Jubilant Life Sciences Ltd

TO THE MEMBERS OF JUBILANT LIFE SCIENCES LIMITED (Formerly Jubilant Organosys Limited)

1. We have audited the attached Balance Sheet of JUBILANT LIFE SCIENCES LIMITED(‘the Company’) as at 31st March, 2011 the related Profit and Loss Account forthe year ended on that date annexed thereto, and the Cash Flow Statement of the companyfor the period ended on that date, which we have signed under reference to this report.These financial statements are the responsibility of the Company’s management. Ourresponsibility 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 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, statement as well as evaluating theover all financial presentation. We believe that our audit provides a reasonable basis forour opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003 issued by theCentral Government of India in terms of Section 227 (4A) of the Companies Act, 1956, andon the basis of such checks as considered appropriate and according to the information andexplanation given to us during the course of our audit, we enclose in the Annexure heretoa statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments mentioned in the Annexure referred to in paragraph 3 above,we report 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 such books;

c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with bythe report are in agreement with the books of account of the Company;

d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statementdealt with by this report comply with the mandatory Accounting Standards referred to inSub-Section 3 (c) of Section 211 of the Companies Act, 1956.

e) According to the information and explanation given to us and on the basis of writtenrepresentations received from the directors as on 31st March, 2011 of the Company andtaken on record by the Board of Directors, we report that none of the directors isdisqualified, as on 31st March, 2011, from being appointed as a director in terms ofclause (g) of Sub Section (1) of Section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said Accounts, and read together with the notes and SignificantAccounting Policies thereon give the information required by the Companies Act, 1956 inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2011.

(ii) In the case of the Profit and Loss Account, of the Profit of the Company for theyear ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows of the Company for theyear ended on that date.

Re: JUBILANT LIFE SCIENCES LIMITED (Formerly Jubilant Organosys Limited)

Referred to in paragraph 3 of our report of even date on the accounts of the Companyfor the year ended 31st March, 2011.

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

(b) As explained to us, physical verification of fixed assets has been carried out interms of the phased programme of verification of its fixed assets adopted by the Companyand no material discrepancies were noticed on such verification. In our opinion thefrequency of verification is reasonable, having regard to the size of the Company andnature of its business.

(c) During the year the Company has not disposed off any substantial/ major part offixed assets except transfers, in terms of the Court Sanctioned Scheme of Demerger ofcertain units to Jubilant Industries Ltd, however, the same has not affected its goingconcern basis.

ii) (a) The inventory has been physically verified, during the year, by the managementat reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of inventory records, in our opinion, the Companyis maintaining proper records of inventory. In our opinion, discrepancies noticed onphysical verification of stocks as compared to book records were not material in relationto the operations of the Company and the same have been properly dealt with in the booksof account.

iii) (a) There are only two Companies (Subsidiaries) covered in the register maintainedunder section 301 of the Companies Act,1956 to whom the Company has granted loans. Themaximum amount involved during the year was Rs. 1,929.75 million (including the openingbalance) and the year end total balance of loans granted to such parties was Rs. 1,929.75million.

(b) In our opinion the rate of interest (wherever leviable) and other terms andcondition on which loan were granted to the said Companies listed in register maintainedunder section 301 of the Companies Act, 1956 are not prima facie, prejudicial to theinterest of the Company.

(c) None of the parties have repaid principal amounts as no demand was raised and theparties were regular in the matter of payment of interest, wherever applicable.

(d) There is no overdue amount of loan granted to the said companies.

