Cipla Ltd

TO THE MEMBERS OF CIPLA LIMITED

1. We have audited the attached Balance Sheet of Cipla Limited (the Company) as at 31^stMarch 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for theyear ended on that date annexed thereto. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. These 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 the 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 (Auditors ’ Report) Order, 2003, (hereinafterreferred to as the Order), as amended, issued by the Central Government ofIndia in terms of section 227(4A) of the Companies Act, 1956 (the Act) and on the basis ofsuch checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we enclose 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, wereport that:

a. We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany, so far as appears from our examination of those books;

c. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report comply with the Accounting Standards referred to insection 211(3C) of the Companies Act,1956;

e. On the basis of the written representations received from the Directors of theCompany as on 31^st March 2011 and taken on record by the Board of Directors ofthe Company, we report that none of the Directors is disqualified as on 31^stMarch 2011, from being appointed as a Director in terms of section 274(1)(g) of theCompanies Act, 1956;

f. In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements, together with the notes thereto, give theinformation required by the Companies Act, 1956, in the manner so required and give a trueand 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 31^stMarch 2011;

ii. In the case of the Profit and Loss Account, of the Profit for the year ended onthat date; and iii. In the case of the Cash Flow Statement, of the cash flows for the yearended on that date.

ANNEXURE TO THE AUDITORS ’ REPORT

(Referred to in paragraph 3 of our report of even date to the Members of Cipla Limited(the Company) for the year ended 31^st March 2011)

1. a. The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets, other than the situation offurniture and fixtures and office equipment where the situation recorded is the locationof the Company’s different establishments.

b. The Company has a policy of physically verifying its fixed assets periodically,which in our opinion, is reasonable having regard to the size of the Company and thenature of its business. During the year, some of the fixed assets have been physicallyverified by the management and discrepancies noticed during the physical verification andthe assets scrapped during the year has been properly dealt with in the books of account.

c. The fixed assets that have been sold/disposed of during the year do not constitute asubstantial part of the total fixed assets of the Company. Hence, the going concernconcept has not been affected.

2. a. The inventory, except goods in transit, has been physically verified by theManagement at reasonable intervals during the year. The verification was done on the basisof the perpetual inventory system operated by the Company. In case of materials lying withthird parties, certificates confirming such inventory have been obtained by the Companyfrom most of the third parties.

b. In our opinion and on the basis of the information and explanations given to us, theprocedures for 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. On the basis of our examination of the inventory records, in our opinion, theCompany has maintained proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to the book records were not material and have beenproperly dealt with in the books of account.

3. a. As informed to us, the Company has not granted any loans, secured or unsecured tocompanies, firms or other parties listed in the Register maintained under section 301 ofthe Companies Act, 1956. The loans outstanding that were repayable on demand have beenrecovered along with interest; as applicable.

b. The Company has not taken any loans from parties covered in the Register maintainedunder section 301 of the Companies Act, 1956. Consequently, the requirements of clause(iii-f) and (iii-g) of paragraph 4 of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, thereare generally adequate internal control systems commensurate with the size of the Companyand the nature of its business for purchase of inventory and fixed assets and for the saleof goods and services. Further, on the basis of our examination of the books and recordsof the Company, and according to the information and explanations given to us during thecourse of audit, no major weakness has been noticed in these internal control systems.

5. a. In our opinion and according to the information and explanations given to us, theparticulars 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.

b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or agreements referred to in 5.a. above andexceeding the value of rupees five lakhs in respect of any party during the year have beenmade at prices which are reasonable having regard to the prevailing market prices at therelevant time.

6. In our opinion and according to the information and explanations given to us, theCompany has not accepted any deposit from the public within the meaning of sections 58A,58AA or any other relevant provisions of Companies Act, 1956 and the Companies (Acceptanceof Deposits) Rules, 1975.

7. In our opinion, the Company has an internal audit system commensurate with its sizeand the nature of its business.

8. We have broadly reviewed the books of account maintained by the Company Pursuant tothe Rules made by the Central Government for the maintenance of cost records under section209(1)(d) of the Companies Act, 1956 in respect of its products and are of the opinionthat, prima facie, the prescribed accounts and records have been made andmaintained. However, we have not carried out a detailed examination of the accounts andrecords with a view to determine whether these are accurate or complete.

9. a. According to the information and explanations provided to us and the records ofthe Company examined by us, in our opinion, the Company was regular in depositingundisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax,Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it withthe appropriate authorities. There were no undisputed arrears that were outstanding as at31^st March 2011 for a period of more than six months from the date they becamepayable.

b. According to the information and explanations given to us and based on the recordsof the Company examined by us, as on 31^st March 2011, there were no dues inrespect of Wealth Tax, Service Tax, Customs Duty and Cess that have not been depositedwith the appropriate authorities on account of dispute.

The particulars of dues towards Excise Duty, Sales Tax and Income Tax that have notbeen deposited on account of dispute as at 31^st March 2011 and the forum wherethese disputes are pending are as follows:

10. The Company does not have accumulated losses at the end of the financial year andhas not incurred cash losses in the financial year under report or in the immediatelypreceding financial year.

11. According to the information and explanations given to us and based on our auditprocedures, the Company has not defaulted in repayment of dues to any financialinstitutions or banks.

12. According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

13. 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 Order are not applicableto the Company.

14. In our opinion and according to the information and explanations given to us, theCompany is not a dealer or trader in shares, securities, debentures or other investments.Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to theCompany.

15. According to the information and explanations given to us and the representationsmade by the management, the Company has not given any guarantee for loans taken by othersfrom banks or financial institutions.

16. The Company has not obtained any term loans. Accordingly, the provisions of clause4(xvi) of the Order are not applicable to the Company.

17. 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 on shortterm basis have been used for long term investment.

18. The Company has not made preferential allotment of shares during the year toparties and companies covered in the Register maintained under section 301 of theCompanies Act, 1956.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money through public issue of securities during theyear.

21. During the course of our examination of the books of account and records of theCompany, and according to the information and explanations given to us, no fraud on or bythe Company has been noticed or reported by the Company during the year.