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Auditor Report of Strides Shasun Ltd.

Mar 31, 2015

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of STRIDES ARCOLAB LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE 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 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 the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 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 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 thereunder.

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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the 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 financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. 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 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 financial statements.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at March 31, 2015, and its profit and its cash flows for the year ended on that date.

EMPHASIS OF MATTER

We draw attention to the Note No. 51 to the financial statements. As stated therein, the Company has early adopted Accounting Standard (AS) 30 'Financial Instruments: Recognition and Measurement', AS 31 'Financial Instruments: Presentation' and AS 32 'Financial Instruments: Disclosure', to the extent such standards do not conflict with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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, 2015 ("the Order") issued by the Central Government in terms of Section 143 (11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) 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 financial statements. Refer note 43 and 40 B(iv) to the financial statements.

ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

(i) In respect of its fixed assets:

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

(b) The Company has a programme of verification of fixed assets to cover all the items in a phased manner over a period of 2 years which, in our opinion, is reasonable having regard to size of the Company and nature of its assets. Pursuant to the programme, certain fixed assets were physically verified by the management. According to information and explanation given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) According to the informations and explanations given to us, the Company has granted loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013. In respect of such loans:

(a) The receipts of principal amounts and interest have been regular as per stipulations

(b) There is no overdue amount in excess of Rs. 1 Lakh remaining outstanding as at the year-end.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) According to the information & explanations given to us, the Company has not accepted any deposit during the year and there were no unclaimed deposits as at March 31, 2015.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at March 31, 2015 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty , Value Added Tax and Cess which have not been deposited as on March 31, 2015 on account of disputes are given below:

Name of statute Nature of the dues Amount (Rs. In Million)

The Income - Income Tax 202.26 tax Act, 1961

The Income - Income Tax 299.17 tax Act, 1961

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

The Income - AY 2008-09 Income Tax Appellate tax Act,1961 Tribunal

The Income - AY 2009-10 Income Tax Appellate tax Act,1961 Tribunal

(d) There are no amounts that are due to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder.

(viii) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions and banks. The Company has not issued any debentures.

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For Deloitte Haskins & Sells Chartered Accountants Firm's Registration No. 008072S

V. Srikumar Partner Bengaluru, May 22, 2015 Membership No. 84494


Mar 31, 2014

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

2. MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL Statements

The Company''s Management is responsible for the preparation of the 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 Standards notified under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. 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.

3. auditors'' 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 the 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 the accounting policies used and the reasonableness of the accounting estimates made by the 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.

4. OpiNION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 of the Company for the period ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that date

5. EMpHASIS OF MATTER

(a) The Company has early adopted Accounting Standard (AS) 30 ''Financial Instruments: Recognition and Measurement'', AS 31 ''Financial Instruments: Presentation'' and AS 32 ''Financial Instruments: Disclosure'', to the extent such standards do not conflict with the standards notified under section 211(3C) of the Act.

(b) We draw attention to Note 40.A to the financial statements regarding sale of investments in Agila Specialties Private Limited. As explained in the note 40.A(d), the Company and the buyer are currently in discussions with regard to certain claims raised, both by the buyer and the Company, on each other. Pending conclusion of these discussions, no adjustments relating to these claims have been made in these financial statements.

Our opinion is not qualified in respect of the matters stated in paragraph 5(a) and 5(b) above.

6. REPORT ON Other Legal AND REGULATORY requirements

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

(b) As required by Section 227(3) of the Act, 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 it appears from our examination of those books.

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

(iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs).

(v) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of these directors are disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS'' REPORT (Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Having regard to the nature of the Company''s business activities during the period, clauses vi, xii, xiii, xiv, xix & xx of CARO are not applicable.

