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Auditor Report of Biocon Ltd.

Mar 31, 2017

To the Members of Biocon Limited

Report on the Standalone Indian Accounting Standards (''Ind AS'') Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Biocon Limited (''the Company''), which comprise the balance sheet as at 31March 2017, the statement of profit and Loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “standalone Ind AS financial statements”).

Management''s Responsibility for the Standalone Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS prescribed under Section 133 of the Act read with relevant rules issued there under

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, including the Ind AS, of the financial position of the Company as at 31 March 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Other matters

The comparative financial information of the Company for the year ended 31 March 2016 and the transition date opening balance sheet as at 1 April 2015 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditor whose report for the year ended 31 March 2016 and 31 March 2015 dated 26 April 2016 and 29 April 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in “Annexure A” a statement on the matters specified in the paragraph 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

(a) we have sought and obtained all the information and explanations which to the best of our knowledge 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 the Company so far as it appears from our examination of those books;

(c) the balance sheet, the statement of profit and Loss, the statement of cash flows and statement of changes in equity dealt with by this report are in agreement with the books of account;

(d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued there under;

(e) o n the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 from being appointed as a director in terms of Section 164(2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

(g) with respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending Litigations on its financial position in its standalone Ind AS financial statements. Refer note 36 to the standalone Ind AS financial statements;

ii. provision has been made in the financial statements, as required under the applicable Law or accounting standards, for the material foreseeable Losses, if any, on Long-term contracts including derivative contracts. Refer note 39 to the standalone Ind AS financial statements;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv. the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management. Refer note 37 to the standalone Ind AS financial statements.

Annexure - A to the Independent Auditor''s Report

The Annexure referred to in Independent Auditors'' Report to the members of the Company on the standalone Ind AS financial statements of Biocon Limited for the year ended 31 March 2017. We report that:

(i) (a) T he Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

(b) T he Company has a regular programme of physical verification of its property, plant and equipment by which all property, plant and equipment are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain property, plant and equipment were verified during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and basis our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for one immovable property amounting to Rs. 35 million as at 31 March 2017 for which the Company is in the process of obtaining registration.

(ii) Inventories apart from goods in transit and inventories Lying with outside parties have been physically verified by the Management during the year and the discrepancies noticed on such verification between the physical stock and book records were not material. In our opinion, the frequency of such verification is reasonable. Inventories Lying with outside parties has been substantially confirmed by them as at the year-end and no material discrepancies were noticed in respect of such confirmations.

(iii) The Company has granted Loan to a Company covered in the register maintained under Section 189 of the Companies Act, 2013 (''the Act'').

(a) I n our opinion, the rate of interest and other terms and conditions on which the Loan had been granted to the company Listed in the register maintained under Section 189 of the Act was not, prima facie, prejudicial to the interest of the Company.

(b) I n the case of the Loan granted covered in the register maintained under Section 189 of the Act, the borrower has been reguLar in the payment of the principal and interest as stipulated.

(c) There are no overdue amounts in respect of the Loan granted to a company covered in the register maintained under Section 189 of the Act.

(iv) I n our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to the Loans given, investments made and, guarantees and securities given.

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

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 as amended, prescribed by the Central Government under Section 148 of the Act and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However we have not made a detailed examination of such records.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales tax, value added tax, duty of customs, excise duty, service tax, cess and other material statutory dues have been regularly deposited during the year with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, sales tax, value added tax, duty of customs, excise duty, service tax, cess and other material statutory dues were in arrears as at 31 March 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of income tax, sales tax, value added tax, service tax, duty of customs, duty of excise which have not been deposited with the appropriate authorities on account of any disputes other than the following dues:

Name of the statute

Nature of dues

Amount disputed (Rs. in millions)

Amount paid under protest (Rs. in millions)

Period to which the amount relates

Forum where dispute is pending

Income-tax Act, 1961

Income Tax

4

4

1996-97

Supreme Court

Income-tax Act, 1961

Income Tax

1,207

111

2009-10, 2012-13 & 2013-14

Commissioner (Appeals)

Income-tax Act, 1961

Income Tax

1,053

117

2008-09, 2010-11, & 2011-12

Income Tax Appellate Tribunal ("ITAT")

Income-tax Act, 1961

Income Tax

4

4

1997-98

High Court

Finance Act, 1994

Service Tax

54

March 2010,

April 2009 to March 2013. March 2009 to December 2011, July 2009 to March 2013

Commissioner (Appeals)

