1.  We have audited the attached Balance Sheet of MATRIX LABORATORIES
 LIMITED (the Company) as at 31st March, 2010, the Profit and Loss
 Account and the Cash Flow Statement of the Company 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 misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and the disclosures in the financial statements.  An audit also
 includes assessing the accounting principles used and the 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 in terms of Section 227(4A) 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.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 (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 it appears from our examination of
 those books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (e) 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:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2010;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date and
 
 (iii) 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 the written representations received from the
 Directors as on 31st March, 2010 taken on record by the Board of
 Directors, none of the Directors is disqualified as on 31st March, 2010
 from being appointed as a director in terms of Section 274(1)(g) of the
 Companies Act, 1956.
 
 Annexure To The Auditors Report (Referred to in paragraph 3 of our report 
 of even date)
 
 (i) Having regard to the nature of the Companys business / activities
 / results, clauses 4(x), 4(xii), 4(xiii), 4(xiv), 4(xix) and 4(xx) of
 CARO are not applicable.
 
 (ii) 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 programme of verification which,
 in our opinion, provides for physical verification of major fixed
 assets at reasonable intervals having regard to the size of the Company
 and the nature of its assets.  According to the information and
 explanation 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 a 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.
 
 (iii) In respect of its inventories:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventories
 followed by the Management were 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 and no material discrepancies were noticed on physical
 verification.
 
 (iv) The Company has neither granted nor taken any loans, secured or
 unsecured, to/from companies, firms or other parties listed in the
 Register maintained under Section 301 of the Companies Act, 1956.
 
 (v) 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 with regard
 to purchases of inventory and fixed assets and the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness in such internal control system.
 
 (vi) 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 4 v (b) of CARO are not
 applicable.
 
 (vii) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 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. According to the information
 and explanations given to us, no order has been passed by the Company
 Law Board or the National Company Law Tribunal or the Reserve Bank of
 India or any Court or any other Tribunal.
 
 (viii) In our opinion, the internal audit functions carried out during
 the year by a Company appointed by the management have been
 commensurate with the size of the Company and the nature of its
 business.
 
 (ix) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1) (d) of the Companies
 Act, 1956 in respect of manufacture of bulk drugs and formulations 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 and explanations given to us, the Central Government has
 not prescribed the maintenance of cost records for any other products
 of the Company.
 
 (x) According to the information and explanations given to us in
 respect of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income-tax, Sales Tax, Value added Tax,
 Wealth Tax, Service Tax, Works Contract Tax, Custom Duty, Excise Duty,
 Cess and other material statutory dues applicable to it with the
 appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Income-tax,
 Wealth Tax, Works Contract Tax, Provident Fund, Employees State
 Insurance, Investor Education and Protection Fund, Value Added Tax,
 Service Tax, Custom Duty, Excise Duty, Cess and other material
 statutory dues in arrears as at 31st March, 2010 for a period of more
 than six months from the date they became payable.
 
 (c) Details of dues of Income-tax, Sales Tax, Value Added Tax, Wealth
 Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been
 deposited as on 31st March, 2010 on account of disputes are given
 below:
 
 
 
 
 Statute        Nature of Dues      Forum where   Period to   Amount
 
                                    Dispute is 
                                    pending       which the  involved
 
                                                    amount      (Rs. in
 
                                                    relates   Millions)
 
 Sales Tax       Sales Tax          Apellate 
                                    Tribunal      2000-2001    0.60
 
 Andhra Pradesh
 General         Sales Tax          Sales Tax 
                                    Appellate 
                                    Tribunal      2001-2002    0.51
 
 Sales Tax 
 Act, 1956       Sales Tax          Sales Tax 
                                    Appellate 
                                    Tribunal      2003-2004    1.08
 
 Andhra 
 Pradesh Value   Value Added Tax    AndhraPradesh 
                                    High Court    2005-2006   152.08
 
 Added Tax 
 Act, 2005       Value Added Tax    Appellate 
                                    Deputy 
                                    Commissioner  2007-2008    8.86
 
 Finance 
 Act, 1994       Service Tax        Customs, 
                                    Excise & 
                                    Service
 
                                    Tax Appellate 
                                    Tribunal      2003-2004   18.78
 
                 Income Tax         Income Tax 
                                    Apellate 
                                    Tribunal      2000-2001    0.29
 
 Income Tax 
 Act, 1961       Income Tax         Income Tax 
                                    Apellate 
                                    Tribunal      2001-2002    2.92
 
                 Income Tax         Income Tax 
                                    Apellate 
                                    Tribunal      2002-2003   16.65
 
                 Income Tax         Income Tax 
                                    Apellate 
                                    Tribunal      2003-2004   21.84
 
 Income Tax 
 Act, 1961       Income Tax         Commissioner
                                    of Income Tax
 
                                    (Appeals)     2004-2005   17.38
 
                 Excise duty         Appellate 
                                     Tribunal 
                                    (CESTAT)      2003-2004 to
 
                                                   2005-2006   1.39
 
                 Excise duty         Appellate 
                                     Tribunal 
                                    (CESTAT)      2005-2006     5.21
  
 Central Excise 
 Act, 1944       Excise duty         Appellate 
                                     Tribunal 
                                    (CESTAT)
                                                  2006-2007     1.27
 
                Excise duty          Department 
                                     of Central 
                                     Excise and 
                                     Customs      2007-2008     0.51
 
                Excise duty          Appellate 
                                     Tribunal 
                                     (CESTAT)     2008-2009    12.37
 
                Excise duty          Deputy 
                                     Commissioner 
                                     of Central
 
                                     Excise and 
                                     Customs      2008-2009     0.22
 
                Excise duty          Assistant 
                                     Commissioner 
 
                                     Central 
                                     Excise and 
                                     Customs      2008-2009     0.20
 
                Customs duty         Andhra 
                                     Pradesh 
                                     High Court   1995-1996    36.00
 
                Customs duty         Appellate 
                                     Tribunal 
                                    (CESTAT)      1998-1999     3.56
 
 Customs 
 Act, 1962      Customs duty         Andhra 
                                     Pradesh 
                                     High Court   1999-2000     2.21
 
                Customs duty         Appellate 
                                     Tribunal 
                                    (CESTAT)      2000-2001     4.95
 
                Customs duty         Appellate 
                                     Tribunal 
                                    (CESTAT)      2008-2009     2.96
   
 
 
 
 
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the 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 not prima facie
 prejudicial to the interests of the Company.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained.
 
 (xiv) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year for long- term investment.
 
 (xv) According to the information and explanations given to us, 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) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no fraud on the
 Company has been noticed or reported during the year.
 
 
 
                                      For DELOITTE HASKINS & SELLS
 
                                             Chartered Accountants
 
                                           Registration No.008072S
 
                                               Ganesh Balakrishnan 
 
 Place : Secunderbad                                       Partner
 
 Date : June 14, 2010                        Membership No. 201193