(i) In respect of its fixed assets:

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

(b) The Company has a programme of verification of fixed assets to cover all the items in a phased manner over a period of 2 years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Pursuant to the programme, certain fixed assets were physically verified by the management. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the period, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the period by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transactions is in excess of Rs. 5 lakhs in respect of any party, having regard to our comments in paragraph (iv) above with regard to purchases of certain items of inventory for which comparative quotes are not available, the other transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion, the internal audit functions carried out during the period by an external agency appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(vii) We have broadly reviewed the books of account maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(viii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-Tax, Sales Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on March 31, 2014 on account of disputes are given below:

Name of statute Nature of the dues Amount (Rs. In Million)

The Income - tax Act, 1961 Income Tax 0.75

The Income - tax Act, 1961 Income Tax 24.70

The Income - tax Act, 1961 Income Tax 212.26

The Income - tax Act, 1961 Income Tax 510.29

The Karnataka Value Added Sales Tax 1.29 Tax Act, 2003



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

The Income - tax Act, 1961 AY 2005-06 Income Tax Appellate Tribunal

The Income - tax Act, 1961 AY 2007-08 Income Tax Appellate Tribunal

The Income - tax Act, 1961 AY 2008-09 Income Tax Appellate Tribunal

The Income - tax Act, 1961 AY 2009-10 Income Tax Appellate Tribunal

The Karnataka Value Added Tax Act, 2003 FY 2006-07 Deputy Commissioner of Commercial Taxes

(ix) The Company does not have accumulated losses at the end of the financial period and the Company has not incurred cash losses during the financial period covered by our audit and in the immediately preceding financial year.

(x) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions. The Company has not issued any debentures.

(xi) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by wholly owned subsidiaries companies from banks and financial institutions, are not prima facie prejudicial to the interests of the Company.

(xii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application.

(xiii) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short- term basis have not been used during the period for long- term investment.

(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xv) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the period.

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No.008072S)

V. Srikumar Partner

Bangalore, May 23, 2014 (Membership No.84494)


Dec 31, 2012

1. We have audited the attached Balance Sheet of STRIDES ARCOLAB LIMITED (the "Company") as at 31st December, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both 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 the 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 the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We draw attention to Note 51 to the financial statements which explains that the Company has early adopted Accounting Standard (AS) 30 ''Financial Instruments: Recognition and Measurement'', AS 31 ''Financial Instruments: Presentation'' and AS 32 ''Financial Instruments: Disclosure'', to the extent such standards do not conflict with the standards notified under Section 211(3C) of the Companies Act, 1956. Pursuant to the above inter alia, the Foreign Currency Convertible Bonds (FCCBs) issued by the Company were segregated into two components comprising (a) the option component which represents the value of the conversion option given to the FCCB-holders to convert the FCCBs into equity shares of the Company and (b) the debt component which represents the debt to be redeemed in the event that the conversion option was not exercised by FCCB-holders, net of issuance costs. The debt component was recognised and measured at amortized cost and the fair value of the option component has been determined using a valuation model and a credit of Rs. 2.09 million has been recognised in the Statement of Profit & Loss for the year ended December 31, 2012, being the gain in the fair value of the embedded option included in the FCCBs, recognised on redemption of the FCCBs (Previous year, a credit of Rs. 188.85 million, being the change in the fairvalue ofthe option).

4. We draw reference to Note 40 to the financial statements regarding the accounting for the Scheme of Arrangement (the "Scheme") between the Company, some of its subsidiaries and their respective shareholders under section 391 to 394 and other provisions of the Companies Act, 1955, which has been approved by the Hon''ble High Court of Bombay. In accordance with the Scheme:

(a) Investments in a subsidiary was fair valued in 2009 and the resultant surplus over the previously carried book values, amounting to Rs. 5,855.20 million, was credited to Reserve for Business Restructure instead of such investments being recorded at historical costs as required by Accounting Standard 13 ''Accounting for Investments''.

(b) During the year, certain expenses (net) amounting to Rs. 451.81 million (Previous year Rs. 480.79 million) has been charged to the Reserve for Business Restructure, instead of being charged to the Statement of Profit and Loss as required by Accounting Standard 5 ''Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies''.

