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Auditor Report of Wintac Ltd.

Mar 31, 2015

Report on the Financial Statements

1) We have audited the accompanying financial statements of WINTAC LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 Financial Statements

2) 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 notified under the Companies Act, 1956 read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 in so far as applicable to the Company. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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

3) Our responsibility is to express an opinion on these financial statements based on our audit.

4) 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.

5) 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.

6) 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. 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.

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

Opinion

8) 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, of the state of affairs of the Company as at 31st, March 2015, and its loss and cash flows for the year ended on that date.

Emphasis of Matter

9) Your attention is drawn to the following Notes forming Part of the financial Statements for the year ended 3103-2015 :

a. Note 19.1 detailing claims against the company not acknowledged as debts (including demands of about ' 267.62 lakhs (excluding interest and penalty) upheld by the lower appellate authorities and contested by the company) in respect of which the management expects favourable orders,

b. Note 28.11 (b) that management's assessment of the impact from the ongoing review/ reconciliations will not be significant, Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

10) 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 dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards notified under the Companies Act, 1956 read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 in so far as applicable to the Company.

e) We report that as on 31st March 2015, no director of the company is disqualified from being appointed as a director under Section 164 (2) of the Companies Act, 2013 by virtue of the directorship in this company In respect of directorships in other companies , we have relied on the written representations made by the directors, in the prescribed form to the Board and taken on record, that they are not subject to disqualification under the said section.

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 Notes 9.1(a), 9.1 (b) and 19 to the financial statements;

ii. The Company has not entered into derivative contracts. Further, with regard to the Long Term Contracts entered into by the Company we are informed that there will be no material foreseeable losses arising from those contracts.

iii. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company.

11) As required by the Companies (Auditors' Report ) Order 2015, issued by the Government of India in terms of subsection (11) of Section 143 of the Companies Act,2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

ANNEXURE REFERRED TO IN PARAGRAPH 10 OF OUR REPORT OF EVEN DATE RE: WINTAC LIMITED

1) Fixed Assets:

a) The company is maintaining proper records which show full particulars of the fixed assets including quantitative details and their situation..

b) Though there is no formal programme for periodic verification of fixed assets, the periodicity of verification is considered reasonable taking into consideration the management had carried out the physical verification of fixed assets during the financial year 2012-13 (and had passed necessary entries to reflect the factual position) and we are informed that the next round of physical verification will be carried out in financial year 2015-16.

2) Inventory

a) According to the information and explanations furnished to us, physical verification has been conducted by the management during the year/as at the year end of inventory in its possession. The stock in the possession of third parties has been verified by the management with reference to certificates furnished by them and/or other relevant documents. Materials in transit have been taken as per records. In our opinion the frequency of verification is reasonable considering the size of the company and nature of its business.

b) In our opinion, the procedures of physical verification of stock are reasonable and adequate in relation to the size of the company and nature of its business.

c) The company has a system of maintaining proper records for inventory. As informed to us, the discrepancies noticed on physical verification as compared to the book records were not material and have been properly dealt with in the books of account.

3) Loans to parties covered in the Register maintained under Section 189

The company has not given any loans to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013.

4) Internal Control for the purchase of inventory and fixed assets and for the sale of goods and services.

The company has an internal control system for the purchase of inventory and fixed assets and for the sale of goods and services, of moderate strength, which as informed to us is adequate because of the size of the company and management oversight. In our opinion the controls in force require proper documentation and the areas of segregation of duties and staffing require strengthening.

5) Fixed Deposits:

The company is not found to have accepted any deposits from the public under the provisions of the Companies Act,2013. In respect of deposits accepted under the provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 the same are being repaid on maturity. No order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

6) Cost Records:

The Company is not required to maintain cost records in terms of the Companies ( Cost Records and Audit ) Rules,2014 prescribed by the Central Government under Section 148 of the Companies Act,2013.

7) Statutory Dues:

a) The company is generally found to be depositing the undisputed statutory dues ( as ascertained and provided in its books ) in respect of Provident Fund, Employees' State Insurance, Income tax, Sales Tax, Excise Duty, Customs Duty, Service Tax, etc. though there may be some delay. There are no undisputed tax dues outstanding for more than six months as on the balance sheet date.

b) Regarding disputed statutory dues, we are informed that Note 19.1 gives full particulars of dues not deposited on account of dispute/ settlement proceedings.

c) There are no dues to the Investor Education and Protection Fund.

