1.  We have audited the attached Balance Sheet of Piramal Healthcare
 Limited, as at March 31, 2011, and the related Profit and Loss Account
 and Cash Flow Statement for the year ended on that date annexed
 thereto, which we have signed under reference to this report. 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 Management, as well as evaluating the overall financial statements
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004,
 (together the ‘Order) issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of ‘The Companies Act, 1956
 of India (the ‘Act) and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we give 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 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 referred to in sub-section (3C) of Section 211 of the Act;
 
 (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,
 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 Act;
 
 (f ) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act 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 Auditors Report of even date to the
 members of Piramal Healthcare Limited on the financial statements for
 the year ended March 31, 2011]
 
 1.  (a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of
 
 fixed assets.
 
 (b) The fixed assets are physically verified by the Management
 according to a phased programme designed to cover all the items over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the Management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (c) In our opinion, the Company has disposed of a substantial part of
 fixed assets during the year. On the basis of our examination of the
 books and records of the Company, and according to the information and
 explanations given to us, in our opinion, the disposal of the said part
 of fixed assets has not affected the going concern status of the
 Company.
 
 2.  (a) The inventory (excluding stocks with third parties) has been
 physically verified by the Management during the
 
 year.  In respect of inventory lying with third parties, these have
 been confirmed by them.  In our opinion, the frequency of verification
 is reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the Management are reasonable and 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. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  (a) The Company has granted unsecured loans, to Four Companies
 covered in the register maintained under Section
 
 301 of the Act.  The maximum amount involved during the year and the
 year-end balance of such loans aggregates to Rs.216,423 lakhs and
 Rs.55,670 lakhs respectively.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of the aforesaid loans, the parties are repaying the
 principal amounts as stipulated and are also regular in payment of
 interest, where applicable.
 
 (d) In respect of the aforesaid loans granted, there is no overdue
 amount more than Rupees One Lakh.
 
 (e) The Company has not taken loans, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed 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) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or
 
 arrangements referred to in Section 301 of the Act have been entered in
 the register required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 6.  The Company has not accepted any deposits from public within the
 meaning of Sections 58A and 58AA of the Act and the rules framed there
 under.
 
 [Referred to in paragraph 3 of Auditors Report of even date to the
 members of Piramal Healthcare Limited on the financial statements for
 the year ended March 31, 2011]
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act, 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) According to the information and explanations given to us and
 the records of the Company examined by us, in
 
 our opinion, 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, Customs Duty, Excise Duty, Cess and other
 material statutory dues as applicable, with the appropriate authorities
 in India.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, there are no dues of Wealth Tax,
 Service Tax, Customs Duty and Cess which have not been deposited on
 account of any dispute.
 
 The particulars of dues of Excise Duty, Sales-Tax and Income-Tax as at
 March 31, 2011 which have not been deposited on account of a dispute
 are as follows -
 
 Name of the   Nature of dues  Amount*   Period to which  Forum where the
 statute                       (Rs. Lak
                                hs)        the amount     dispute is 
                                                          pending
                                             relates
   
 The Central 
 Excise       Excise duty inc
              luding             255       1995-2010      Appellate
                                                          Authority –   
 Act,1944     interest and 
              penalty,                                    upto Commis
                                                          sioners
              as applicable                                Level
 
                                 888       1989-2006       CESTAT
 
                                  1        1994-1995      The High Cou
                                                          rt of
                                                          Judicature at
                                                          Indore
 
 Central 
 Sales Tax 
 Act          Sales Tax 
              including          883      1998-2010       Appellate Aut
                                                          hority
 and Local 
 Sales Tax   interest and 
              penalty,                                    – upto Joint
 
 Act         as applicable                                Commissioner 
                                                           Level
 
                                                           Tribunal
                                111      1991 to 2007
 
 Income-Tax 
 Act, 1961    Income tax 
              including      14,794.32      2003-04, 
                                            2004-05,     Appellate Autho
                                                          rity –
                                            2005-06, 
                                            2006-07,     upto Commissio
                                                         ners 
              as applic
              able                          2007-08, 
                                            2008-09,       level
                                            2009-10 & 
                                            2010-11
 
                               20.45        1999-00      Income Tax App
                                                          ellate
                                                          Tribunal
 
 * Net of amounts paid under protest or otherwise
 
 [Referred to in paragraph 3 of Auditors Report of even date to the
 members of Piramal Healthcare Limited on the financial statements for
 the year ended March 31, 2011]
 
 10.  The Company has no accumulated losses as at March 31, 2011 and it
 has not incurred any cash losses in 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 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 provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund / societies are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  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 during the year, are not
 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.  On the basis of an overall examination of the Balance Sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis, which have been used for long-term investment.
 
 18.  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 during the year.
 
 19.  The Company has created security in respect of debentures issued
 and outstanding at the year-end.
 
 20.  The Company has not raised any money by public issues during the
 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
 material fraud on or by the Company, noticed or reported during the
 year, nor have we been informed of such case by the Management.
 
                                           For Price Waterhouse
                                    Firm Registration Number: 301112E
                                            Chartered Accountants
 
                                               Partha Ghosh 
 Mumbai,                                       Partner
 Dated : May 6, 2011                       Membership No. F-55913