Finance Act, 1994

Service Tax

91

May 2006 to September 2010, October 2010 to March 2011, March 2006 to March 2010. 2007-08

Customs, Excise and Service Tax Appellate Tribunal ("CESTAT")

Finance Act, 1994

Service Tax

1

-

January 2009 to May 2012, June 2010 to June 2012

Additional Commissioner

Finance Act, 1994

Service Tax

11

-

April 2014 to March 2015

Principal Commissioner, LTU

Value added tax Act, 2005

Value Added Tax

1

-

2006-07

Commissioner (Appeals)

The Central Excise Act, 1944

Excise Duty

361

53

April 2005 to March 2008 2006-07 to 2008-09 2009-10 to 2012-13

CESTAT

The Central Excise Act, 1944

Excise Duty

1

-

2009-10 to 2012-13

Commissioner (Appeals)

The Central Excise Act, 1944

Excise Duty

15

2007-08 to 2011-12 September 2013 to October 2013

Commissioner (Appeals)

The Customs Act, 1962

Customs Duty

4

3

1994 till 2008

CESTAT

The Customs Act, 1962

Customs Duty

4

4

2005 till 2011

Commissioner (Appeals)

(viii) I n our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institutions or government. The Company did not have any borrowings during the year by way of debentures.

(ix) According to the information and explanations given to us, the Company has not raised any money by way of public issue or further public offer (including debt instruments) during the year. The term Loans raised by the Company have been applied for the purpose for which they were raised.

(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/ provided for managerial remuneration in accordance with the requisite approvals as per provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly para 3 (xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Annexure - B to the Independent Auditor''s Report of even date on the standalone financial statements of Biocon Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Biocon Limited (''the Company''), as of 31 March 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (''Guidance Note'') issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the Ind AS financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent Limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

for B S R & Co. LLP

Chartered Accountants

Firm registration number: 101248W/W-100022

S Sethuraman

Partner

Membership number: 203491

Place: Bangalore

Date: 27 April 2017


Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of Biocon Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 ("the Act"), read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethica requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from materia misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014,

(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our 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 the Company so far as appears from our examination of those books,

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account,

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Act, read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate Affairs,

(e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification, intended to cover all the fixed assets of the Company over a period, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification

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

ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year. In our opinion, the frequency of verification is reasonable. Inventories lying with outside parties have been confirmed by them as at year end

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business

(c) The Company is maintaining proper records of inventory. Discrepancies noted on physical verification of inventories were not material, and have been properly dealt with in the books of account

ii) (a) The Company has granted unsecured loans to a company covered in the register maintained under Section 301 of the Companies Act, 1956 (''the Act''). The maximum amount involved during the year was Rs. 1,891 million and the balance outstanding at March 31, 2014 from such party is Rs. 1,644 million

(b) In our opinion and according to the information and explanations given to us, and having regard to management''s representation that interest free loan given to wholly-owned subsidiary of the Company is in the interest of the Company''s business, the other terms and conditions for such loans 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

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Act.

(e) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Companies (Auditor''s Report) Order, 2003 (as amended) (''the Order'') are not applicable to the Company and hence not commented upon

iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed assets and inventories 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 and the nature of its business, for the purchase of fixed assets and inventory and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas

v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need 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, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time, except in respect of one item, because of the unique and specialized nature of the item involved and absence of any comparable prices, we are unable to comment whether such transaction was made at the prevailing market price at the 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 the size and nature of its business

viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Act, related to manufacture of biopharmaceuticals and biotechnology products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained

ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six 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 any dispute, are as follows:

Name of the statute Nature of dues Amount Payment under Period to which the Forum where dispute is pending claimed protest amount relates (Rs. million) (Rs. million)

The Central Excise Act, 1944 Excise Duty 1 1 1994-1995 Assistant Collector of Central Excise

The Central Excise Act, 1944 Excise Duty 89 - 2005-2008 Customs, Excise and Service Tax Appellate Tribunal, Chennai

The Central Excise Act, 1944 Excise Duty 10 - 2010-2011 Commissioner Appeals, Chennai

The Customs Act, 1962 Customs Duty 47 47 2006-2009 and Customs, Excise and Service Tax Appellate 2011-12 Tribunal

The Customs Act, 1962 Customs Duty 4 3 2004-2005 Customs, Excise and Service Tax Appellate and Tribunal, Chennai 2007-2008

The Customs Act, 1962 Customs Duty 23 23 2008-2009 to Commissioner Appeals, Bangalore 2011-2012