5. As required by the Companies (Auditor''s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1955, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. Further to our comments in paragraph 3 and in the Annexure referred to in paragraph 5 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 it appears from our examination ofthose books;

(iii) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 2H(3C) ofthe Companies Act, 1955, other than for the matters referred to in paragraph 4 above;

(v) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with Note 40.3(c) to the financial statements and our comments in paragraph 4 above, give the information required by the Companies Act, 1955 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 31st December, 2012;

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

(c) in the case ofthe Cash Flow Statement, ofthe cash flows ofthe Companyfor the year ended on that date.

7. As explained in Note 53, the Company has not received a written representation from one of the directors of the Company as at 31st December 2012 confirming that he is not disqualified from being appointed as a director ofthe Company in terms of Section 274(l)(g) of the Companies Act, 1956. In the absence of such a written representation, we are unable to comment on whether he is disqualified from being appointed as director ofthe Company in terms of Section 274(1)(g) ofthe Companies Act, 1956.

On the basis ofthe written representations received from the other directors as on 31st December 2012 taken on record by the Board of Directors, none of these directors are disqualified as on 31st December 2012 from being appointed as a director in terms ofSection 274(1)(g) ofthe Companies Act, 1956.

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in paragraph 5 our report ofeven date)

(i) Having regard to the nature ofthe Company''s business/activities/result, clauses iii (b) to (d),(f) and (g), vi, xii, xiii, xiv, xix & xx of CARO are not applicable.

(ii) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part ofthefixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size ofthe Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iv) The Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties listed in the Register maintained under Section 301 ofthe Companies Act, 1956.

(v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some ofthe items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size ofthe Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained in pursuance ofSection 301 ofthe Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) In our opinion and having regard to our comments in paragraph (v) above, with regard to purchases of certain items of inventory for which comparative quotes are not available, transactions made in pursuance of such contracts or arrangements, in excess of Rs. 5 Lakhs in respect of any party, have been made at prices which are, prima facie, reasonable having regard to the prevailing market prices at the relevant time.

(vii) In our opinion, the Company has an internal audit system which is 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(l)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination ofthe records with a view to determining whether they are accurate or complete.

(ix) According to the information and explanations given tous in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-Tax, Sales Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st December, 2012 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31st December, 2012 on account of disputes are given below:

Name of statute Nature of Amount Period to which Forum where dispute is the dues (Rs. In Million) the amount pending relates

The Income-tax Act,1961 Income Tax 31.50 AY 2007-08 Income Tax Appellate Tribunal

The Income-tax Act,1961 Income Tax 570.40 AY 2008-09 Dispute Resolution Panel

The Karnataka Value Added Sales Tax 1.29 FY 2006-07 Deputy Commissioner Tax Act, 2003 of Commercial Taxes

The Customs and Excise Excise duty 3.86 Aug-2005 Customs and Excise Laws Service Tax Appellate Tribunal

(x) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions. The Company has not issued any debentures.

(xii) In our opinion and according to the information and explanations given to us, the terms and conditions ofthe guarantees given by the Company for loans taken by wholly owned subsidiary companies from banks and financial institutions, are not prima facie prejudicial to the interests ofthe Company.

(xiii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application.

(xiv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long-term investment.

(xv) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 ofthe Companies Act, 1956.

(xvi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No.008072S)

V. SRIKUMAR

Partner

(Membership No.84494)

Place: Bangalore,

Date : February 28, 2013


Dec 31, 2010

1. We have audited the attached Balance Sheet of STRIDES ARCOLAB LIMITED ("the Company") as at December 31, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both 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 the 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 the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the 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 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. The Company has early adopted Accounting Standard (AS) 30 ‘Financial Instruments: Recognition and Measurement, AS 31 ‘Financial Instruments: Presentation and AS 32 ‘Financial Instruments: Disclosure, to the extent such standards do not conflict with the standards notified under section 211(3C) of the Companies Act. Pursuant to the above, the Foreign Currency Convertible Bonds (FCCBs or Bonds) issued by the Company have been segregated into two components comprising (a) option component which represents the value of the conversion option given to the FCCB-holders to convert the bonds into equity shares of the Company and (b) debt component which represents the debt to be redeemed in the absence of conversion option being exercised by FCCB-holder, net of issuance costs. The debt component has been recognised and measured at amortized cost and the fair value of the option component has been determined using a valuation model and a charge of Rs.15.63 Million has been recognised in the Profit & Loss Account for the year ended December 31, 2010, being the change in the fair value of embedded option during the year.

