We have audited the accompanying financial statements of STANDARD
 MEDICAL & PHARMACEUTICALS LIMITED (the Company), which comprise the
 Balance Sheet as at 31st March, 2012, the Profit and Loss Statement and
 the Cash Flow Statement for the year then ended and a summary of the
 significant accounting policies and other explanatory information.
 
 Management''s Responsibility for the Financial Statements.
 
 Management is responsible for the preparation of these financial
 statements that give a true and fair view of the financial position,
 financial performance and cash flows of the Company in accordance with
 the accounting principles generally accepted in India, including
 Accounting Standards referred to in sub-section (3C) of section 211 of
 the Companies Act, 1956 (the Act).  This responsibility includes the
 design, implementation and maintenance of internal controls relevant to
 the preparation and presentation of the financial statements that give
 a true and fair view and are free from material misstatement, whether
 due to fraud or error.
 
 Auditors'' Responsibility
 
 Our responsibility is to express an opinion on these financial
 statements based on our audit. We conducted our audit in accordance
 with the Standards on Auditing issued by the Institute of Chartered
 Accountants of India. Those Standards require that we comply with the
 ethical requirements and plan and perform the audit to obtain
 reasonable assurance about whether the financial statements are free
 from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and the disclosures in the financial statements.  The
 procedures selected depend on the auditor''s judgment, including the
 assessment of the risks of material misstatement of the financial
 statements, whether due to fraud or error. In making those risk
 assessments, the auditor considers the internal controls relevant to
 the Company''s preparation and fair presentation of the financial
 statements in order to design audit procedures that are appropriate in
 the circumstances. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Management, as well as
 evaluating the overall presentation of the financial statements. We
 believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our audit opinion.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the financial statements give the information
 required subject to Note No. 1.4 in the Notes Forming Part of Financial
 Statements regarding preparation of accounts on principles applicable
 to the going concern, 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, 2012;
 
 b) in the case of the Statement of Profit and Loss, of the Loss 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.
 
 Report on Other Legal and Regulatory Requirements
 
 1) As required by the Companies (Auditor''s Report) Order, 2003 (the
 Order) issued by the Central Government in terms of sub-section (4A)
 of section 227 of the Act, we give in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the Order.
 
 2) As required by sub-section (3) of section 227 of the Act, 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 it appears from our examination of those
 books.
 
 c) The Balance Sheet, Profit and Loss Statement, 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 Statement of Profit and Loss,
 and the Cash Flow Statement comply with the Accounting Standards
 referred to in sub-section (3C) of section 211 of the Act.
 
 e) On the basis of the written representations received from the
 directors as on 31st March, 2012 taken on record by the Board of
 Directors, none of the directors is disqualified as on 31st March, 2012
 from being appointed as a director in terms of clause (g) of
 sub-section (I) of section 274 of the Act.
 
 Annexure referred to in paragraph I under the heading Report on other
 legal and regulatory requirements of our report of even date
 
 i) a. The Company has maintained proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets.
 
 b. All fixed assets have not been physically verified by the Management
 during the year, but there is a regular programme of verification
 which, in our opinion, is reasonable having regard to the size of the
 Company and the nature of its Assets. No material discrepancies were
 noticed on such verification.
 
 c.  There was no disposal of fixed assets during the year.
 
 ii) During the year the company has not carried any Trading activity
 and the Company is not having any Inventory at the Year end. Hence
 other matters specified in the clause are not applicable to the
 company.
 
 iii) a. The Company has not granted any loans, Secured or Unsecured to
 Companies, Firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956.
 
 b.  The Company has obtained unsecured Loans from two 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 loans
 obtained from such parties was Rs. 18,01,03,694/-. The said loans/
 advances are interest free and other terms and conditions on which the
 said loans/advances were obtained are not prima facie prejudicial to
 the interest of the Company. As per the information and explanations
 given to us, there are no specific terms and conditions as to repayment
 of these loans except that the amounts are to be repaid in a phased
 manner depending upon the resources available to the Company from time
 to time.
 
 iv) In our opinion, there is an adequate internal control procedures
 commensurate with the size of the company and the nature of it''s
 business. During the course of our audit no major weaknesses have been
 noticed in internal controls.
 
 v) a. According to the information and explanations provided by the
 Management, we are of the opinion that the transactions that need to be
 entered into the register maintained under section 301 has been so
 entered.
 
 b. In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time.
 
 vi) During the year under audit, the Company has not accepted any
 deposits from the public.
 
 vii) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 viii) The Central Government has not prescribed maintenance of cost
 records by the Company under section 209 (I)(d) of the Companies Act,
 1956 for any of it''s products.
 
 ix) a. The provisions of Excise Duty, Cess and others are not
 applicable to the company. However, the Company is not regular in
 depositing the Provident Fund and Employee''s State Insurance
 Contributions.
 
 b.  According to the information and explanations given to us excepting
 an amount of Rs. 4,31,308/- representing Sales Tax and Provident Fund
 dues, there were no other undisputed statutory dues outstanding, at the
 year end for a period of more than six months from the date they became
 payable.
 
 c.  According to the records of the Company and on the basis of the
 information and explanations given to us, there are no dues of
 Sales-tax, Income-tax, Customs Duty, Wealth tax, Excise Duty, Service
 Tax and Cess which have not been deposited on account of any dispute.
 
 x) The accumulated losses of the Company at the end of financial year
 are more than fifty percent of its net worth.  The Company has incurred
 cash losses during the financial year and in the immediately preceding
 financial year.
 
 xi) The Company has not defaulted in repayment of dues to the Financial
 Institutions or banks or Debenture Holders.
 
 xii) The Company has not granted any loans or advances on the basis of
 security by the way of pledge of shares, debentures or other
 securities.
 
 xiii) In our opinion, the Company is not a chit fund, nidhi/mutual
 benefit fund/society. Therefore, the provisions of Clause 4(xiii) of
 the Order are not applicable.
 
 xiv) 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 order are not applicable to the
 Company.
 
 xv) The Company has not given any guarantee for loans taken by others
 from banks or financial institutions.
 
 xvi) The Company has not obtained any term loans during the year.
 
 xvii) The Funds raised on short term basis have not been used for long
 term investment and whereas part of long term funds were used for
 working capital requirement of the company.
 
 xviii) The Company has not made, during the year any preferential
 allotment of the Shares to parties and companies covered in the
 Register maintained under section 301 of the Companies Act, 1956.
 
 xix) Based on books and records produced to us by the management,
 securities have been created in respect of debentures issued.
 
 xx) During the year the Company has not raised money by public issues.
 Hence other matters specified in the Clause or not applicable to the
 Company.
 
 xxi) As per the checks carried out by us, no fraud on or by the company
 has been noticed or reported during the year under report.
 
 
                                                 for J B REDDY & CO.,
                                                Chartered Accountants
                                               Firm Regn. No. 003256S
 
                                                            A V REDDY
                                                              Partner
                                                         M. No. 23983
 
 Place : Hyderabad
 Date : 14th August, 2012