Finance Act, 1944 Service Tax 111 - FY 2006 to FY 2011 Customs, Excise and Service Tax Appellate Tribunal, Bangalore

Income-tax Act, 1961 Income Tax 4 4 FY1996- 1997 Supreme Court

Income-tax Act, 1961 Income Tax 94 86 FY1997- 1998 High Court of Karnataka and FY 2002- 2008

Income-tax Act, 1961 Income Tax 69 - FY2008- 2009 Income Tax Appellate Tribunal

Income-tax Act, 1961 Withholding tax 16 16 FY 2003-04 to FY Income Tax Appellate Tribunal 2006-07

x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution and banks. The Company does not have any borrowing by way of debenture.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

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 the Order are not applicable to the Company.

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

xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

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

xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

xix) The Company did not have any outstanding debentures during the year.

xx) The Company has not raised any money by way of a public issue during the year.

xxi) We have been informed that an employee of the Company misappropriated funds over a period of time by falsifying records and documents pertaining to payment of wages to contract labour Management has informed us that the amount of loss incurred due to the above is unascertainable owing to the nature of records maintained by such employee, though the Company recovered Rs.5.2 million as part of its investigation. The management has since concluded its investigation in the matter.

For S.R. Batliboi & Associates LLP

ICAI Firm Registration Number: 101049W

Chartered Accountants

per Aditya Vikram Bhauwala

Partner

Membership Number: 208382

Place: Bangalore

Date: April 24, 2014


Mar 31, 2013

Report on the financial statements

We have audited the accompanying financial statements of Biocon Limited ("the Company"), which comprise the balance sheet as at March 31, 2013, and the statement of profit and loss and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s responsibility for the financial statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the balance sheet, of the state of affairs of the Company as at March 31, 2013,

(b) In the case of the statement of profit and loss, of the profit for the year ended on that date; and

(c) In the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

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

(c) The balance sheet, statement of profit and loss and cash flow statement dealt with by this report, are in agreement with the books of account.

(d) In our opinion, the balance sheet, statement of profit and loss and cash flow statement 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 as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Act.

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification, intended to cover all the fixed assets of the Company over a period, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

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

ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year. In our opinion, the frequency of verification is reasonable. Inventories lying with outside parties have been confirmed by them as at year end.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. Discrepancies noted on physical verification of inventories were not material, and have been properly dealt with in the books of account.

iii) (a) The Company has granted unsecured loans to three companies covered in the register maintained under Section 301 of the Companies Act, 1956 (''the Act''). The maximum amount involved during the year was Rs. 3,577 million and the balance outstanding at March 31, 2013 from such parties was Rs. 2,373 million.

(b) In our opinion and according to the information and explanations given to us, and having regard to management''s representation that interest free loans given to certain wholly-owned subsidiaries of the Company are in the interest of the Company''s business, the rate of interest, wherever applicable, and other terms and conditions for such loans 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 and payment of interest, wherever applicable, has been regular.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under Section 301 of the Act.

(e) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Companies (Auditor''s Report) Order, 2003 (as amended) (''the Order'') are not applicable to the Company and hence not commented upon.

iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed assets and inventories 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 and the nature of its business, for the purchase of fixed assets and inventory and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

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

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

viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act, related to manufacture of biopharmaceuticals and biotechnology products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six 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 any dispute, are as follows:

Name of the statute Nature of dues Amount Payment under claimed protest (Rs. million) (Rs. million)

The Central Excise Act, 1944 Excise Duty 1 1

The Central Excise Act, 1944 Excise Duty 89 -

The Central Excise Act, 1944 Excise Duty 10 -

The Customs Act, 1962 Customs Duty 42 42

The Customs Act, 1962 Customs Duty 4 3

The Customs Act, 1962 Customs Duty 23 23

Karnataka VAT Act, 2003 Value added tax 6 1

Finance Act, 1944 Service Tax 90 -

Income-tax Act, 1961 Income Tax 4 4

Income-tax Act, 1961 Income Tax 4 4

Income-tax Act, 1961 Income Tax 90 82

Income-tax Act, 1961 Income Tax 69 -

Name of the Statute Period to which the Forum where dispute is pending amount relates

The Central Excise Act, 1944 1994-1995 Assistant Collector of Central Excise.