5. We draw attention to Note B.5 of Schedule ‘P regarding the accounting for the Scheme of Arrangement (‘the Scheme’) between the Company, some of its subsidiaries and their respective shareholders under section 391 to 394 and the other provisions of the Companies Act, 1956, which has been approved by the Hon’ble High Court of Mumbai. In accordance with the Scheme:

(a) Investments in a subsidiary has been fair valued and the resultant surplus over the previously carried book values, amounting to Rs.5,856.20 Million, has been credited to Reserve for Business Restructure instead of such assets being recorded at historical costs as required by Accounting Standard 13 ‘Accounting for investments.

(b) Certain expenses (net) amounting to Rs.46.95 Million has been debited to the Reserve for Business Restructure, instead of being charged to the Profit and Loss Account as required by Accounting Standard 5 ‘Net profit or Loss for the Period, Prior Period Items.

6. Further to our comments in the Annexure referred to in paragraph 3 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 it appears from our examination of those books;

(iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) subject to our comments in paragraph 5 above and read with our comments in paragraph 4 above, in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

(v) 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 read with our comments in paragraph 5 above, 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 31st December, 2010;

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

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

7. On the basis of the written representations received from the Directors as on December 31, 2010 taken on record by the Board of Directors, we report that none of the Directors is disqualified as on December 31, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

Annexure to the Auditors Report (Referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Companys business/activities/result, clauses iii(d), vi, xii, xiii, xiv & xix of CARO are not applicable. (ii) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iv) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has granted loans aggregating to Rs.100 Million to one party during the year. At the year-end, the outstanding balance of such loan granted aggregated to Nil and the maximum amount involved during the year was Rs.100 Million.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been regular/as per stipulations.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has taken loans aggregating to Rs.190 Million from two parties during the year. At the year-end, the outstanding balance of such loans taken aggregated to Nil and the maximum amount involved during the year was Rs.151.05 Million.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of principal amounts and interest in respect of such loans are regular/as per stipulations.

(v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) In our opinion and having regard to our comments in paragraph (v) above, with regard to purchases of certain items of inventory for which comparative quotes are not available, transactions (excluding loans covered by our comments under paragraph (iv) above) made in pursuance of such contracts or arrangements, in excess of Rs.5 Lakhs in respect of any party, have been made at prices which are, prima facie, reasonable having regard to the prevailing market prices at the relevant time.

(vii) In our opinion, the Company has an internal audit system which is 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 Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at December 31, 2010 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on December 31, 2010 on account of disputes are given below:

Name of statute Nature of the dues Amount (Rs. in Million) Period to which the Forum where dispute is amount relates pending

Income - tax Act, 1961 Income Tax 63.88 AY 2007-08 Dispute Resolution Panel

Customs and Excise Laws Excise duty 3.86 Aug-2005 Customs and Excise Service Tax Appellate Tribunal

(x) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions. The Company has not issued any debentures.

(xii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by wholly owned subsidiary companies from banks and financial institutions, are not prima facie prejudicial to the interests of the Company.

(xiii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained, other than temporary deployment pending application.

(xiv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long-term investment.

(xv) According to the information and explanations given to us, the Company has made preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956 at a price which is prima facie not prejudicial to the interests of the Company.

(xvi) The management has disclosed the end use of monies raised under a Qualified Institutional Placement of its equity shares in the notes to the financial statements and we have verified the same.

