1.  We have audited the attached balance sheet of Wockhardt Limited
 (''the Company'') as at March 31, 2011 and also the profit and loss
 account and the cash flow statement for the year ended on that date
 annexed thereto. 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, (as
 amended), 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''), 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 above, we
 report that:
 
 (i) 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;
 
 (ii) In our opinion, the Company has kept proper books of account as
 required by law, so far as it appears from our examination of those
 books;
 
 (iii) The balance sheet, profit and loss account and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) 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 Companies Act, 1956;
 
 (v) On the basis of the 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.  Without qualifying our opinion, we draw attention
 
 (a) to Note 32 of the financial statements, wherein as explained,
 Corporate Debt Restructuring (CDR) Scheme is effective from April 15,
 2009. The outstanding liabilities of the Company have been
 substantially restructured under the aegis of CDR Scheme, which extends
 till 2018.
 
 (b) to Note 36 and 37 of the financial statements, wherein as
 explained, certain lenders have filed winding up petitions against the
 Company and the Company has filed affidavit in reply. In one case, the
 Hon''ble High Court of Bombay has admitted winding up petition filed by
 certain holders of Zero Coupon Foreign Currency Convertible Bonds and
 the High Court has granted stay thereon upon appeal by the Company. The
 matter is sub-judice and outcome of which cannot be currently
 ascertained. The Company''s ability to continue as a going concern is
 dependent on the successful outcome of the winding up petitions.
 
 (c) to Note 35(c) of the financial statements, wherein as explained,
 the Company has given corporate guarantee for US$ 250 million syndicate
 loan obtained by its Swiss subsidiary, which is being rescheduled.
 Terms and conditions for rescheduling of 31% of the loan are still
 under negotiation.
 
 6.  In respect of crystallized derivative losses oft 1,843.79 million
 forming part of ''exceptional items'', we have relied on appropriate
 written representations.
 
 1. As explained in Note 35(e) to the financial statements, the Company
 and its Swiss subsidiary had, on certain derivative contracts with
 banks/financial institutions, stopped payment of margins called by the
 banks/financial institutions. The banks/financial institutions, based
 on the Early Termination clause in the agreement, terminated these
 contracts and claimed an amount of Rs. 3,322.51 million (including a
 demand oft 669.15 million as guarantor for derivatives contracts
 executed by Swiss subsidiary), being the loss incurred on termination
 of such contracts, which the Company and its subsidiary have disputed.
 
 No provision has been made in the accounts for above amounts, which
 have been considered as contingent liabilities. The consequential
 impact upon relevant assets and liabilities and loss for the year is
 not ascertainable.
 
 8. In our opinion, and to the best of our information and according to
 the explanations given to us, subject to the matter included in
 paragraph 6 and 7 above, the effect of which cannot be currently
 ascertained, the said accounts give the information required by the Act
 in the manner so required and also 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 March 31, 2011;
 
 (b) in the case of the profit and loss account, of the loss for the
 year ended on that date; and
 
 (c) 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 the Auditors'' Report of even date to the
 members of WOCKHARDT LIMITED on the financial statements for the year
 ended 31st March, 2011.
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets.
 
 (b) The Company has a program for phased physical verification of all
 its fixed assets over a period of three years, which, in our opinion,
 is reasonable having regard to the size of the Company and nature of
 its assets. Accordingly, certain fixed assets have been physically
 verified by the management during the year and discrepancies noticed on
 such verification, which were not material, have been properly dealt
 with in the books of accounts.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 (ii) (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 substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) 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) The Company is maintaining proper records of inventory and as
 informed, no material discrepancies were noticed on such physical
 verification carried out.
 
 (iii) (a) As informed, 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.
 Accordingly, the provisions stated in paragraph 4 (iii)(b),(c) and (d)
 of the Order are not applicable.
 
 (b) As informed, 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.
 Accordingly, the provisions stated in paragraph 4 (iii)(f) and (g) of
 the Order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there exists an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory, fixed assets and with
 regard to the sale of goods and services. During the course of our
 audit, we have not observed any continuing failure to correct any major
 weakness in the aforesaid internal control system of the Company.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of contracts or arrangements
 referred to in Section 301 of the Companies Act, 1956 that need to be
 entered into the register maintained under Section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rs. five lakhs have been entered during
 the year at prices which are reasonable having regard to the prevailing
 market prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 within the meaning of Sections 58A and 58AA of the Act and the rules
 framed there under.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business, except that
 scope needs to be enlarged in respect of Treasury Operations.
 
 (viii) 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 we are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities 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 applicable to
 it.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under Section 441A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees''state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other undisputed statutory dues were outstanding, at the end of the
 year, for more than six months from the date they became payable.
 