(e) The Company had taken short term loan from one company covered in the registermaintained under section 301 of the Companies Act, 1956. The amount involved were Rs. 160million and the maximum balance was Rs. 100 million during the year and the year endbalance was Rs. Nil, as the loan were repaid during the year. The rate of interest andterms of such loan, prima facie, are not prejudicial to the interest of the Company.

iv) In our opinion and according to the information and explanations given to us, thereare adequate internal control systems commensurate with the size of the company and thenature of its business with regard to purchase of inventory and fixed assets and for thesale of goods and services. During the course of our audit, we have not observed anycontinuing failure to correct major weakness in internal control system.

v) (a) Based on the audit procedures applied by us and according to the information andexplanations provided by the management, we are of the opinion that the transactions thatneed 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, thetransactions made in pursuance of contracts or arrangements entered in the register underSection 301 have been made at prices which are reasonable having regard to prevailingmarket prices, to the extent comparable prices were available, at the relevant time.

vi) In the case of public deposits received by the company, the directives issued bythe Reserve Bank of India and the provisions of Section 58A, 58AA or any other relevantprovisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules 1975have been Compiled with. No order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

viii) The Central Government has prescribed maintenance of the Cost Records undersection 209(1)(d) of the Companies Act, 1956 in respect of certain products of theCompany. We have broadly reviewed the books of account maintained by the company pursuantto the Rules made by the Central Government for the maintenance of the cost records, andare of the opinion that prima facie the prescribed accounts and records have beenmaintained. We are, however, not required to and have not carried out any detailedexamination of such accounts and records.

ix) (a) According to the records examined by us, the company is regular in depositingwith appropriate authorities undisputed statutory dues including provident fund, investorseducation and protection fund, employees state insurance, income tax, sales-tax, wealthtax, service tax, custom duty, excise duty, cess and other statutory dues whereverapplicable. According to the information and explanations given to us, no undisputedarrears of statutory dues were outstanding as at 31st March, 2011 for a period of morethan six months from the date they became payable.

(b) According to the records of the Company, the dues of sales tax, income-tax,customs, wealth-tax, service tax, excise duty, cess which have not been deposited onaccount of disputes and the forum where the dispute is pending are as under:

The above table excludes the disputed cases pertaining to the businesses demerged intoJubilant Industries Ltd pursuant to the Scheme of Amalgamation and Demerger as sanctionedby Hon’ble Allahabad High Court.

x) There are no accumulated losses of the Company as at 31st March 2011. The companyhas not incurred cash losses during the financial year covered by our audit and in theimmediately preceding financial year.

xi) Based on our audit procedures and on the basis of the information and explanationsgiven to us by the management, we are of the opinion that the company has not defaulted inrepayment of dues to any financial institution, bank or debenture holders.

xii) Based on our examination of the records and the information and explanations givento us, the Company has not granted any loans and/ or advances on the basis of security byway of pledge of shares, debentures and other securities. Hence, paragraph 4(xii) of orderis not applicable.

xiii) In our opinion, the Company is not a Chit Fund/Nidhi/Mutual Fund/Society.Therefore, the provisions paragraph 4(xiii) of the Order are not applicable to thecompany.

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 theCompanies (Auditor’s Report) Order, 2003 are not applicable to the Company. However,all investments have been held by it in its own name or its nominees.

xv) According to the information and explanations given to us, Company has givenguarantees for loans taken by others (by the step down subsidiary companies) from Banksand the terms of such guarantees are not prejudicial to the interest of the company.

xvi) According to the information and explanations given to us, the term loans raisedduring the year have been applied, to the extent used, for the purpose for which they wereraised and the balance moneys are lying in Current Accounts/Deposits with the banks.

xvii) According to the information & explanation given to us and on an overallexamination of the Balance Sheet of the company, we report that the no funds raised onshort-term basis have been used for long term investment.

xviii)The Company has not made any preferential allotment of shares during the year toparties/companies covered in the register maintained under section 301 of the companiesAct, 1956.

xix) During the year covered by our audit report the Company has not issued secureddebentures.

xx) The company has not raised money by Public Issue during the year.

xxi) Based upon the audit procedures performed and as per the information andexplanations given by the management to us, we report that no fraud on or by the Companyhas been noticed or reported during the course of our audit for the year ended 31st March,2011.