The Central Excise Act, 1944 2005-2008 Customs, Excise and Service Tax Appellate Tribunal, Chennai

The Central Excise Act, 1944 2010-2011 Commissioner Appeals, Chennai

The Customs Act, 1962 2006-2009 Customs, Excise and Service Tax Appellate Tribunal

The Customs Act, 1962 2004-2005 Customs, Excise and Service Tax Appellate and Tribunal, Chennai 2007-2008

The Customs Act, 1962 2008-2009 to Commissioner Appeals, Bangalore 2011-2012

Karnataka VAT Act 2003 2005-2006 Joint Commissioner Appeals, Bangalore

Finance Act 1944 FY 2006 to FY 2011 The Company is in the process of filing its appeal with Commissioner Appeals

Income-tax Act, 1961 FY 1996-1997 Supreme Court

Income-tax Act, 1961 FY 1997-1998 High Court of Karnataka

Income-tax Act, 1961 FY 2002-2008 Commissioner of Income Tax (Appeals)

Income-tax Act, 1961 FY 2008-2009 The Company is in the process of filing its appeal with Dispute Resolution Panel

x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution and banks. The Company does not have any borrowing by way of debenture.

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

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

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 the Order are not applicable to the Company.

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

xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

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

xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act.

xix) The Company did not have any outstanding debentures during the year.

xx) The Company has not raised any money by way of a public issue during the year.

xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI & ASSOCIATES LLP

ICAI Firm registration no.: 101049W

Chartered Accountants

per Aditya Vikram Bhauwala

Partner

Membership no.: 208382

Bangalore

April 25, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Biocon Limited ('the Company') as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility 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 in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, 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 above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge 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 the Company so far as appears from our examination of those books,

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

iv. In our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt 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 March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of 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 explanations given 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 accounting principles generally accepted in India,

(a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2012,

(b) in the case of the statement of profit and loss, of the profit for the year ended on that date, and

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

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, including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification, intended to cover all the fixed assets of the Company over a period, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

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

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. Inventories lying with outside parties have been confirmed by them as at year end.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. Discrepancies noted on physical verification of inventories were not material, and have been properly dealt with in the books of account.

(iii) (a) Company has granted unsecured loans to four companies covered in the register maintained under section 301 of the Companies Act, 1956 ('the Act'). The maximum amount involved during the year was Rs 2,123 million and the balance outstanding at March 31, 2012 from such parties was Rs 1,729 million.

(b) In our opinion and according to the information and explanations given to us, and having regard to management's representation that interest free loans given to certain wholly-owned subsidiaries of the Company are in the interest of the Company's business, the rate of interest, wherever applicable, and other terms and conditions for such loans 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 and payment of interest, wherever applicable, has been regular.

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Act.

(e) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Companies (Auditor's Report) Order, 2003 (as amended) ('the Order') are not applicable to the Company and hence not commented upon.

(iv) I n our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed 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 and the nature of its business, for the purchase of fixed assets and inventory and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

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

(b) I n respect of transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the 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 the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act, related to the manufacture of biotechnology products, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six 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 any dispute, are as follows:

Name of the statute Nature of dues Amount Period to which the amount

(Rs.in Million) relates

The Central Excise Act, 1944 Excise Duty 1* 1994-1995

The Central Excise Act, 1944 Excise Duty 89 2005-2008

The Central Excise Act, 1944 Excise Duty 10 2010-2011

The Customs Act, 1962 Customs Duty 4 2004-2005

(3*) and 2007-2008 The Customs Act, 1962 Customs Duty 23* 2008-2009,

2010-2011

and

2011-2012

Karnataka VAT Act, 2003 Value added tax 6 2005-2006 Appeals, Bangalore

(1*)

Income-tax Act, 1961 Income Tax 4* 1996-1997

Income-tax Act, 1961 Income Tax 4* 1997-1998

Income-tax Act, 1961 Income Tax 90 2002-2008 (Appeals)

(82*) Name of the Director Forum where dispute is pending

The Central Excise Act,1944 Assistant Collector Central Excise The Central Excise Act,1944 Cutoms, Excise and service Tax Appellate Triubunal Chennai

The Central Excise Act,1944 Commissioner Appeals Chennai The Customs Act,1962 Cutoms. Excise and service Tax Appellate Tribunal Chennai The Customs Commissioner Appeals Banngalore

Karnataka VAT Act,2003 Joint Commissioner Appeals Bangalore Act,1962

Income -tax Act,1961 Supreme Court

Income -tax Act,1961 High Court of Karnataka

Income -tax Commissioner of Income Act,1961 Tax (Appeals)

* These amounts are paid in protest.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

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

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

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company

(xiv) I n 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 the Order are not applicable to the Company

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

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

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

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

(xix) The Company did not have any outstanding debentures during the year

(xx) The Company has not raised any money through a public issue during the year

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI & ASSOCIATES

Firm registration number: 101049W

Chartered Accountants

per Aditya Vikram Bhauwala

Partner

Membership No.: 208382

Bangalore

April 27, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of Biocon Limited (‘the Company) as at March 31, 2011 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility 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 in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, 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 above, we report that:

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

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

iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt 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 March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of 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 explanations given 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 accounting principles generally accepted in India;

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

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

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

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, including quantitative details and situation, of fixed assets.