(xvii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.008072S)

V. BALAJI Partner (Membership No.203685)

BANGALORE, 24 February, 2011


Dec 31, 2009

1. We have audited the attached Balance Sheet of STRIDES ARCOLAB LIMITED as at December 31, 2009, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Management of the Company. 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 the 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 issued by the Government of India in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. The Company has early adopted Accounting Standard 30 ‘Financial Instruments: Recognition and Measurement’, along with the limited revision to Accounting Standard 2 ‘Valuation of Inventories’, Accounting Standard 11 ‘The Effect of Changes in Foreign Exchange Rates’, Accounting Standard 19 ‘Leases’, Accounting Standard 21 ‘Consolidated Financial Statements and Accounting for Investment in Subsidiaries in Separate Financial Statements’, Accounting Standard 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’, Accounting Standard 26 ‘Intangible Assets’, Accounting Standard 27 ‘Financial Reporting of Interest in Joint Ventures’, Accounting Standard 28 ‘Impairment of Assets’, and Accounting Standards 29 ‘Provisions, Contingent Assets and Contingent Liabilities’, arising from the announcement of the Institute of Chartered Accountants of India on March 29, 2008. Pursuant to the above:

(i) The Foreign Currency Convertible Bonds (FCCBs or Bonds) have been segregated into two components comprising (a) option component which represents the value of the conversion option given to the FCCB-holders to convert the bonds into equity shares of the Company and (b) debt component which represents the debt to be redeemed in the absence of conversion option being exercised by FCCB-holder, net of issuance costs. The debt component has been recognised and measured at amortised cost and the fair value of the option component has been determined using a valuation model and a charge of Rs.41.12 Million has been recognised in the Profit and Loss Account for the year ended December 31, 2009, being the change in the fair value of embedded option during the year.

(ii) Certain US Dollar investments in subsidiaries and joint ventures have been designated as hedged items in a fair value hedge for changes in spot rates and have been restated at the end of the every reporting period. Consequently, a charge of Rs.107.01Million has been recognised in the Profit and Loss account for the year ended December 31, 2009 as compared to the policy of valuing investments at cost less diminution that is other than temporary, as required under Accounting Standard 13 ‘Accounting for Investments’, notified under section 211(3C) of the Companies Act, 1956.

5. We refer to Note A.2 of Schedule P, regarding the accounting for the Scheme of Arrangement (‘the Scheme’) between the Company, some of its subsidiaries and their respective shareholders under section 391 to 394 and the other provisions of the Companies Act, 1956, which has been approved by the Hon’ble High Court of Mumbai.

(i) As explained in Note A.2.2 (b) of Schedule P, in accordance with the Scheme, the excess of fair value of assets of the Company over the previously carried book values, amounting to Rs.6,891.77 Million has been credited to Reserve for Business Restructuring, instead of such assets being recorded at historical costs or written down value, as required by Accounting Standard 10 ‘Accounting for Fixed Assets’ and Accounting Standard 13 ‘Accounting for Investments’, as applicable.

(ii) As explained in Note A.2.2(c) of Schedule P, in accordance with the Scheme, certain expenses and impairments amounting to Rs.2,277.77 Million have been debited to the Reserve for Business Restructuring, instead of being charged to the Profit and Loss Account as required by Accounting Standard 5 ‘Net Profit or Loss for the Period, Prior Period Items’.

6. Attention is invited to Note B.17.1 of Schedule P regarding the excess managerial remuneration of earlier years in respect of which the Company’s application is pending with the Central Government.

7. Further to our comments in the Annexure referred to above, 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 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 the books;

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

(d) subject to our comments in paragraph 5 above and read with our comments in paragraph 4 above, the Balance Sheet, the Profit and Loss Account and the 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;

(e) on the basis of the written representations received from the directors, as on December 31, 2009, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on December 31, 2009 from being appointed as a director in terms of clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956.

(f) in our opinion, and to the best of our information and according to the explanations given to us, the said accounts, read together with the notes thereon, 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:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2009;

(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

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

Annexure to the Auditors’ Report (Referred to in our report of even date)

(i) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by the management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) Although some of the fixed assets of the Company have been disposed off during the year, in our opinion and according to the information and explanation given to us, the ability of the Company to continue as a going concern is not affected.

