Matrix Laboratories

1.  We have audited the attached Balance Sheet of MATRIX LABORATORIES
 LIMITED as at 31st March, 2009, the Profit and Loss Account for the
 year ended on that date and the Cash Flow Statement for the year ended
 on that date, both 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 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 the 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 [CARO]
 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 to the extent applicable.
 
 4.  Further to our comments in the annexure referred to in paragraph 3
 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 it 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) 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 31st March, 2009;
 
 (b) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5. On the basis of written representations received from the directors
 as on 31st March, 2009 and taken on record by the Board of Directors,
 none of the directors is disqualified as on 31st March, 2009 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956.
 
 Annexure to the Auditors Report
 
 (Referred to in paragraph 3 of our report of even date attached
 
 The nature of the Companys business/activities during the year was
 such that paragraphs 4(xii), 4(xiii), 4(xiv), and 4(xix) of CARO are
 not applicable.
 
 (i) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of a major portion of
 fixed assets.
 
 (b) Some of the fixed assets were physically verified during the year
 by the management in accordance with a program of verification which,
 in our opinion, provides for physical verification of all fixed assets
 at reasonable intervals having regard to the size of the company and
 the nature of its assets. According to the information and explanations
 given to us, no material discrepancies were noticed on such
 verification.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute substantial part of the fixed assets of the Company and
 such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (ii) In respect of its inventories:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the management. In the case of materials lying with third
 parties, certificates confirming stocks have been received in respect
 of a substantial portion of the stocks held.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.
 
 (iii) The Company has not granted or taken any loans, secured or
 unsecured to or from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act 1956. As the
 Company has neither granted nor taken any loans, secured or unsecured,
 to or from parties listed in the register maintained under Section 301
 of the Companies Act, 1956, paragraphs 4 (iii)(t>), (c), (d), (f) and
 (g) of CARO are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems 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 we
 have not observed anv continuing failure to correct major weaknesses in
 such internal control systems.
 
 (v) According to the information and explanations given to us, we are
 of the opinion that there are no contracts or arrangements which need
 to be entered in the register maintained under section 301 of the Act.
 In view of this , paragraphs 4 v(a) and v(b) of CARO are not applicable
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 58A, 58AA or any other relevant provisions of the Companies Act, 1956
 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to
 the deposits accepted from the public.
 
 (vii) In our opinion the internal audit functions carried out during
 the year by a firm of chartered accountants appointed by the management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 (viii) We have broadly reviewed the books of account and records
 maintained by the Company relating to the manufacture of bulk drugs and
 formulations pursuant to the order made by the Central Government for
 the maintenance of cost records under Section 209(1) (d) of the
 Companies Act, 1956 and are of the opinion that prima facie the
 prescribed accounts and records have been made and maintained. We have,
 however, not made a detailed examination of the records with a view to
 determining whether they are accurate or complete.  To the best of our
 knowledge and according to the information given to us, the Central
 Government has not prescribed the maintenance of cost records for any
 other products of the Company.
 
 (ix) In respect of statutory dues:
 
 (a) According to the information and explanations given to us, the
 Company has been generally regular in depositing undisputed statutory
 dues including provident fund, employees state insurance, investor
 education and protection fund, income-tax, sales tax, value added tax,
 wealth tax, service tax, works contract tax ,custom duty, excise duty,
 cess and any other material statutory dues applicable to it with the
 appropriate authorities during the year.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, employees
 state insurance, investor education and protection fund, income-tax,
 sales tax, value added tax, wealth tax, service tax, works contract
 tax, custom duty, excise duty, cess and any other material statutory
 dues applicable to it were in arrears, as at 31st March, 2009 for a
 period of more than six months from the date they became payable.
 
 (c) According to the information and explanations given to us, details
 of dues of income tax, sales tax, service tax, custom duty, excise duty
 and cess which have not been deposited as on 31st March, 2009 on
 account of any dispute are given below:
 
 Name of the statute                   Financial
                                       years to which
                                       the matter
                                       pertains
 
 Andhra Pradesh General                2000-2001
 
 Sales Tax Act, 1956                   2001-2002
 
                                       2003-2004
 
 Central Sales Tax Act, 1957           2003-2004
 
 Andhra Pradesh Value Added            2007-2008
 
 Tax Act, 2005                         2005-2006
 
 Finance Act, 1994                     2003-2004
 
 Customs Act, 1962                     1998-1999
                                       1995-1996
                                       1999-2000
                                       2008-2009
 
 Central Excise Act, 1944              2005-2006
                                       2006-2007
                                       2006-2007
                                       2006-2007
                                       2003-2004 to
                                       2005-2006
                                       2008-2009
 
 Income- Tax Act, 1961                 2000-2001
                                       2001-2002
                                       2002-2003
                                       2002-2003
                                       2003-2004
                                       2004-2005
 
 Name of the statute         Amount   Forum where dispute
                             (Rs.     is pending
                            Million)
 
 Andhra Pradesh General0.60        Sales Tax Appellate Tribunal
 
 Sales Tax Act, 1956   0.51        Sales Tax Appellate Tribunal
 
                       0.51        Sales Tax Appellate Tribunal
 
 Central Sales Tax     0.57        Sales Tax Appellate Tribunal
 
 Act, 1957
 
 Andhra Pradesh        8.86        Appellate Deputy Commissioner
 Value Added1         52.08        Andhra Pradesh High Court
 
 Tax Act, 2005
 
 
 Finance Act, 1994    18.78        Customs, Excise & Service
                                   Tax Appellate Tribunal
 Customs Act, 1962     3.58        Customs, Excise & Service
                                   Tax Appellate Tribunal
                      34.90        Andhra Pradesh High Court
                       1.32        Andhra Pradesh High Court
                       2.80        Appellate Commissioner
 
 
 Central Excise        4.77        Appellate Tribunal (CESTAT)
 Act, 1944             1.09        Appellate Tribunal (CESTAT)
                       0.10        Assistant Commissioner of
                                   Central Excise and Customs
                       0.01        Commissioner of Central 
                                   Excise and Customs
                       1.26        Appellate Tribunal (CESTAT)
                      11.01        Appellate Tribunal (CESTAT)
  
 Income- Tax Act,      0.29        Income Tax Apellate Tribunal
 1961                  2.92        Income Tax Apellate Tribunal
                      10.43        Income Tax Apellate Tribunal
                       4.89        Income Tax Apellate Tribunal
                      19.35        Income Tax Apellate Tribunal
                      19.75        Commissioner of Income Tax (Appeals)
 
 (*) The Company does not have accumulated losses and has not incurred
 cash losses during the financial year covered by our audit and the
 immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 banks.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks are prima facie not
 prejudicial to the interests of the Company.
 
 (xiii) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the company were prima facie applied for the purpose for
 which the loans were obtained.
 
 (xiv) 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.
 
 (xv) According to the information and explanations given to us during
 the year, the Company has not made preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 (xvi) During the year covered by our audit report, the Company has not
 raised any money by public issues.
 
 (xvii) To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on the
 Company and no fraud by the Company was noticed or reported during the
 year.
 
 
 
                                   For Deloitte Haskins & Sells
                                          Chartered Accountants
 
                                                  K. Rajasekhar
 Place : Secunderabad                                   Partner
 Date : June 25, 2009                      Membership No: 23341