 (c) According to the records of the Company and as informed to us,
 there are no dues outstanding of income-tax, sales-tax, wealth-tax,
 service tax, customs duty, excise duty and cess that have not been
 deposited on account of any dispute, except as follows:
 
 Name of the   Nature of 
               dues        Amount     Period to which 
                                      the amount        Forum where the 
                                                        dispute
 statute                   (Rs. in 
                           millions)  relates           is pending
 
 Central 
 Excise      Reversal of 
             CENVAT           0.40    April 1999 to 
                                      August 1999       Commissioner 
                                                        Appeal
 Act, 1944   credit
 
             Penalty for      3.66    February 2001 to 
                                      February 2003     CESTAT
             classification
 
             Differential
             Duty            21.92    November 1996 to 
                                      April 1998        Commissioner
 
             Education Cess   0.24    July 2004 to 
                                      August 2004       Deputy 
                                                        Commissioner
 
             Penalty for 
             Valuation        3.62    December 2001 to 
                                      January 2004      Additional
                                                        Commissioner
 
             Demand and 
             Penalty         21.96    September 1991 to 
                                      July 1993         CESTAT
             for 
             classification
 
 Income Tax  Demand under    36.42    April 2001 to 
                                      March 2002        High Court
 Act, 1961   Section 143(3)
 
             Demand under    231.21   April 2005 to 
                                      March 2006       Commissioner of 
                                                       Income
             Section 143(3)                            Tax (Appeals)
 
             Demand under    128.01   April 2006 to 
                                      March 2007       Commissioner of
                                                       Income
             Section 143(3)                            Tax (Appeals)
 
             TDS Assessment   25.98   April 2007 to 
                                      March 2009       Commissioner of 
                                                       Income
             order u/s 
             201/201 (IA)                              Tax (Appeals)
 
 Note: Amount paid under protest by the Company and not included above
 for Income tax are Rs. 202.66 million.
 
 (x) In our opinion, the accumulated losses of the Company are not more
 than fifty percent of its net worth. The Company has incurred cash
 losses during the current financial year as well as during the
 preceding financial period. This is without considering the effect of
 the qualifications in our main report on accumulated losses, net worth,
 and cash losses, as the resulting financial impact is not quantifiable.
 
 (xi) (a) In our opinion and according to the information and
 explanations given to us, considering the loan liabilities being
 restructured under the aegis of Corporate Debt Restructuring (CDR)
 Scheme and Master Restructuring Agreement being signed by lenders, as
 per the terms of CDR Scheme, there has been no default in repayment of
 principal and interest to CDR lenders.
 
 (b) With respect to Foreign Currency Convertible Bonds aggregating Rs.
 4,588.23 million which were due for repayment in October 2009, no
 repayment has been made and as informed, CDR Scheme comprehensively
 covers FCCB liabilities.
 
 (c) As informed, the Company is in dispute with certain lenders whose
 liabilities as per books of accounts aggregate Rs. 261.50 million.
 Further as stated in Note 35(e), the Company has not acknowledged as
 debt the demand raised on account of unilateral termination of certain
 derivative contracts. We are unable to comment in respect of such
 liabilities whether there has been any default in view of the dispute.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/ society. Therefore, the provisions of Clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of Clause 4(xiv) of the Companies (Auditor''s Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) In our opinion and as explained in Note 35(c) to the financial
 statements, the terms and conditions of the guarantees given by the
 Company, for loans taken by its subsidiaries from banks or financial
 institutions are not prejudicial to the interest of the Company.
 
 (xvi) In our opinion, the term loans have been applied for the purpose
 for which the loans were raised.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, funds
 raised on short-term basis to the tune of Rs. 2,671.26 million have been
 used for long-term investment mainly on account of losses incurred
 during the year and demerger of nutrition business of wholly owned
 subsidiary into the Company.
 
 (xviii) According to the information and explanations given to us, the
 Company has made preferential allotment of shares to parties and
 companies covered in the register maintained under Section 301 of the
 Act as required by the Corporate Debt Restructuring Scheme.
 Accordingly, in our opinion, the prices at which such shares have been
 issued are not prejudicial to the interest of the Company.
 
 (xix) According to the information and explanations given to us, the
 Company has created adequate security or charge in respect of
 debentures outstanding during the year.
 
 (xx) The Company has not raised any money by public issue during the
 year covered under our audit.
 
 (xxi) 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 Haribhakti & Co.
 
 Chartered Accountants 
 FRN NO.103523W
 
 Shailesh Haribhakti
 Partner
 Membership No. 30823
 
 Place : Mumbai 
 Date : May 19, 2011