We have audited the attached Balance Sheet of Ipca Laboratories Limited
 as at 31st March, 2011 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.
 
 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.
 
 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 Statement on the matters specified in paragraphs 4 and
 5 of the said Order.
 
 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 purpose of our
 audit.
 
 ii) In our opinion, proper books of accounts as required by law have
 been kept by the company so far as it appears from our examination of
 the 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 accounts.
 
 iv) In our opinion, the Balance Sheet, Profit and Loss Account and the
 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 representation received from the
 directors and taken on record by the Board of Directors, we report that
 none of the directors is disqualified as on 31st March, 2011 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 explanation given to us, the accounts and the other notes thereon
 give the information required by the Companies Act, 1956 in the manner
 so required and give a true and fair view.
 
 (a) in the case of Balance Sheet, of the State of Affairs of the
 Company as at 31st March, 2011 and
 
 (b) in the case of Profit and Loss Account, of the Profit for the year
 ended on 31st March 2011.
 
 (c) in the case of the Cash Flow Statement, of the cash flow for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT  (Referred to in our report of even 
 & date)
 
 (i) (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets;
 
 (b) The fixed assets have been physically verified by the management at
 reasonable intervals and any material discrepancies noticed on such
 verification have been properly dealt with in the books of account;
 
 (c) The Company has not disposed off any substantial part of fixed
 assets.
 
 (ii) (a) Stock of finished goods, stores, spare parts and raw materials
 has been physically verified by the management at reasonable intervals
 during the year.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedure of physical verification of stock followed
 by the management is reasonable and adequate in relation to the size of
 the company and the nature of its business.
 
 (c) The valuation of stock has been done on the basis of physically
 verified quantity. Therefore shortage / excess automatically gets
 adjusted and the same is properly dealt in the books of accounts.
 
 (iii) The Company has not taken / given any loan from / to any party
 listed in the register maintained under Section 301.
 
 (iv) In our opinion and according to the information and explanations
 given to us there is an adequate internal control procedure
 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. We have not come across any continuing failure to
 correct major weaknesses in internal control.
 
 (v) (a) In our opinion and 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 has been properly
 entered.
 
 (b) All the transactions have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time and
 the nature of services rendered by such party.
 
 (vi) The Company has not accepted any deposits from the public during
 the year under review, and consequently the directives issued by the
 Reserve Bank of India and the provisions of Sections 58A and 58AA of
 the Act and the rules framed there under are not applicable.
 
 (vii) In our opinion the Company has an internal audit system
 commensurate with the size of the company and the nature of its
 business.
 
 (viii) According to the records produced and information given to us,
 the cost records and accounts as prescribed by the Central Government
 under Section 209(1)(d) of the Companies Act, 1956 have been made and
 maintained by the company but no examination of such records and
 accounts has been carried out by us.
 
 (ix) (a) The Company is regular in depositing provident fund, employees
 state insurance, income tax, sales tax, service tax, customs duty and
 excise duty dues with the appropriate authorities and there are no
 arrears of outstanding statutory dues as at the last day of the
 financial year for a period of more than six months from the date they
 became payable.
 
 (b) According to the information and explanation given to us, the
 following tax / duty, etc., has not been deposited on account of
 dispute.
 
 Name of the     Nature of Dues          Amount   Period to which the
 Statute                                 (Rs in     amount relates
                                         crores)
 
 Excise Duty     Valuation of Inputs      0.12    2001-2002 & 2002-2003
 
 Excise Duty     Cenvat availed on direct 0.34    April 2002 - Jan 2005
                 clearance of goods from 
                 job workers premises.  
 
 Excise Duty/    Availment of Cenvat      0.03    2006-2007 and 2007-
 Service Tax     Credits on Input                 2008
                 Services.
 
 Excise Duty /   Availment of Cenvat      0.01    April 2008 - Dec 2008
 Service Tax     Credits on Input
                 Services.
 
 Excise Duty /   Availment of Cenvat      0.01    Jan 2009 - Sep 2009
 Service Tax     Credits on Input 
                 Services.
 
 Service Tax     Availment of Cenvat      0.91    April 2006 -Nov 2008
                 Credits on H.O invoices.  
 
 Service Tax     Availment of Cenvat      2.06    April 2006 -Nov 2008
                 Credits on H.O invoices.  
 
