1.  We have audited the attached Balance Sheet of Orchid Chemicals &
 Pharmaceuticals Limited (the Company) as at March 31, 2011 and also the
 Profit and Loss Account of the Company for the year ended on that date
 annexed thereto and the Cash Flow Statement for the year ended on that
 date. These financial statements are the responsibility of the
 Company''s management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2.  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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of
 Section 227 of the Companies Act, 1956, we annexe hereto 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 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 as referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 e.  On the basis of written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub- section (1) of Section 274 of the Companies Act, 1956.
 
 5. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read with notes
 thereon, specifically Note No.1 (i) (4) regarding adoption of amended
 Accounting Standard (AS- 11) and the impact on the same on the profit
 for the year of the Company, 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 March 31, 2011;
 
 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 Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure to Auditors'' Report
 Referred to in Paragraph 3 of our Report of even date:
 
 1.  The Company has maintained proper records showing full particulars
 including quantitative details and situation of its fixed assets.
 According to the information and explanations given to us, the fixed
 assets have been physically verified by the Management at regular
 intervals. In our opinion, the frequency of such physical verification
 is reasonable having regard to the size of the Company and the nature
 of its assets. No material discrepancies were noticed on such
 verification as compared to the available records. There was no
 substantial disposal of fixed assets during the year.
 
 2.  Physical verification of Inventory has been conducted by the
 Management at reasonable intervals. The procedures for physical
 verification of stocks followed by the Management are reasonable and
 adequate in relation to the size of the Company and nature of its
 business. The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 3.  a.  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 Companies Act, 1956.
 
 b. As informed to us, the Company has not granted any loans secured or
 unsecured loans to companies, firms, or other parties for which entries
 are required to be made under Section 301 of the Companies Act, 1956.
 
 4.  In our opinion and according to the information and explanation
 given to us, there is 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. During the course of our audit, no major weakness has been
 noticed in the internal control system.
 
 5.  In our opinion and according to the information and explanation
 given to us, the particulars of contracts or arrangements referred to
 in Section 301 of the Companies Act, 1956 have been entered in the
 register required to be maintained under that section.
 
 The transactions made in pursuance of such contracts or arrangements
 have been made at prices which are reasonable having regard to the
 prevailing market prices / Joint Venture agreements at the relevant
 time.
 
 6.  The Company has not accepted any deposits from the public.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  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 the 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.
 
 9.  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, Custom duty, Excise duty, Cess and any other statutory
 dues applicable to it with the appropriate authorities.
 
 10.  According to the information and explanations given to us, no
 undisputed amounts payable in respect of sales-tax, Income-Tax, Wealth
 Tax, Service Tax, Custom duty, Excise duty and Cess were outstanding at
 the year end for a period of more than six months from the date they
 became payable.
 
 11. According to the records of the Company, there are no disputed
 amounts that have not been deposited with appropriate authorities on
 account of Income Tax, Sales-Tax, Wealth Tax, Service-Tax, Custom duty,
 Excise duty and Cess except the following:
 
 Name of 
 the Statute  Nature of dues Period to 
                             which the   Amount  Forum where the dispute
                             amount 
                             relates      Rs in 
                                          Lakhs  is pending
 
 Central 
 Excise Act, 
 1944         Excise duty    1999-00 to
                             2001-02     149.07  Additional Commissioner
                                                 of Central Excise, 
                                                 Chennai
 
                             2004-05 to 
                             2006-07       3.06  Customs, Excise and 
                                                 Service Tax Appellate
                                                 Tribunal, Chennai
 
                             2004-05 to 
                             2006-07     439.48  Commissioner Chennai III
 
                             April 2005
                             to May 2010 136.28  Additional Commissioner
                                                 of Central Excise, 
                                                 Chennai
 
                             Aug 2005 to 
                             July 2007    20.93  Joint Commissioner of
                                                 Central Excise, Chennai
 
                             2007 to 
                             2009          4.67  Commissioner of Central
                                                 Excise (Appeals)
 
                             2007 to 
                             2009          6.77  Assistant Commissioner 
                                                 of Central Excise, 
                                                 Chennai
 
                             Sep 2006 to 
                             Feb 2010  1,423.06  Commissioner of Central
                                                 Excise, Chennai
 
                            Oct 2009 to
                            July 2010      3.62  Deputy Commissioner of
                                                 Central Excise, Chennai
 
 Finance 
 Act, 1994     Service tax   2005-06 to
                             2009-10     153.46  Commissioner of Central
                                                 Excise, Chennai
 (Chapter V)                 April 2007 
                             to Jan 2010  22.24  Assistant Commissioner
                                                 of Central Excise, 
                                                 Chennai
 
                             Jan 2008 to
                             Sep 2008      0.83  Commissioner of Central
                                                 Excise (Appeals), 
                                                 Chennai
 
 12.  The Company has no accumulated losses at the end of the financial
 year and it has not incurred any cash losses in the current and in the
 immediately preceding financial year.
 
 13.  Based on our audit procedures and on the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in payment of dues to financial institutions
 and banks. The Company does not have any borrowings by way of
 debentures.
 
 14.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 15.  In our opinion and according to the information and explanations
 given to us, the nature of activities of the Company does not attract
 any special statute applicable to chit fund and nidhi / mutual benefit
 fund/societies.
 
 16.  Based on our examination of records and the information and
 explanations given to us, the Company has not dealt / traded in any
 shares, securities, debentures and other investments during the year.
 
 17.  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.
 
 18.  The term loans obtained by the Company were applied only for the
 purposes for which the loans were obtained.
 
 19.  According to the Cash Flow Statement and other records examined by
 us and the information and explanations given to us on an over all
 basis, the funds raised on short-term basis, prima facie, have not been
 used during the year for long-term purposes.
 
 20.  The Company has not made any preferential allotment of shares to
 parties or companies covered in the register maintained under section
 301 of the Companies Act, 1956, during the year.
 
 21.  The Company did not have any outstanding debentures / bonds during
 the year for which creation of securities is required.
 
 22.  The Company has not raised any money through public issue during
 the year. The end use of the money raised through Foreign Currency
 Convertible Bonds in the earlier years has been disclosed and verified.
 
 23.  Based on the audit procedures performed and information and
 explanations given by the management, we report that no fraud on or by
 the Company has been noticed or reported during the course of our
 audit.
 
                                                   For SNB Associates
 
                                                Chartered Accountants 
 
                                        Firm Registration No. 015682N
 
                                                        B. Mahalingam
 
 Place: Chennai                                               Partner
 
 Date:  May 18, 2011                            Membership No. 210408