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

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

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

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

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

(iii) (a) The Company has granted unsecured loans to three companies listed in the register 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 balance outstanding at March 31, 2011 is Rs. 1,801,779 thousands.

(b) In our opinion and according to the information and explanations given to us, the rate of interest, where applicable, and other terms and conditions of the loans given by the 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 and payment of interest, wherever applicable, has been regular.

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

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

(iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed 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 and the nature of its business, for the purchase of fixed assets and inventory and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.

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

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs entered into during the financial year, because of the 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 at the 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 the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

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

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

(b) According to the information and explanations given to us, there were no undisputed dues in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty and other statutory dues which were outstanding, at the year end for a period of more than six 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 any dispute, are as follows:

Name of the statute Nature of Amount Period to dues (Rs. in which the thousands) amount relates

The Central Excise Act, 1944 Excise Duty 633* 1994-1995

The Central Excise Act, 1944 Excise Duty 859 2005-2006

The Central Excise Act, 1944 Excise Duty 88,209 April 2005 till March 2008

The Central Excise Act, 1944 Excise Duty 0,414 2010-2011

The Customs Act, 1962 Customs Duty 3,005 2004-2005 (1514*)

The Customs Act, 1962 Customs Duty 21,606* 2010-2011

VAT Act VAT 5,583 2005-2006 (1164*)

Income-tax Act, 1961 Income Tax 3,879* 1996-1997

Income-tax Act, 1961 Income Tax 4,040* 1997-1998

Income-tax Act, 1961 Income Tax 17,619* 2002-2003

Income-tax Act, 1961 Income Tax 12,713* 2003-2004

Income-tax Act, 1961 Income Tax 18,940* 2004-2005

Income-tax Act, 1961 Income Tax 15,062* 2005-2006

Income-tax Act, 1961 Income Tax 24,625 2006-2007 (17,838*)

Income-tax Act, 1961 Income Tax 837 2007-2008

Name of the statute Forum where dispute is pending

The Central Excise Act, 1944 Assistant Collector of Central Excise.

The Central Excise Act, 1944 Customs, Excise and Service Tax Appellate Tribunal, Chennai

The Central Excise Act, 1944 Customs, Excise and Service Tax Appellate Tribunal, Chennai

The Central Excise Act, 1944 Commissioner Appeal, Chennai

The Customs Act, 1962 Customs, Excise and Service Tax Appellate Tribunal, Chennai

The Customs Act, 1962 Commissioner Appeal Bangalore

VAT Act Joint Commissioner Appeal Bangalore

Income-tax Act, 1961 Supreme Court

Income-tax Act, 1961 High Court of Karnataka

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

Income-tax Act, 1961 Commissioner of Income Tax (Appeals)

* These amounts are paid in protest.

(xi) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

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

(xiii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the 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 benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) 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 the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

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

(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 overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

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

(xx) The Company did not have any outstanding debentures during the year.

(xxi) The Company 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 true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



For S.R. BATLIBOI & ASSOCIATES Firm registration number: 101049W Chartered Accountants



per Aditya Vikram Bhauwala Partner Membership No.: 208382

Bangalore April 28, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Biocon Limited (‘the Company’) as at March 31, 2010 and also the Profi t and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit ncludes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancail statement presentation. We believe that our audit provides a reasonable basis for our opinion

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, 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 above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

i The balance sheet, profi t and loss account and cash fl ow statement dealt with by this report are in agreement with the books of account;

iv In our opinion, the balance sheet, profi t and loss account and cash fl ow statement dealt 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 March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualifi ed as on March 31, 2010 from being appointed as a director in terms of 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 explanations given 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 accounting principles generally accepted in India

(a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010;

(b) in the case of the profi t and loss account, of the profi t for the year ended on that date; and

(c) in the case of cash fl ow statement, of the cash fl ows for the year ended on that date



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, including quantitative details and situation, of fixed assets.

(b) Fixed assets have been physically verified by the management during the year in accordance with a regular programme of verification, intended to cover all the fixed assets of the Company over a period of two years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Based on the information and implementaiton provided to us, no material discrepancies were noticed on such verification.

