Glaxosmithkline Pharma Ltd

TO THE MEMBERS OF GLAXOSMITHKLINE PHARMACEUTICALS LIMITED

1. We have audited the attached Balance Sheet of GlaxoSmithKline PharmaceuticalsLimited, as at 31^st December, 2009, and the related Profit and Loss Account forthe year ended on that date annexed thereto and the Cash Flow Statement for the year endedon that date, which we have signed under reference to this report. These financialstatements are the responsibility of the company’s management. Our responsibility isto express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. 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 by theCompanies (Auditor’s 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 ofsuch checks of the books and records of the company as we considered appropriate andaccording to the information and explanations given to us, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportthat:

(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, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

(d) 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 Act;

(e) On the basis of written representations received from the Directors of the company,as on 31^st December, 2009, and taken on record by the Board of Directors of thecompany, none of the Directors of the company is disqualified as on 31^stDecember, 2009 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 explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto give in the prescribed manner the information required by the Act 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^stDecember, 2009;

(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 year ended onthat date.

Annexure To Auditors’ Report

[Referred to in paragraph 3 of the Auditors’ Report of even date to the members ofGlaxoSmithKline Pharmaceuticals Limited on the financial statements for the year ended 31^stDecember, 2009]

1. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets, other than the situation of furnitureand office equipment, for which the situation recorded is the location of thecompany’s different establishments.

(b) The fixed assets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of three years which, in ouropinion, is reasonable having regard to the size of the company and the nature of itsassets. Pursuant to the programme, a portion of the fixed assets has been physicallyverified by the management during the year and no material discrepancies between the bookrecords and the physical inventory have been noticed.

(c) In our opinion, a substantial part of fixed assets has not been disposed of by thecompany during the year.

2. (a) The inventory, excluding materials in transit, has been physically verified bythe management during the year.

Further, a major portion of inventory lying with third parties has been physicallyverified by the management during the year. In our opinion, the frequency of verificationis reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe management are reasonable and adequate in relation to the size of the company and thenature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, thecompany is maintaining proper records of inventory. In our opinion, the discrepanciesnoticed on physical verification of inventory as compared to the book records were notmaterial and have been properly dealt with in the books of account.

3. (a) The company has not granted any loans, secured or unsecured, to companies, firmsor other parties covered in the register maintained under Section 301 of the Act.Accordingly, clauses (iii)(b) to (iii)(d) of paragraph 4 of the Order are not applicableto the company for the current year.

(b) The company has not taken any loans, secured or unsecured, from companies, firms orother parties covered in the register maintained under Section 301 of the Act.Accordingly, clauses (iii)(f) and (iii)(g) of paragraph 4 of the Order are not applicableto the company for the current year.

4. In our opinion and according to the information and explanations given to us, havingregard to the explanation that certain items of inventory and fixed assets purchased areof special nature for which suitable alternative sources do not exist for obtainingcomparative quotations, there is an adequate internal control system commensurate with thesize of the company and the nature of its business for the purchase of inventory and fixedassets and for the sale of goods and services. Further, on the basis of our examination ofthe books of account and according to the information and explanations given to us, wehave not come across nor have we been informed of any instance of major weaknesses in theaforesaid internal control system.

5. In our opinion and according to the information and explanations given to us, thereare no contracts or arrangements referred to in Section 301 of the Act during the yearthat need to be entered in the register maintained under that Section. Accordingly, clause(v)(b) of paragraph 4 of the Order is not applicable to the company for the current year.

6. In our opinion, the company has complied with the provisions of Sections 58A, 58AAor any other relevant provisions of the Act and the Companies (Acceptance of Deposits)Rules, 1975 with regard to the deposits accepted from the public which have matured andare remaining unpaid as at 31^st December, 2009. According to the informationand explanations given to us, no order has been passed by the Company Law Board orNational Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunalon the company in respect of the aforesaid deposits.

7. In our opinion, the company has an internal audit system commensurate with its sizeand 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 of India for the maintenance of cost records,under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion thatprima facie, the prescribed accounts and records have generally been maintained and areunder preparation. We have not, however, made a detailed examination of the records with aview to determining whether they are accurate or complete.

9. (a) According to the books of account and records as produced and examined by us inaccordance with the generally accepted auditing practices in India, in our opinion, thecompany is generally regular in depositing undisputed statutory dues in respect ofprovident fund, investor education and protection fund, employees’ state insurance,income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and othermaterial statutory dues as applicable with the appropriate authorities in India.

(b) According to the books of account and records as produced and examined by us inaccordance with the generally accepted auditing practices in India, there are no dues ofincome-tax, wealth tax, customs duty and cess which have not been deposited on account ofany dispute. The particulars of dues of sales tax, service tax and excise duty as at 31^stDecember, 2009 which have not been deposited on account of a dispute, are as follows–

*Net of amounts paid under protest or otherwise

10. The company has no accumulated losses as at 31^st December, 2009 and hasnot incurred any cash losses in the financial year ended on that date or in theimmediately preceding financial year.

11. According to the books of account and records of the company, there has been nodefault in repayment of dues to any financial institution or bank or debenture holdersduring the year.

12. The company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/nidhi/mutual benefitfund/societies are not applicable to 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 and other investments.

15. The company has not given any guarantee for loans taken by others from banks orfinancial institutions during the year.

16. In our opinion, the company has not obtained any term loans that were not appliedfor the purpose for which these were raised.

17. On the basis of the information and explanations given to us and on an overallexamination of the Balance Sheet of the company, in our opinion, there are no funds raisedon 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 andcompanies covered in the register maintained under Section 301 of the Act during the year.

19. The company has not issued any debentures.

20. The company has not raised any money by public issue during the year.

21. During the course of our examination of the books of account and records of thecompany, carried out in accordance with the generally accepted auditing practices inIndia, we have not 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 themanagement.