1.  We have audited the attached Balance Sheet of GlaxoSmithKline
 Pharmaceuticals Limited (the company), as at 31st December, 2010, 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
 (together the Order) 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 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 31st December, 2010 and taken on record by the Board
 of Directors, none of the directors is disqualified as on 31st
 December, 2010 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 31st December, 2010;
 
 (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 Pharmaceuticals Limited on the financial
 statements for the year ended 31st December, 2010]
 
 1.  (a) The company is maintaining proper records showing full
 particulars including quantitative details and situation of
 
 fixed assets, other than the situation of furniture and office
 equipment, for which the situation recorded is the location of the
 companys different establishments.
 
 (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
 of by the company during the year.
 
 2.  (a) The inventory, excluding materials in transit, has been
 physically verified by the management during the year.
 
 Further, a major portion of inventory lying with third parties has been
 physically verified by the management during the year. 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. In our
 opinion, 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. Accordingly, clauses
 (iii)(b) to (iii)(d) of paragraph 4 of the Order are not applicable to
 the company for the current year.
 
 (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. Accordingly, clauses (iii)(f) and
 (iii)(g) of paragraph 4 of the Order are not applicable to the company
 for the current year.
 
 4.  In our opinion and according to the information and explanations
 given to us, 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 and 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 we been
 informed of any instance of major weaknesses in the aforesaid internal
 control system.
 
 5.  In our opinion and according to the information and explanations
 given to us, there are no contracts or arrangements referred to in
 Section 301 of the Act during the year that need to be entered in the
 register maintained under that Section. Accordingly, clause (v)(b) of
 paragraph 4 of the Order is not applicable to the company for the
 current year.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has complied with the provisions of Sections
 58A, 58AA or any other relevant provisions of the Act and the Companies
 (Acceptance of Deposits) Rules, 1975 with regard to the deposits
 accepted from the public. According to the information and explanations
 given to us, no order has been passed by the Company Law Board or
 National Company Law Tribunal or Reserve Bank of India or any Court or
 any other Tribunal on the company in respect of the aforesaid deposits.
 
 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 the 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 generally regular in depositing 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 in India.
 
 (b) According to the information and explanations given to us and the
 records of the company examined by us, there are no dues of wealth tax,
 customs duty and cess which have not been deposited on account of any
 dispute. The particulars of dues of income-tax, sales tax, service tax
 and excise duty as at 31st December, 2010 which have not been deposited
 on account of a dispute, are as follows -
 
 Name of the statute       Nature of dues         Amount* 
                                                  Rs. in lakhs
 
 The Income-tax            Income-tax              19,93.26
 Act, 1961                 including interest,
                           as applicable
 
 The Centra! Sales         Sales tax                9,46.33
 Tax Act, 1956 and         including
 Local Sales Tax           interest and
 Acts                      penalty, as
                           applicable
 
                                                    9,71.40
 
 The Finance               Service tax              2,55.45
 Act, 1994
 
 The Central               Excise duty              1,10.14
 Excise Act, 1944          including interest
                           and penalty, as
                           applicable
 
                                                    2,89.17
                                                      30.12
 
 
 
 Name of the             Period to which the         Forum where the
 statue                  amount relates             dispute is pending
 
 The Income-tax
 Act, 1961               #Assessment Years         Appellate Authority -
                          2006-2007 and            up to Commissioners
                          2007-2008                level
 
 The Central Sales
 Tax Act, 1956 and
 Local Sales Tax
 Acts                     Several demands          Appellate Authority-
                          pertaining to the         up to Commissioners
                          period 1983-1984         level
                          to 2009-2010
 
                          Several demands          Tribunal
                          pertaining to the
                          period 1990-1991
                          to 2005-2006
 
 The Finance
 Act, 1994                January 2001 to          Tribunal
                          December 2002
                          and May 2006 to
                          January 2007
 
 The Central
 Excise Act, 1944         Several demands          Appellate Authority -
                          pertaining to the        up to Commissioners
                          period March 1992 to     level
                          November 2007
 
                          Several demands          Tribunal
                          pertaining to the
                          period October 1994
                          to January 2007
 
                          1977 to 1980             The High Court of
                                                   Judicature at Bombay
 
 * Net of amounts paid including under protest
 
 # Out of total dues of Rs. 19,93.26 lakhs, an amount of Rs. 5,70.00
 lakhs has been deposited subsequent to the year end.
 
 10.  The company has no accumulated losses as at 31st December, 2010
 and 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 records of the company examined by us and the
 information and explanations given to us, the company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders.
 
 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 and according to the information and explanations
 given to us, the company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  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.  In our opinion and according to the information and explanations
 given to us, the company has not obtained any term loans that were not
 applied for the purpose for which these were raised.
 
 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 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.
 
 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, we have neither come across any instance of
 material fraud on or by the company, noticed or reported during the
 year, nor have we been informed of such case by the management.
 
                                      For Price Waterhouse & Co.
 
                                  Firm Registration No. 007567S
 
                                          Chartered Accountants
 
                                               Himanshu Goradia
 
                                                        Partner
 
 Mumbai, 14th February, 2011               Membership No. 45668