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

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

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

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

(iii) (a) The Company has granted unsecured loans to three companies listed in the register maintained under Section 301 of the

Companies Act, 1956 (‘the Act’). The maximum amount involved during the year was Rs 2,880,922 thousands and the balance outstanding as at March 31, 2010 is Rs 1,914,754 thousands.

(b) In our opinion and according to the information and explanations given to us, the rate of interest, where applicable, and other terms and conditions of the loans given by the 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 and payment of interest, wherever applicable, has been regular.

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

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

(iv) In our opinion and according to the information and explanations given to us, as well as taking into consideration the management representation that certain items of fixed 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 and the nature of its business, for the purchase of fixed assets and inventory and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

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

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs entered into during the financial year, because of the 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 at the 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 the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

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

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

(b) According to the information and explanations given to us, there were no undisputed dues in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six 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, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the statute Nature of dues Amount Period to which the (Rs in thousands) amount relates

The Central Excise Act, 1944 Excise Duty 633* 1994-1995

The Central Excise Act, 1944 Excise Duty 859 2005-2006

The Central Excise Act, 144 Excise Duty 88,209 April 2005 till March 2008

The Customs Act, 1962 Customs Duty 3,005 2004-2005 (1,514*)

Income-tax Act, 1961 Income Tax 3,879* 1996-1997

Income-tax Act, 1961 Income Tax 4,040* 1997-1998

Income-tax Act, 1961 Income Tax 17,619 2002-2003

(14,844*)

Income-tax Act, 1961 Income Tax 12,713* 2003-2004

Income-tax Act, 1961 Income Tax 18,940* 2004-2005

Income-tax Act, 1961 Income Tax 15,062* 2005-2006

Income-tax Act, 1961 Income Tax 24,625 2006-2007

(17,838*)



Name of the Director Forum where dispute is pending

The Central Excise Act, 1944 Assistant Collector of Central Excise.

The Central Excise Act, 1944 Customs, Excise and Service Tax Appellate Tribunal, Chennai.

The Central Excise Act, 1944 Customs, Excise and Service Tax Appellate Tribunal, Chennai.

The Customs Act, 1962 Customs, Excise and Service Tax Appellate Tribunal, Chennai.

Income Tax Act, 1961 Supreme Court

Income Tax Act, 1961 High Court of Karnataka.

Income Tax Act, 1961 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 Commissioner of Income Tax (Appeals)



* These amounts are paid in protest

(x) The Company has no accumulated losses at the end of the fi nancial year and it has not incurred cash losses in the current and immediately preceding fi nancial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to fi nancial institution and banks. The Company does not have any borrowing by way of debenture.

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

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

(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 the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

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

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

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

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fi nancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

(i) The Company has working capital facilities with State Bank of India (SBI). These facilities are repayable on demand, secured by a pari- passu first charge on current assets. The Company has utilised Rs Nil [March 31, 2009 - Rs 291 inclusive of foreign currency loans of Rs Nil (US$ Nil) (March 31, 2009 - Nil (US$ Nil))].

(ii) The Company has working capital facilities with Hongkong and Shanghai Banking Corporation (HSBC). These facilities are repayable on demand, secured by pari-passu fi rst charge on current assets. As on March 31, 2010, the Company has utilised fund based limits of Rs 694,435 (March 31,2009 - Rs 784,274), inclusive of foreign currency denominated loans of Rs 427,025 (US$ 9.5 Million ) [March 31, 2009 - Rs 763,050 (US$ 1 5 million)].

(iii) The Company has working capital facilities with Canara Bank (CB). These facilities are repayable on demand, secured by a pari-passu first charge on current assets of the Company. As on March 31, 2010, the Company has utilised Rs 124 (March 31, 2009 - Rs Nil) inclusive of foreign currency denominated loans of Rs Nil (US$ Nil) [March 31, 2009 - Rs Nil (US$ Nil)]

(iv) The Company has working capital facilities with ABN Amro Bank. These facilities are repayable on demand, secured by a pari-passu first charge on the current assets of the Company. As on March 31, 2010, the Company has utilised Rs 202,275 (March 31, 2009 - Rs 230,000) inclusive of foreign currency denominated loans of Rs 202,275 (US$ 4.5 million) [March 31, 2009-Rs Nil (US$ Nil)]

(i) Under the Industrial Policy of the Government of Karnataka, the Company on February 4, 1998 obtained an order from the Karnataka Sales Tax Authority for allowing deferment of sales tax (including turnover tax) for a period upto 8 years with respect to sales from its Bommasandra manufacturing facility for an amount not exceeding Rs 24,375. As at March 31, 2010, the Company has utilised Rs354 (March 31, 2009 - Rs 354).