8) Whether accumulated loss exceeds fifty percent of the Net Worth:

As per the financial statements under report:

a) The accumulated loss as at the end of the financial year does exceed fifty percent of the Net Worth.

b) The company has incurred cash loss during the financial year covered by our audit and in the previous financial year.

9) Frauds

No fraud on or by the company was noticed or reported during the year under report.

FOR RAO AND SWAMI Chartered Accountants (FRN 003105S) Date : 22nd May, 2015 (H.Anil Kumar) Place : Bengaluru. Partner M. no : 022329


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Wintac 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.

Board''s Responsibility for the Financial Statements

2. The Board of Directors of the company 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 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 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

3. Our responsibility is to express an opinion on these financial statements based on our audit. We have 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.

4. 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.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. 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 loss 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.

Emphasis of Matter

7. Your attention is drawn to the following Notes forming Part of the financial Statements for the year ended 31-03-2013 :

(a) Note 1.7 giving the reasons for not recording the redemption of Preference shares on 17.02.2013 pending (earlier of) receipt of Preference share certificate / expiry of notice period.

(b) Note 19.1 detailing claims against the company not acknowledged as debts (including demands of about Rs. 267.01 lakhs (excluding interest) upheld by the lower appellate authorities and contested by the company) in respect of which the management expects favourable orders.

(c) Note 28.10 b) that management''s assessment of the impact from the ongoing reconciliations will not be significant.

(d) Note 20.1 regarding method followed for recognition of revenue from Formulation Development Fee.

Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

8. 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.

9. 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 subsection (3C) of section 211 of the Companies Act, 1956;

(e) We report that no director of the company is disqualified from being appointed as a director under Section 274(1)(g) of the Companies Act,1956 by virtue of the directorship in this company. In respect of disqualification which could arise from directorships in other companies, representations have been received from the Directors and taken on record by the Board, that they are not subject to disqualification u/s. 274(1 )(g) of the Companies Act, 1956 as on March 31st, 2013.

(f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE REFERRED TO IN PARAGRAPH 8 OF OUR REPORT OF EVEN DATE

RE: WINTAC LIMITED

1) Fixed Assets:

a) The company is maintaining proper records which shows full particulars including quantitative details and location of the fixed assets..

b) After many years the management has carried out the physical verification of fixed assets during the year and compared with the book records. Material discrepancies were noticed on such verification and necessary entries have been passed in the books to reflect the factual position. Attention is drawn to Note 9.5 on the Accounts. In our opinion all assets must be verified at least once in every three years.

c) As substantial part of the fixed assets has not been disposed during the year, our reporting under Clause 4 (i) (c) of the order does not arise.

2) Inventory

a) According to the information and explanations furnished to us, physical verification has been conducted by the management during the year/as at the year end of inventory in its possession. The stock in the possession of third parties has been verified by the management with reference to certificates furnished by them and/or other relevant documents. Materials in transit have been taken as per records. In our opinion the frequency of verification is reasonable considering the size of the company and nature of its business.

b) In our opinion, the procedures of physical verification of stock are reasonable and adequate in relation to the size of the company and nature of its business.

c) The company has a system of maintaining proper records for inventory at factory in respect of raw materials and finished goods. In respect of other items and inventory with third parties the system requires to be strengthened. As informed to us, the discrepancies noticed on physical verification as compared to available book records are not material and have been properly dealt with in the books of account. In respect of stores and consumables, the balance is as per inventory taken and valued by the management. In respect of goods lying with third parties the balances are taken as per declarations received.

3) Loans from/to parties listed in the Register maintained under Section 301 of the Companies Act, 1956:

According to the information and explanations furnished to us, no loans secured or unsecured, have been granted or obtained from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 except for inter corporate deposits aggregating to Rs. 252,93 lakhs during the year obtained from a company in which a director of the company is a director. The balance in the said account as on 31-03-2013 is Rs.15.05 lakhs. No interest has been paid on the deposit and in terms of the information furnished to us the other terms and conditions are not prejudicial to the interests of the company. As informed to us no amount is overdue for repayment.

