GlaxoSmithKline Consumer Healthcare

1.  We have audited the attached Balance Sheet of GlaxoSmithKline
 Consumer Healthcare Limited, as at December 31, 2008, and the related
 Profit and Loss Account and Cash Flow Statement for the year ended on
 that date annexed thereto, which we have signed under reference to this
 report. 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 the 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 by the Companies (Auditors Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of The Companies Act, 1956 of India (the Act) 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 statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 purposes 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 examination of
 those books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) 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 Act;
 
 (e) On the basis of written representations received from the
 Directors, as on December 31, 2008 and taken on record by the Board of
 Directors, none of the Directors is disqualified as on December 31,
 2008 from being appointed as a Director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act 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 December 31, 2008;
 
 (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 the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS REPORT
 
 [Referred to in paragraph 3 of the Auditors Report of even date to the
 members of GlaxoSmithKline Consumer Healthcare Limited on the financial
 statements for the year ended December 31, 2008]
 
 1. (a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets are physically verified by the management
 according to a phased programme designed to cover all the items over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 2.  (a) The inventory (excluding certain stocks with third parties) has
 been physically verified by the management during the year/year end. In
 respect of inventory lying with third parties and not physically
 verified, confirmations have been obtained. In our opinion, the
 frequency of verification is reasonable.
 
 (b) In our opinion, 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) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  (a) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act and accordingly clauses 3 (a) to (d) of
 the Order are not applicable.
 
 (b) 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 Act and accordingly clauses 3 (e) to (g) of
 the Order are not applicable.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, there is an adequate
 internal control system 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 and services. Further, on the basis of our
 examination of the books and records of the Company, and according to
 the information and explanations given to us, we have neither come
 across nor have been informed of any continuing failure to correct
 major weaknesses in the aforesaid internal control system.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Act have been entered in the register
 required to be maintained under that Section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transaction made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs in respect of
 a party during the year have been made at a price which is reasonable
 having regard to the prevailing market price at the relevant time.
 
 6.  The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act 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 records with a view to determine whether
 they are accurate or complete.
 
 9.  (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is 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 as
 applicable with the appropriate authorities.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 income- tax, sales-tax, wealth tax, service tax, customs duty, excise
 duty and cess as at December 31, 2008 which have not been deposited on
 account of disputes, are as follows -
 
 Name of the Statute         Nature of dues         Amount under
                                                    dispute not
                                                    yet deposited
                                                   (Rs. Lacs)
 
 Excise Duty
 
 The Central Excise          Interest on duty on         71.02
 Act, 1944                   Freight & Insurance
 The Central Excise          Valuation Cases and       1,75.79
 Act, 1944                   Other matters
 The Central Excise          Valuation Cases and         49.31
 Act, 1944                   Other matters
 The Central Excise          Valuation Cases,         48,59.92
 Act, 1944                   Refund of duty and
                             Other matters
 Sub Total                                            51,56.04
 Sales Tax
 Andhra Pradesh              Turnover Tax on             13.18
 General Sales Tax           Milk Purchases
 Act, 1957
 Tamil Nadu General          Additions on account      1,61.40
 Sales Tax Act, 1959         of concessional rates
                             of Tax and Differential
                             Value Added Tax
 As per Statutes             Demand on Freebies,         42.35
 applicable in the           Addition on account of
 following states-           disllowance of Credit
 Chattisgarh, Uttar          notes and Others
 Pradesh, Rajasthan,
 West Bengal, Bihar,
 Orissa and
 Andhra Pradesh
 As per Statutes             Miscellaneous             1,53.14
 applicable in the           demands
 following states- Bihar,
 West Bengal, Orissa,
 Madhya Pradesh,
 Maharashtra, Punjab
 As per Statutes             Miscellaneous               24.55
 applicable in the           demands
 following states-
 Punjab, Delhi, Uttar
 Pradesh, Rajasthan,
 Goa, West Bengal,
 Bihar, Jharkhand, Assam
 Sub Total                                             3,94.62
 Income Tax
 Income Tax Act, 1961        Demand on account of      4,43.34
                             Market research
                             expense, Renovation
                             expense, PLA deposits
 Income Tax Act, 1961        Fringe Benefits Tax       2,44.03
                             demand on account of
                             Freebies, Free products
                             Celebrity Expenditure
 Sub Total                                             6,87.37
 Grand Total                                          62,38.03
 
 Period to                 Forum where
 which the                 the dispute
 amount relates            is pending
 
 2001                      Customs, Excise,
                           Service Tax Appellate
                           Tribunal (CESTAT),
                           New Delhi
 1983-2003                 Customs, Excise,
                           Service Tax Appellate
                           Tribunal (CESTAT),
                           various States
 1991-2007                 Commissioner of Central
                           Excise (Appeals)
 1995-2007                 Commissioner/Additional/
                           Deputy Commissioner of
                           Central Excise
 1997-1999                 Andhra Pradesh
                           High Court
 1990-2008                 Chennai High Court
 1983-2006                 Sales Tax
                           Appellate
                           Tribunal/Revenue
                           Board
 2001-2005                 First Appellate
                           Authorities of
                           various states
 2000-2006                 Adjudication Level
 2000-01 to                Commissioner of
 2004-05                   Income Tax (A)
 2005-06                   Additional Commissioner
                           of Income Tax
 
 Note: The above details exclude Departmental Appeals to higher
 authorities as there is no stay on the order of lower authority
 favouring the Company and the amount is not ascertainable.
 
 10.  The Company has no accumulated losses as at December 31, 2008 and
 it has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the information and explanations given to us and the
 records of the Company examined by us, the Company has not availed any
 loan from financial Institutions or banks as at the balance sheet date.
 Accordingly, there have been no defaults in repayment of dues.
 
 12.  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.  The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and 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 during the year.
 
 16.  The Company has not obtained any term loans.
 
 17.  On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short- term
 basis which have been used for long-term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 parties and Companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19.  The Company has not issued any debentures during the year and
 accordingly, no securities or charges have been created.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 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 according to the information and
 explanations given to us, the instances of fraud on the Company,
 noticed or reported during the year and informed to us by the
 management, were not material
 
                                                        Anupam Dhawan
                                                              Partner
                                          Membership Number: F 084451
 
                                                 For and on behalf of
 Place : Gurgaon                                     Price Waterhouse
 Dated : January 27,2009                        Chartered Accountants