(ii) Under the Agro Food Processing Industrial Policy of the Government of Karnataka, the Company on February 9, 2000 obtained an order from the Karnataka Sales Tax Authority for allowing deferment of sales tax (including turnover tax) for a period upto 12 years with respect to sales from its Hebbagodi manufacturing facility for an amount not exceeding Rs 648,938. As at March 31, 2010, the Company has utilised Rs 648,624 (March 31, 2009 - Rs 611,196).

(iii) On March 31, 2005, the Company entered into an agreement with the Council of Scientific and Industrial Research (CSIR), for an unsecured loan of Rs3,312 for carrying out part of the research and development project under the New Millennium Indian Technology Leadership Initiative (NMITU) Scheme. The loan is repayable over 10 equal annual installments starting from April 2009 and carry an nterest rate of 3 percent per annum. The amount due for repayment within one year is Rs Nil (March 31, 2009- Rs 331). The amount due during 2010 -11 being Rs331, has been paid off as at March 31, 2010

(iv) On March 31, 2009, the Department of Scientific and Industrial Research (DSIR) has sanctioned financial assistance for a sum of Rs 17,000 to the Company for part financing one of its research projects. Of the said sanctioned amount, the Company has received the first installment of Rs 10,000 during the year 2008-09. The Research project has been completed during the year ended March 31, 2010 The assistance is repayable in the form of royalty payments post commercialisation of the project in five equal annual installments

(v) The Company has obtained foreign currency packing credit loan of Rs 359,600 (US$ 8 million) from HDFC Bank as at March 31, 2010 The loan is repayable on May 22, 2010

Notes:

(a) Certain freehold land and buildings were revalued on November 1, 1994, based on the estimated replacement cost after considering depreciation up to that date, as per valuers reports and the resultant surplus of Rs 34,529 was credited to revaluation reserve. Of this reserve, Rs 25,040 (March 31, 2009 - Rs 25,040) has been transferred to the profit and loss account for depreciation on these assets till March 31, 2008 or adjusted on the sale of these assets

(b) On December 5, 2002, Karnataka Industrial Areas Development Board (KIADB) allotted land aggregating to 26.75 acres to the Company for Rs 64,200 on a lease-cum-sale basis for a period of 6 years, extended subsequently for further period of 14 years. During the year ended March 31, 2005, the Company acquired an additional 41.25 acres of land for Rs 99,417 from KIADB. During the quarter ended June 30, 2005, the Company paid an advance of Rs 56,320 towards allotment of additional 19.68 acres of land, offered to the Company by KIADB on December 20, 2003. The Company has received the possession certificate from KIADB in January 2006 and entered into an agreement with KIADB to acquire this plot of land on lease cum sale basis for a period of 20 years during the year ended March 31, 2007. The registration for a part of the land under this lease is pending settlement of certain disputes in respect of claims made against KIADB

(c) During the year ended March 31, 2008, the Company has been allotted land measuring approximately 50 acres at the Jawaharlal Nehru Pharma City Vishakhapatnam, Andhra Pradesh, on a long term lease basis for a consideration of Rs 260,100. As at March 31, 2010, the Company has paid the entire consideration towards the lease and is in the process of completing the formalities for registering the said lease

(d) On December 1, 2009 the Company completed the purchase of Active Pharma Ingredient business of M/s IDL Speciality Chemicals Limited. The assets acquired have been capitalised at their fair values in the books of the Company

(a) The Company acquired patents relating to certain technologies (collectively IPs) including oral insulin and Apaza from M/s Nobex Inc. During the year ended March 31, 2007 , the Company licensed out it’s IP Apaza for further development and commercialisation. Effective October 2006, the Company commenced amortisation of Apaza over a period of 5 years.

During the year ended March 31, 2010, the Company transferred the right to develop and commercialise Oral Insulin to Biocon Research Ltd , a wholly owned subsidiary (BRL) for a consideration of Rs 673,260 (US$ 14 Million). As the development and marketing rights of Oral Insulin have certain obligations of the parties to conclude the arrangements, the same has been treated as deferred revenues by the Company at March 31, 2010.