4) Internal Control for the purchase of inventory and fixed assets and for the sale of goods and services.

According to the information and explanations furnished to us, taking into consideration that some items are of special nature for which comparative alternative quotations cannot be obtained there are prima facie adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. While no major failure to correct weaknesses in internal control in the above areas have been identified, other than need to strengthen system of record keeping of inventory for items other than raw materials and finished goods as reported in paragraph 2 (c) above, the procedures and controls have not been documented and the accounting processes still require to be streamlined.

5) Transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956:

a) Our audit has not disclosed any transaction exceeding the value of five lakh rupees during the financial year in respect of any party that needs to be entered in the register maintained under Section 301 and not having been so entered.

b) As explained to us the transactions have been made at prices which were reasonable having regard to the prices which were reasonable having regard to the prevalent market price at the relevant time.

6) Fixed Deposits:

The company has generally complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from the public. No order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

7) Internal Audit:

An external firm of Chartered Accountants has done the internal audit for the year under review. The internal audit system needs to be strengthened through proper follow up so as to be commensurate with the size of the company and nature of its business.

8) Cost Records: .

We have broadly reviewed the system for maintenance by the company of books of account pursuant to the order made by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima facie the system provides for generation/maintenance of prescribed accounts and records. However we have not made a detailed examination to determine whether these records are accurate and complete.

9) Statutory Dues:

a) The company is generally found to be depositing the undisputed statutory dues (as ascertained and provided in its books )in respect of Provident Fund, Investor Education & Protection Fund, Employees'' State Insurance, Income tax, Sales Tax, Excise Duty, Customs Duty, Service Tax, etc. though there may be some delay. As per the books, arrears outstanding for period of more than six months from the date they became payable are Rs. .09 lakh towards PF and Rs. 9.96 lakh in respect of Excise Duty.

b) Regarding disputed statutory dues, we are informed that Note 19.1 gives full particulars of dues not deposited on account of dispute/ settlement proceedings.

10) Whether accumulated loss exceeds fifty percent of the Net Worth:

As per the financial statements under report:

a) The accumulated loss as at the end of the financial year does not exceed fifty percent of the Net Worth.

b) The company has incurred cash loss during the financial year covered by our audit and in the previous financial year.

11) Defaults in repayment of debts to Financial Institutions etc.

The company has no dues to any bank or financial institution as at the end of the year. The company has not issued debentures.

12) The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Hence our reporting under Clause 4 (xiii) of the Order does not arise.

13) The Company is not a Chit fund I Nidhi / Mutual fund. Hence our reporting on matters specified in Clause 4 (xiii) of the Order does not arise.

14) The company is not dealing or trading in shares, securities, debentures and other investments. Hence our reporting on the matters specified in Clause 4 (xiv) of the Order does not arise.

15) Guarantees given on behalf of others:

In our opinion, the terms and conditions on which the company had given guarantee in the usual course of business, for working capital finance taken by its associate from a bank are not prejudicial to the interest of the company.

16) Application of Term Loans:

As per our information the term loans availed during the year had been applied/are in the process of being applied for the purposes for which they had been obtained. However they have since been pre-closed out of the proceeds of the preference issue.

17) Funding of Investments:

The long term investments held by the company are backed by long term funds. The company is not holding any short term investments.

18) The company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act and hence our reporting whether the price at which the shares have been issued is prejudicial to the interest of the company does not arise.

19) The company has not issued any debentures. Hence our reporting on whether any security or charge has been availed in respect thereof does not arise.

20) The company has not made any public issue for management to disclose the end use thereof and our verification of the same.

21) Frauds:

According to the information and explanations furnished to us no fraud on or by the company has been noticed or reported during the year.

For RAO & SWAM

Chartered Accountants

(FRN003105S)

Place : BANGALORE (N.Ramesh)

Date : 31-05-2013 M No: 016153,

PARTNER


Mar 31, 2012

We have audited the attached Balance Sheet of WINTAC LIMITED as at 31st March 2012 and also the Profit and Loss Account and Cash Flow Statement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the management of Wintac Limited. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the generally accepted auditing standards in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. 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.

1. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government in terms of sub section (4A) of Section 227 of the Companies Act 1956, we enclose in Annexure- I a statement on the matters specified in paragraphs 4 read with paragraph 5 of the said Order in so far as applicable to the company.

2. Further to our comments in Annexure-I referred to in paragraph 1 above we state 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 it appears from our examination of these books.

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account.

d. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report substantially comply with the Accounting Standards referred to in Subsection (3C) of Section 211.

e. Without qualifying our opinion we draw your attention to the following Notes forming part of the Accounts for the year ended 31sl March, 2012 containing representations made by the management relied upon by us in the absence of independent documentation/evidence - in this regard and evidence to the contrary:

i Note 10.1 regarding non provision for diminution in value of investment of Rs. 90,00,000 in the Joint Venture Company Medispec Pharmaceutical (P) Ltd. though its net worth has fully eroded and that no exposure is anticipated in respect of the corporate guarantee of Rs. 20 lakhs issued in favour of the joint venture company's bankers for the reasons stated therein, Note 12.1 regarding balance of Rs.7,95,92,226 due from the aforesaid company, considered good for recovery. We are unable to express our opinion on the same as it is contingent on future performance of the said company. Further, the present arrangement with the other company, which has resulted in the balance of Rs. 7,95,92,226 may require proper ratification from the joint venture partner, in view of the expiry of original joint venture agreements and the subsidiary agreements there under;

ii Note 12.2 (a) that provision of Rs. 283 lakhs now held is considered adequate in respect of sum of Rs. 3,00,78,845 due from erstwhile subsidiary;

iii Note 12.2 (b) that advance of Rs. 1,32,85,000 to Preference shareholder is considered good;

iv Notes 19.1 detailing the claims against the company not acknowledged as debts (including demands of nT 464.72 lakhs in respect of taxes and penalties upheld by lower appellate authorities and under appeal by the company), in respect of which the management expects favourable orders.

v Note 20.1 regarding method followed for recognition of revenue from Formulation Development Fee.

vi Note 28.9 (a) regarding methodology of classification of assets and liabilities as either long term or short term.

vii Note 28.9 (b) that Management's assessment of the impact from the ongoing reconciliations will not be significant.

f. In our opinion and to the best of our information and according to the explanations given to us, the accounts, read together with accounting policies and notes forming part thereof, 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 so far as it relates to the Balance Sheet, of the state of affairs of the company as at 31st March 2012;

ii In so far as it relates to the Profit and Loss Account, of the Loss for the year ended on that date;

iii In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

3. We report that no director of the company is disqualified from being appointed as a director under Section 274(1 )(g) of the Companies Act, 1956 by virtue of the directorship in this company. In respect of directorships in other companies representations have been received from the Directors and taken on record by the Board, that they are not subject to disqualification u/s. 274(1 )(g) of the Companies Act, 1956 as on 31st March 2012.

ANNEXURE REFERRED TO IN PARAGRAPH m OF OUR REPORT QF EVEN DATE RE: WINTAC LIMITED

1) Fixed Assets:

a) The company is maintaining a Fixed Asset Register, which shows full particulars including quantitative details and location of the fixed assets recorded therein. However the same requires to be brought up to date.

b) The physical verification of fixed assets and comparison with book records has not been carried out during the year. In our opinion all assets must be verified at least once in every three years and physical verification should be properly documented.

Attention is drawn to Note 9.4 forming part of Accounts In the absence of updated records and physical verification, we have relied upon the representation of the management that the discrepancy in the fixed assets requiring adjustment in the financial books will not be material.

2) Inventory:

a) According to the information and explanations furnished to us, physical verification has been conducted by the management during the year/as at the year end of inventory in its possession. The stock in the possession of third parties has been verified by the management with reference to certificates furnished by them and/or other relevant documents. Materials in transit have been taken as per records. In our opinion the frequency of verification is reasonable considering the size of the company and nature of its business.

b) In our opinion, the procedures of physical verification of stock are reasonable and adequate in relation to the size of the company and nature of its business.

c) The company has a system of maintaining proper records for inventory except for stores to the extent of Rs. 43.26 lakh. As informed to us, the discrepancies noticed on physical verification as compared to book records are not material and have been properly dealt with in the books of account. In respect of stores, the balance is as per inventory taken and valued by the management. In respect of goods lying with third parties the balances are taken as per declarations received. We are of the opinion that system of maintaining records in respect of inventory requires to be strengthened.

