Nectar Lifesciences

We have audited the attached Balance sheet of M/S. NECTAR LIFESCIENCES
 LIMITED as at March 31, 2008 and also the Profit and Loss Account and
 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.
 
 1.  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
 
 2.  As required by the Companies (Auditors Report) Order,2003 issued
 by the Ministry of Corporate Affairs in terms of Section 227 (4A) of
 the Companies Act, 1956 we enclose in the annexure A statement on the
 matters specified in paragraph 4 & 5 of said order:
 
 3.  Further to our comments in the annexure referred to in paragraph
 (1) above, we report that: -
 
 a) We have obtained all the information and explanation which to the
 best of our knowledge and belief were necessary for the purpose 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 the
 books.
 
 c) The Balance sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of accounts.
 
 d) In our opinion, the balance sheet and the profit and loss account
 comply with the Accounting Standards referred to in sub section (3C) of
 section 211 of the companies Act, 1956, subject to Notes on Accounts
 forming part of Balance Sheet.
 
 e) As per information and explanation given to us, none of the
 directors of the company is disqualified from being appointed as a
 Director in terms of clause (g) of subsection (1) of section 274 of the
 Companies Act, 1956.
 
 f) 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.
 
 i) In the case of the Balance Sheet, of the State of affairs of the
 company as at March 31, 2008 and
 
 ii) In the case of the Profit and Loss account, of Profit of the
 company for the year ended on that date.
 
 iii) In case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 Annexure A referred to in paragraph 2 of our report of the Auditors to
 the members of M/S. Nectar Lifesciences Limited on the Accounts for the
 year ended 31st march 2008.
 
 1 (a) The company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the fixed assets have been physically verified
 by the management at the reasonable intervals during the year under
 review and no material discrepancies were noticed in the said
 verification.
 
 (c) During the year, the company has not disposed off substantial part
 of the fixed assets.
 
 2 (a) Physical verification of inventory has been conducted by the
 management during the year and in our opinion, the frequency of
 verification was reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management are 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. As
 explained to us, the discrepancies noticed on physical verification
 between the physical stocks and the books records were not material and
 have been properly dealt in the books of accounts.
 
 3. (a) The company has not granted any loans, secured or unsecured to
 Companies, Firms and other Parties Listed in the register maintained
 under Section 301 of the Companies Act 1956.
 
 (b) The company has not taken any loans, secured or unsecured from
 Companies, Firms and other Parties Listed in the register maintained
 under Section 301 of the Companies Act 1956.
 
 4 In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business with regard to the purchase of stores, raw materials including
 the plant & machinery, vehicles, equipment and other 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) According to the information and explanation given to us, the
 transaction of purchase of goods and materials and sale of goods,
 materials and services in pursuance of contracts of agreements entered
 in the register maintained U/s 301 of the Companies Act, 1956 and
 aggregating during the year to Rs. 5,00,000/- or more in respect of
 each party are not prejudicial to the interests of the company.
 
 (b) Each of these transactions has been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6. In our opinion and according to the information and explanations
 given to us, the company has not invited any deposits from public
 attracting 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.
 
 7 In our opinion and according to the information and explanations
 given to us, the company has an internal audit system commensurate with
 the size and nature of its business.
 
 8 We have broadly reviewed books of accounts maintained by the Company,
 pursuant to the rules made by the Central Government for the
 maintenance of cost records u/s 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 not, however, made a
 detailed examination of the records with a view to determine whether
 they are accurate or complete.
 
 9 (a) The Company is generally regular in depositing the
 
 Employees State Insurance and Provident Fund & Miscellaneous Provision
 Act, 1952.
 
 (b) According to the information and explanation given to us, there are
 no undisputed amounts payable in respect of Income Tax, Service Tax,
 Wealth Tax, Sales Tax, Customs duty and excise duty, which are
 outstanding as at March 31, 2008 for a period of more than six months
 from the date they became payable.
 
 (c) According to the information and explanations given to us, there is
 no disputed amount of sales tax/ income tax/ custom duty/ wealth tax/
 excise duty/ cess, other than those mentioned below:
 
 Statute      Nature of     Amount 
              the Dues      Rs. in
                            Millions
 
 Income Tax    Income Tax    3.73
 Act, 1961
 
 Income Tax    Income Tax    0.03
 Act, 1961
 
 Income Tax    Income Tax    0.02
 Act, 1961
 
 Income Tax    Income Tax    2.23
 Act, 1961
 
 Period to           Forum where
 which the           dispute is
 amount relates      pending
 
 Assessment         Income Tax Appellate
 Year 2001-02       Tribunal, Delhi
 
 Assessment         Income Tax Appellate
 Year 2003-04       Tribunal, Delhi
 
 Assessment         Commissioner of
 Year 2003-04       Income Tax Appeal,
                    Delhi
 
 Assessment         Commissioner of
 Year 2004-05       Income Tax Appeal,
                    Delhi
 
 10 The company has no accumulated losses as at the March 31, 2008 and
 it has not incurred cash losses during 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 as at the balance sheet date.
 
 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 company is not a chit fund or a nidhi or a mutual benefit
 fund/society. Therefore the provisions of clause 4(xiii) of the
 Companies (Auditors Report) Order 2003 are not applicable to the
 company.
 
 14 In our opinion and according to the information and explanations
 given to us, the company is not dealing or trading in shares,
 securities, debentures and other investments. Accordingly the
 provisions of clause 4(xiv) of the companies (Auditors Report) Order
 2003 are not applicable to the company.
 
 15 In our opinion and according to the information and explanations
 given to us, the company has given corporate guarantees to bank for
 farmers loan. In our opinion and according to the information and
 explanations given to us, the terms and conditions thereof are not
 prima facie prejudicial to the interest of the company.
 
 16 In our opinion and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 17 According to the information and explanation given to us and based
 on overall examination of the balance sheet and cash flow statement of
 the Company, we report that no funds raised on short-term basis have
 been used for long term investment other than temporary deployment
 pending application.
 
 18 During the year, the company has not made any preferential allotment
 of shares to parties, firms and companies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 19 The company has not issued any debentures during the year and there
 are no debentures outstanding as at the year end.
 
 20 The company has not raised any money by public issues during the
 year. However, the company had converted FCCB amounting to Rs. 86.34
 millions into Share Capital during the financial 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 fraud on or by
 the Company, noticed or reported during the year, nor have we been
 informed of such case by the management.
 
 
                                 For Datta Singla & Co.
                                 Chartered Accountants
 
                                 Mukul Bansal
 
 Place : Chandigarh              Partner
 Date  : 20.06.2008              Membership No. 84281