 Excise Duty /   Availment of Cenvat      5.76    May 2007 -March 2008
 Service Tax     Credits on Common 
                 Inputs.
 
 Excise Duty     Non reversal of service  0.01    2005-2006 to 2007-2008
                 tax credit on short 
                 receipt and destruction 
                 of RM/PM
 
 Excise Duty     Payment of Excise Duty   0.51    April 2003 to Dec 2008
 
 Service Tax     Availment Of Cenvat      0.01    2006-2007
                 Credit on Service Tax
 
 Sales Tax       Disputed demand          0.01    2001-2002
 
 Sales Tax       Disputed demand          0.03    2004-2005
 
 Sales Tax       Disputed Demand          0.95    2006-2007
 
 Sales Tax       Disputed Demand          0.08    2008-2009
 
 Income tax      Disputed disallowances   0.57  AY:-2007-08
 
 
 Name of the     Forum where dispute is 
 statute                pending
 
 Excise Duty     Commissioner of Central Excise   
 
 
 Excise Duty     CESTAT
 
 
 Excise Duty/    Assistant Commissioner of
 Service Tax     Central Excise
 
 
 Excise Duty /   Assistant Commissioner of
 Service Tax     Central Excise
 
 
 Excise Duty /   Assistant Commissioner of
 Service Tax     Central Excise
 
 
 Service Tax     Commissioner of Central
                 Excise.
 
 
 Service Tax     Commissioner of Central
 Excise.
 
 
 
 Excise Duty /   Commissioner of Central
 Service Tax     Excise.
 
 
 
 Excise Duty     Assistant Commissioner of
                 Central Excise  
 
 
 Excise Duty     CESTAT-New Delhi
 
 
 Service Tax     Asst Commissioner of
                 Central Excise
 
 
 Sales Tax       Sales Tax Authority- Patna
 
 
 
 Sales Tax       Sales Tax Authority -
                 Jaipur
 
 
 Sales Tax       Gujarat Sales Tax
 
 
 Sales Tax       Sales Tax Authority-UP
 
 
 Income tax      CIT(Appeal)
 
 
 (x) The Company does not have any accumulated losses and has not
 incurred cash losses in current year and the previous year.
 
 (xi) We are informed that the Company has not defaulted in repayment of
 dues to any financial institution or bank or debenture holders.
 
 (xii) On the basis of the audit procedures followed and the
 representations from the management, we report that the Company has not
 granted loans or advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) The Company is not a nidhi/ mutual benefit fund/society and
 accordingly clause (xiii) of the Companies (Auditors Report) Order,
 2003 is not applicable.
 
 (xiv) The company does not trade in securities and other investments.
 However in respect of shares and other securities held as investments,
 the said investments are in the name of the company.
 
 (xv) According to the information and explanations given to us, the
 company has given guarantee for loans taken by others from bank, the
 terms and conditions whereof are not prejudicial to the interest of the
 company.
 
 (xvi) On the basis of the documents submitted to the bankers and the
 other records perused by us we have to state that the term loans which
 are in the nature of External Commercial Borrowings taken during the
 year have been applied for the purpose for which the loans were
 obtained.
 
 (xvii) According to the information and explanation given to us, on an
 over all examination of the Balance Sheet of the company and the
 necessary representations from the management, we report that no short
 term funds raised by the company have been applied towards long term
 assets / investments.
 
 (xviii) 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. Accordingly clause (xviii) of the Companies
 (Auditors Report) Order, 2003 is not applicable.
 
 (xix) The Company has not made any fresh issue of debentures during the
 year and accordingly clause (xix) of Companies (Auditors Report)
 Order, 2003 is not applicable
 
 (xx) The Company has not raised any money by public issues during the
 year and accordingly clause (xx) of Companies (Auditors Report) Order,
 2003 is not applicable;
 
 (xxi) Based on the audit procedures performed and the information and
 explanation given by the management we report that no fraud on or by
 the company has been noticed or reported during the year.
 
 
 
                                            For Natvarlal Vepari & Co.
                                                 Chartered Accountants
                                         Firm Registration No. 106971W
 
  
                                                          N. Jayendran
                                                               Partner
                                                           M.No. 40441
 
 
 Mumbai, 
 May 24, 2011