(b) During the year ended March 31, 2010, the Company transferred the rights relating to development and marketing of certain monoclonal antibodies (‘MABs’) to BRL for a consideration of Rs 480,500. As the Company has certain obligations for the development of the products, the income is being recognised over the period of the process development, estimated to be 18 months from the date of agreement.

(c) During the year ended March 31, 2009, the Company acquired marketing rights of hR3 and EPO from Biocon Biopharmaceuticals Private Limited (BBPL) for a sum of Rs. 128,850. These rights give the Company an exclusive right of marketing the products in certain territories. The Company is yet to receive regulatory approvals for marketing of the products from the authorities of such countries. Pending receipt of approval, no amortisation has been recorded by the Company.

(a) During the year ended March 31, 2009, Biocon Research Limited (BRL) was incorporated as a wholly owned subsidiary for undertaking research in novel and innovative drug initiatives. BRL has commenced commercial activities during the year ended March 31, 2010

As at March 31, 2010 BRL has a negative net worth of Rs 50,120 due to its early stage of operations and research activities. BRL is a development stage company and of strategic importance to the Company. Accordingly, the management is of the view that there is no diminution in the value of the investment. Further, the Company has given a letter of fi nancial support to BRL to fund its operations

(b) During the year ended March 31, 2009, Biocon SAa wholly owned subsidiary was incorporated in Switzerland for development and marketing of biopharmaceuticals in European markets. As at March 31, 2010, Biocon SA holds 78% (March 31, 2009 - 78% ) equity nterest in AxiCorp GmbH, Germany and has commenced clinical development of insulin for the European markets

(c) BBPL is a 51% joint venture between the Company and CIMAB SA, engaged in research, development, manufacturing and marketing of Biopharmaceuticals. At March 31, 2010, the aggregate amount of Biocon’s interest in the assets, liabilities, income and expenses of BBPL is Rs 437,332 (March 31,2009 - Rs 449,718), Rs 427,532 (March 31, 2009 - Rs 422,992), Rs 194,464 (March 31, 2009 - Rs 94,651) and Rs 181,172 (March 31, 2009 - Rs 121,036) respectively. Further, the Company has granted a long term loan of Rs 258,259 (March 31, 2009 - Rs 317,511) to fund the operations of BBPL repayable over a period of 5 years. Interest was charged at the rate of 10.5% p.a till December 23, 2009 and 5.68% p.a with effect from December 24, 2009 as per the prevailing bank rates. The share of the Company n the accumulated losses of BBPL as at March 31, 2010 stood at Rs 179,155 (March 31, 2009 - Rs 192,447). Since BBPL has commenced full fl edged operations only recently, and considering the future business potential, management believes that there is no other than temporary diminution in the value of the investment

On March 31, 2010, CIMAB, BBPL, Biocon SAand the Company entered into an agreement whereby Biocon SA would acquire the 49% equity stake held by CIMAB in BBPL. The sale is yet to be consummated as at March 31,2010

(d) NeoBiocon was incorporated in Dubai as a 50% joint venture between the Company and Mr. B R Shetty and is engaged in development, marketing and distribution of biopharmaceuticals in the Gulf region. As at March 31, 2010, the aggregate amount of Biocons interest in the assets, liabilities, income and expenses of NeoBiocon is Rs 17,033 (March 31, 2009 - Rs 5,059) and Rs 10,049 (March 31, 2009 - Rs 3,595), Rs 23,927 (March 31, 2009 - Rs 4,251) and Rs 21,214 (March 31, 2009 - Rs 8,225) respectively. The share of the Company in the accumulated losses of NeoBiocon as at March 31, 2010 stood at Rs 4,080 (March 31, 2009 - Rs 6,792). Since NeoBiocon has commenced marketing / distribution activities recently, management believes that there is no other than temporary diminution in the value of the investment

(e) As on March 31, 2010, the ESOP Trust held 5,509,323 shares (March 31, 2009 - 7,055,168) of the Company towards grant / exercise of shares to/ by employees of the Company and its subsidiaries under the ESOP Scheme. Also refer Note 3 in Schedule 17

(f) Vaccinex Inc., USA (Vaccinex) is engaged in research and development activities and has been incurring losses and has a negative net- worth. As Vaccinex is a development stage enterprise and of strategic importance to the Company, management believes that there is no other than temporary diminution in the value of this investment

(g) The Company has 30% (March 31, 2009 - 22%) voting rights in lATRICa Inc., USA



For S.R. BATLIBOI & ASSOCIATES

Firm registraion number: 101049W Chartered Accountants

per Aditya Vikram Bhauwala Partner Membership No.: 208382

Bangalore April 29, 2010

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