3) Loans from/to parties listed in the Register maintained under S&ction 301 of the Companies Act, 1956:

According to the information and explanations furnished to us, no loans secured or unsecured, have been granted or obtained from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 except for an inter corporate deposit of Rs. 400 lakh obtained in an earlier year from a company in which a director of the company is a director and the balance in the said account as on 31-03-2012 is.Rs. 39,11,616. The interest paid on the deposit during the year is found to be reasonable and in terms of the information furnished to us, the other terms and conditions are not prejudicial to the interests of the company and the balance which is repayable on demand has not been fallen due for repayment.

4) Internal Control for the purchase of inventory and fixed assets and for the sale of goods

According to the information and explanations furnished to us, taking into consideration that some items are of special nature for which comparative alternative quotations cannot be obtained there are prima facie adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods. While no major failure to correct weaknesses in internal control in the above areas have been identified, the procedures and controls have not been documented and the accounting processes still require to be streamlined.

5) Transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956:

a) Our audit has not disclosed any transactions exceeding the value of five lakh rupees during the financial year in respect of any party that need to be entered in the register maintained under Section 301 and not having been so entered.

b) Hence our reporting whether each of such transactions have been madn at prices which are reasonable having regard to the prevailing market price for such goods, materials or services does not arise.

6) Fixed Deposits:

The Company has generally complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from the public. No order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

7) Internal Audit:

An external firm of Chartered Accountants has done the internal audit for the year under review. The internal audit system needs to be strengthened through proper follow up so as to be commensurate with the size of the company and nature of its business.

8) Cost Records:

We have broadly reviewed the system for maintenance by the company of books of account pursuant to the order made by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima facie the system provides for generation/maintenance of prescribed accounts and records. However we have not made a detailed examination to determine whether these records are accurate and complete.

9) Statutory Dues:

a) The company is generally found to be depositing the undisputed statutory dues (as ascertained and provided in its books) in respect of Provident Fund, Investor Education & Protection Fund, Employees' State Insurance, Income tax, Sales Tax, Excise Duty, Customs Duty, Service Tax, etc. though there may be some delay. As per the books, arrears outstanding for period of more than six months from the date they became payable are Rs. 7.79 lakh in respect of Excise Duty and Rs. 21.99 lakh in respect of Income Tax Deducted at Source.

b) Regarding disputed statutory dues, we are informed that Note 19 gives full particulars of dues not deposited on account of dispute/ settlement proceedings.

10) Whether accumulated loss exceeds fifty percent of the Net Worth:

As per the financial statements under report :

a) The accumulated loss as at the end of the financial year does not exceed fifty percent of the Net Worth.

b) The company has incurred cash loss during the financial year covered by our audit. The company has not incurred cash loss in the immediately preceding financial year.

11) Loan Defaults :

The company has not defaulted in repayment of dues to its bankers. The company has not borrowed from any financial institution nor issued debentures.

12) Corporate Guarantees:

In our opinion, the terms and conditions on which the company had given guarantee in earlier year, in the usual course of business, for working capital finance taken by its associate from a bank are not prejudicial to the interest of the company.

13) Application of Term Loans:

As per our information the term loans availed during the year have been applied/are in the process of being applied for the purposes for which they have been obtained.

14) Funding of Investments:

The long-term investments held by the company are backed by iong-term funds. The company is not holding any short-term investments.

15) Preferential Allotment of Shares:

The company has not made any preferential allotment of shares during the year.

16) Frauds:

According to the information and explanations furnished to us no fraud on or by the company has been noticed or reported during the year.

17) Considering the nature of the company's business and the transactions during the year, the provisions of clauses (i)(c),(xii), (xiii), (xiv), (xviii), (xix) and(xx) of paragraph 4 of the Companies (Auditor's Report) Order are not found applicable to the company for the year under review.

