Nectar Lifescience Ltd

To

The Members

M/S. NECTAR LIFESCIENCES LIMITED

We have audited the attached Balance sheet of M/S. NECTAR LIFESCIENCES LIMITED asat 31st March, 2010 and also the Profit and Loss Account and Cash Flow Statement 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.

1. 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.

2. As required by the Companies (Auditor's Report) Order, 2003 issued by the Ministryof Corporate Affairs in terms of Section 227 (4A) of the Companies Act, 1956 we enclose inthe annexure A statement on the matters specified in paragraph 4 & 5 of said order:

3. Further to our comments in the annexure referred to in paragraph (1) above, wereport that: a) We have obtained all the information and explanation which to the best ofour knowledge and belief were necessary for the purpose 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 the books.

c) The Balance Sheet and Profit and Loss Account dealt with by this report are inagreement with the books of accounts.

d) In our opinion, the balance sheet and the profit and loss account comply with theAccounting Standards referred to in sub section (3C) of section 211 of the companies Act,1956, subject to Notes on Accounts forming part of Balance Sheet.

e) As per information and explanation given to us, none of the directors of the companyis disqualified from being appointed as a Director in terms of clause (g) of subsection(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 give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view.

i) In the case of the Balance Sheet of the State of affairs of the company as at 31stMarch, 2010 and ii) In the case of the Profit and Loss account, of Profit of the companyfor the year ended on that date.

iii) In case of Cash Flow Statement, of the Cash

Flows for the year ended on that date.

Annexure A referred to in Paragraph 2 of our report of the Auditors to the Members ofM/s Nectar Lifesciences Limited on the accounts for the year ended 31st March, 2010.

1. (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets have been physically verified by themanagement at the reasonable intervals during the year under review and no materialdiscrepancies were noticed in the said verification.

(c) During the year, the company has not disposed off substantial part of the fixedassets.

2. (a) Physical verification of inventory has been conducted by the management duringthe year and in our opinion, the frequency of verification was reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe management are 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 is maintaining proper records of inventory. As explained to us, the discrepanciesnoticed on physical verification between the physical stocks and the books/records werenot material and have been properly dealt in the books of accounts.

3. (a) The company has not granted any loans, secured or unsecured to Companies, Firmsand other Parties Listed in the register maintained under Section 301 of the Companies Act1956.

(b) The company has not taken any loans, secured or unsecured from Companies, Firms andother Parties Listed in the register maintained under Section 301 of the Companies Act1956.

4. In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the company and thenature of its business with regard to the purchase of stores, raw materials including theplant & machinery, vehicles, equipment and other assets and for the sale of goods andservices. Further, on the basis of our examination of the books and records of thecompany, and according to the information and explanations given to us, we have neithercome across nor have been informed of any continuing failure to correct major weaknessesin the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanation 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 explanation given to us, thetransactions made in pursuance of contracts and arrangements referred to in point (a)above and exceeding the value of Rs.5 lakh with any party during the year, have been madeat prices which are reasonable having regard to the prevailing market prices at therelevant time except for the purchases of certain items of inventories which are forCompany's specialized requirements and similarly for sale of certain goods for thespecialized requirements of the buyers and for which suitable alternative sources are notavailable to obtain comparable quotations. However, on the basis of information andexplanations provided, the same appear reasonable.

6. In our opinion and according to the information and explanations given to us, thecompany has not invited any deposits from public attracting the provisions of sections 58Aand 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies(Acceptance of Deposits) Rules,1975.

7 In our opinion and according to the information and explanations given to us, thecompany has an internal audit system commensurate with the size and nature of itsbusiness.

8 We have broadly reviewed books of accounts maintained by the Company, pursuant to therules made by the Central Government for the maintenance of cost records U/s 209(1) (d) ofthe Companies Act, 1956 and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. We have not, however, made a detailedexamination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of theCompany examined by us, in our opinion, the Company is generally regular in depositing theundisputed statutory dues including provident fund, investor education and protectionfund, employees state insurance, income-tax, sales-tax, wealth tax, customs duty, servicetax, excise duty, cess and other material statutory dues as applicable with theappropriate authorities in India.

(b) According to the information and explanation given to us and records of the companyexamined by us, there are no dues of Service Tax, Wealth Tax, Sales Tax, Customs Duty andExcise Duty, which are outstanding as at 31st March, 2010, which have not

been deposited on account of any dispute. The particulars of dues of income tax as at31 st March, 2010 which have not been deposited on account of a dispute are as follows:

10. The company has no accumulated losses as at the March 31, 2010 and it has notincurred cash losses during the financial year ended on that date or in the immediatelypreceding financial year.

11. According to the records of the company examined by us and the information andexplanations given to us, the company has not defaulted in repayment of dues to anyfinancial institution or bank or debenture holders as at the balance sheet date.

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 company is not a chit fund or a nidhi or a mutual benefit fund/society.Therefore the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order 2003are not applicable to the company.

14. In our opinion and according to the information and explanations given to us thecompany is not dealing or trading in shares, securities, debentures and other investments.Accordingly the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order2003 are not applicable to the company.

15. In our opinion and according to the information and explanations given to us, thecompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the year.

16. In our opinion and according to the information and explanations given to us, on anoverall basis, the term loans have been applied for the purposes for which they wereobtained.

17. According to the information and explanation given to us and based on overallexamination of the balance sheet and cash flow statement of the Company, we report that nofunds raised on short-term basis have been used for long term investment other thantemporary deployment pending application.

18. During the year the company has not made any preferential allotment of shares toparties, firms 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 and there are nodebentures outstanding as at the year end.

20. We have verified the end-use of money raised by public issues as disclosed in thenotes to the financial statements (Refer Note No. A 6)

21. 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, andaccording to the information and explanations given to us, we have neither come across anyinstance of fraud on or by the Company, noticed or reported during the year, nor have webeen informed of such case by the management.