(ii) In respects of its inventories:

(a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

(b) In our opinion, and according to the information and explanation given to us, the procedures for physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) Accordingly to the information and explanation given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(iv) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company had taken unsecured loans from two parties. At the year-end, the outstanding balances of such loans taken aggregated to Nil and the maximum amount involved during the year was Rs.75.70 Million.

(b) The rate of interest and other terms and conditions of such loan are in our opinion, prima facie, not prejudicial to the interests of the Company.

(c) The payments of principal amounts and interest have during the year been regular as per stipulations.

(v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items of inventory and fixed assets purchased are of a special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services and we have not observed any continuing failure to correct major weaknesses in such internal controls.

(vi) In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the Companies Act 1956, to the best of our knowledge and belief, and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered into the register maintained under the said section have been so entered.

(b) In our opinion and having regard to our comments in paragraph (v) above, with regard to purchases of certain items of inventory for which comparative quotes are not available, transactions (excluding loans covered by our comments under paragraph (iv) above) made in pursuance of such contracts or arrangements, in excess of Rs.5 Lakhs in respect of any party, have been made at prices which are, prima facie, reasonable having regard to the prevailing market prices at the relevant time.

(vii) The Company has not accepted deposits from public.

(viii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the management has been commensurate with the size of the Company and the nature of its business.

(ix) We have broadly reviewed the books of account and records maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(x) In respect of statutory dues:

(a) According to the information and explanations given to us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and any other material statutory dues with the appropriate authorities during the year and there are no undisputed statutory dues as noted above which are outstanding for a period more than six months from the date they became payable.

(b) According to the information and explanations given to us, details of disputed Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and cess, which have not been deposited as on December 31, 2009 on account of any dispute are given below:

Amount

Nature of the (Rupees in Name of statute dues Million)

Income - tax Act, 1961 Income Tax (incl. 3.38 interest)

Income - tax Act, 1961 Income Tax (incl. 3.31 interest)

Income - tax Act, 1961 Penalty 19.1

Income - tax Act, 1961 Penalty 0.70

Income - tax Act, 1961 Income Tax (incl. 38.97 interest)

Income - tax Act, 1961 Income Tax (incl. 121.95 interest)

Customs and Excise Excise duty 3.86 Laws



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

Income - tax Act, 1961 AY 1998-99 Income Tax Appellate Tribunal and Commissioner of Income - tax (Appeals)

Income - tax Act, 1961 AY 1999-00 Income Tax Appellate Tribunal and Commissioner of Income - tax (Appeals)

Income - tax Act, 1961 AY 2000-01 Commissioner of Income - tax (Appeals)

Income - tax Act, 1961 AY 2001-02 Commissioner of Income - tax (Appeals)

Income - tax Act, 1961 AY 2004-05 Commissioner of Income - tax (Appeals)

Income - tax Act, 1961 AY 2005-06 Commissioner of Income - tax (Appeals)

Customs and Excise Laws Aug-2005 Customs and Excise Service Tax Appellate Tribunal

(xi) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the year and in the immediately preceding financial year.

(xii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions and banks.

(xiii) The Company has not granted loans and advances on the basis of the security by way of pledge of shares, debentures and securities.

(xiv) The Company is not a chit fund or a nidhi/mutual benefit fund/ society.

(xv) The Company is not in the business of dealing or trading in shares, securities, debentures and other investments.

(xvi) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by wholly owned subsidiary companies from financial institutions, are not prima facie prejudicial to the interest of the Company.

(xvii) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application.

(xviii) According to the information given to us and having regard to the explanation that Foreign Currency Convertible Bonds amounting to Rs.2,100.70 Million are due for redemption / conversion on April 19, 2010, on an overall examination of the Balance Sheet of the Company, other funds raised on short term basis have not been used during the year for long term investment.

(xix) According to the information and explanations given to us, the price at which the Company has made preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956 is not prima facie prejudicial to the interests of the Company.

(xx) The Company has not issued any debentures.

(xxi) The Company has not raised any money by public issues during the year.

(xxii) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants Registration No. 0080728

Place: Bangalore V. BALAJI

Date: February 24, 2010 Partner

Membership No. 203685

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