.
 
 c) The company is maintaining proper records of inventory. The
 discrepancies noticed during verification between physical stocks and
 the book records were not material.
 
 iii) The Company has taken unsecured loans from one company covered in
 the register maintained under section 301 of the Companies Act 1956.
 The maximum amount involved during the period was Rs 194.59 lakhs and
 the year end balance was Rs.. NIL.  The loan has been repaid in the
 financial year. In our opinion and according to the information and
 explanation given to us the rate of interest is not prejudicial to the
 interest of the Company.
 
 iv) 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 with regard to purchase of fixed assets and sale of
 products/services. During the course of our audit, we have not observed
 any weaknesses in internal controls.
 
 v) a) According to the information and explanations .  given to us the
 transactions that need to be entered into a register in pursuance of
 section 301 of the Act have been so entered,
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained u/s 301 of the
 Companies Act 1956, and exceeding Rs. 5.00 lakhs in respect of any
 party during the period, have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time
 
 vi) According to the information and explanations given to us, the
 Company has not accepted 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) Except the Service tax covered in the note 12 of Schedule 15,
 undisputed statutory dues including Provident Fund, Income-tax, Cess
 and other material statutory dues have generally been regularly
 deposited during the period with the appropriate authorities. The
 Company has delayed the remittance of service tax . The arrears of
 service tax outstanding for more than six months as at the last day of
 financial year is Rs. 10.95 lakhs.
 
 b) According to the information and explanations given to us, no
 disputed amounts payable in respect of income tax, wealth tax, sales
 tax, customs duty, excise duty and cess were in arrears, as at 31st
 March 2011 for a period of more than six months from the date on which
 they are payable.
 
 x) In our opinion and according to the information and explanations
 given to us, accumulated losses at the end of the current period are
 less than fifty percent of the net worth.
 
 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 any financial
 institutions, 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
 banks or financial institutions.
 
 xvi) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purpose for which
 they were raised
 
 xvii) In our opinion and according to the information and explanations
 given to us, the short-term funds were raised by the Company and were
 not utilised for repayment of long-term loans.
 
 xviii) The Company has not made preferential allotment of shares during
 the period. Hence the provisions of clause 4(1) (viii) are not
 applicable.
 
 xix) The company has not issued debentures during the period. Hence
 provisions of clause 4(1)(ix) are not applicable.
 
 xx) The Company has not raised any money by public issue during the
 period. Hence provisions of clause 4(1) (xx) are not applicable.
 
 xxi) To the best of our knowledge and belief, and according to the
 information and explanations given to us, no fraud on or by the Company
 has been noticed or reported during the course of our audit.
 
                                                   for K. Gopalan & Co
                                                 Chartered Accountants 
                                        Firms Registration No.000975S
 
                                                     S.N.Parthasarathy
                                                               Partner 
                                                  Membership No. 20168
 
 Place : Chennai 
 Date  : 16th May, 2011