Biocon Ltd

To the Members of Biocon Limited

1. We have audited the attached Balance Sheet of Biocon Limited (‘theCompany’) as at March 31, 2011 and also the Profit and Loss Account and the Cash FlowStatement for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issuedby the Central Government of India in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 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 ourknowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

iii. The balance sheet, profit and loss account and cash flow statement dealt with bythis report are in agreement with the books of account;

iv. In our opinion, the balance sheet, profit and loss account and cash flow statementdealt 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 March31, 2011, and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on March 31, 2011 from being appointed as a director in termsof Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanationsgiven 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 in conformity with the accountingprinciples generally accepted in India;

(a) in the case of the balance sheet, of the state of affairs of the Company as atMarch 31, 2011;

(b) in the case of the profit and loss account, of the profit for the year ended onthat date; and

(c) in the case of cash flow statement, of the cash flows for the year ended on thatdate.

For S.R. BATLIBOI & ASSOCIATES

Firm registration number: 101049W

Chartered Accountants

per Aditya Vikram Bhauwala

Partner

Membership No.: 208382

Bangalore

April 28, 2011

Annexure referred to in paragraph 3 of our report of even date

Re: BIOCON LIMITED (‘the Company’)

(i) (a) The Company has maintained proper records showing full particulars, includingquantitative details and situation, of fixed assets.

(b) Fixed assets have been physically verified by the management during the year inaccordance with a regular programme of verification, intended to cover all the fixedassets of the Company over a period of two years, which, in our opinion, is reasonablehaving regard to the size of the Company and the nature of its assets. Based on theinformation and explanation provided to us, no material discrepancies were noticed on suchverification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonableintervals during the year.

(b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) The Company is maintaining proper records of inventory and there were no materialdiscrepancies noticed on physical verification.

(iii) (a) The Company has granted unsecured loans to three companies listed in theregister maintained under Section 301 of the Companies Act, 1956 (‘the Act’).The maximum amount involved during the year was Rs. 3,061,806 thousands and the balanceoutstanding at March 31, 2011 is Rs. 1,801,779 thousands.

(b) In our opinion and according to the information and explanations given to us, therate of interest, where applicable, and other terms and conditions of the loans given bythe Company, are not prima facie prejudicial to the interest of the Company.

(c) In respect of loans granted, repayment of the principal amount is as stipulated andpayment of interest, wherever applicable, has been regular.

(d) Based on our audit procedures and the information and explanation made available tous, there is no overdue amount of the loan granted by the Company to the companies listedin the register maintained under section 301 of the Act.

(e) The Company has not taken any loans from companies, firms or other parties listedin the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, aswell as taking into consideration the management representation that certain items offixed assets are of special nature for which alternative quotations are not available,there is an adequate internal control system commensurate with the size of the Company andthe nature of its business, for the purchase of fixed assets and inventory and for thesale of goods and services. During the course of our audit, no major weakness has beennoticed in the internal control system in respect of these areas. During the course of ouraudit, we have not observed any continuing failure to correct major weakness in internalcontrol system of the Company.

(v) (a) According to the information and explanations provided by the management, weare of the opinion that the particulars of contracts or arrangements referred to insection 301 of the Act, that need to be entered into the register maintained under Section301 have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangementsexceeding value of Rupees five lakhs entered into during the financial year, because ofthe unique and specialized nature of items involved and absence of any comparable prices,we are unable to comment whether the transactions are made at prevailing market prices atthe relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system, commensurate with thesize and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 209(1)(d) of the Act and are of the opinion that prima facie, the prescribedaccounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education andprotection fund, or employees’ state insurance, income-tax, sales-tax, wealth-tax,service tax, customs duty, excise duty and other material statutory dues applicable to ithave generally been regularly deposited with the appropriate authorities.

Further, since the Central Government has till date not prescribed the amount of cesspayable under Section 441 A of the Act, we are not in a position to comment upon theregularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, there were no undisputeddues in respect of provident fund, investor education and protection fund, employees’state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise dutyand other statutory dues which were outstanding, at the year end for a period of more thansix months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax,sales-tax, wealth-tax, service tax, custom duty, excise duty and cess on account of anydispute, are as follows:

* These amounts are paid in protest.

(xi) The Company has no accumulated losses at the end of the financial year and it hasnot incurred cash losses in the current and immediately preceding financial year.

(xii) Based on our audit procedures and on the information and explanations given bythe management, we are of the opinion that the Company has not defaulted in repayment ofdues to financial institution and banks. The Company does not have any borrowing by way ofdebenture.

(xiii) According to the information and explanations given to us and based on thedocuments and records produced to us, the Company has not granted loans and advances onthe basis of security by way of pledge of shares, debentures and other securities.

(xiv) In our opinion, the Company is not a chit fund or a nidhi/mutual benefitfund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’sReport) Order, 2003 (as amended) are not applicable to the Company.

(xv) 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 theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to theCompany.

(xvi) According to the information and explanations given to us, the Company has givenguarantee for loans taken by others from banks or financial institutions, the terms andconditions whereof in our opinion are not prima-facie prejudicial to the interest of theCompany.

(xvii) The Company did not have any term loans outstanding during the year.

(xviii) According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that no funds raised onshort-term basis have been used for long-term investment.

(xix) The Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under section 301 of the Act.

(xx) The Company did not have any outstanding debentures during the year. (xxi) TheCompany has not raised any money through a public issue during the year.

(xxii) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and as per the information and explanationsgiven by the management, we report that no fraud on or by the Company has been noticed orreported during the course of our audit.

For S.R. BATLIBOI & ASSOCIATES

Firm registraion number: 101049W

Chartered Accountants

per Aditya Vikram Bhauwala

Partner

Membership No.: 208382

Bangalore

April 28, 2011