For RAO & SWAM

Chartered Accountants

(FRN003105S)

Place : BANGALORE (N.Ramesh)

Date : 02-06-2012 M No: 16153, PARTNER


Mar 31, 2010

We have audited the attached Balance Sheet of WINTAC LIMITED as at 31st March 2010 and also the Profit and Loss Account and Cash Flow Statement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the management of Wintac Limited. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the generally accepted auditing standards in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. 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.

1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of sub section (4A) of Section 227 of the Companies Act 1956, we enclose in Annexure-I a statement on the matters specified in paragraphs 4 read with paragraph 5 of the said Order in so far as applicable to the company.

2. Further to our comments in Annexure-I referred to in paragraph 1 above we state 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 it appears from our examination of these books.

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of account.

d. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report substantially comply with the Accounting Standards referred to in Subsection (3C) of Section 211.

e. Attention is invited to the following Notes forming part of the Accounts for the year ended 31st March, 2010 (Schedule-R).

i Note 6 regarding non provision for diminution in value of investment ofRs.90,00,000 in the Joint Venture Company Medispec Pharmaceutical (P) Ltd. for the reasons stated therein, Note 7(a) regarding balance of Rs.8,06,32,059 due from the aforesaid company, stated to be advance given for developing and marketing specialty injectibles and share of co-marketing expenses considered good for recovery and Note 9(a) regarding corporate guarantee of Rs.30 lakhs issued in favour of the joint venture companys bankers in respect of which no exposure is anticipated. We are unable to express our opinion on the same. Further, the present arrangement with the other company, which has resulted in the balance of Rs. 8,06,32,059 may require proper ratification

from the joint venture partner, in view of the expiry of original joint venture agreements and the subsidiary agreements there under.

ii Note 10 (a) that balances of major Debtors, Creditors and Advances are subject

to confirmation /reconciliation. In respect of long outstanding balances aggregating to Rs 91.99 lakh under Sundry Debtors and Rs.417.67 lakh under advances ( including the advance referred to in Note 7(b)), we are unable to determine whether the same are recoverable and the adequacy of provision of Rs. 319 lakh now held for outstandings under advances, pending outcome of the steps taken/ proposed to be taken by the company to realise the dues.

The consequential effect of the above on the accounts could not be ascertained.

f. In our opinion and to the best of our information and according to the explanations given to us, subject to our reservations stated in para 2 (e) above andour observations in paragraphs 1(b)and 2(c) of the annexure to thisreport, the accounts, read together with accounting policies and notes forming part thereof, in particular Note 5 regarding Fixed assets (including Capital work in Progress) Note 9(b) detailing the reasons for non provision for sales tax pending the outcome of assessments and appeals and Note 12 regarding method followed for recognition of revenue from Formulation Development Fee, 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 so far as it relates to the Balance Sheet, of the state of affairs of the company as at 31st March, 2010;

ii In so far as it relates to the Profit and Loss Account, of the Profit for the yearended on that date;

iii In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

3. We report that no director of the company is disqualified from being appointed as a director under Section 274(1)(g) of the Companies Act,1956 by virtue of the directorship in this company. In respect of directorships in other companies representations have been received from the Directors and taken on record by the Board, that they are not subject to disqualification u/s. 274(1)(g) of the Companies Act, 1956 as on March 31st, 2010.

ANNEXURE REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE RE: WINTAC LIMITED

1) Fixed Assets:

a) The company is maintaining a Fixed Asset Register which shows full particulars including quantitative details and location of the fixed assets recorded therein. However the same requires to be brought up to date.

b) The physical verification of fixed assets and comparison with book records has not been carried out during the year. In our opinion all assets must be verified at least once in every three years and physical verification should be properly documented.

Attention is drawn to Note 5(e) forming part of Accounts ( Schedule-R) In the absence of updated records and physical verification, we have relied upon the representation of the management that the discrepancy in the fixed assets requiring adjustment in the financial books will not be material.

2) Inventory

a) According to the information and explanations furnished to us, physical verification has been conducted by the management during the year/as at the year end of inventory in its possession. The stock in the possession of third parties has been verified by the management with reference to certificates furnished by them and/or other relevant documents. Materials in transit have been taken as per records. In our opinion the frequency of verification is reasonable considering the size of the company and nature of its business.

b) In our opinion, the procedures of physical verification of stock are reasonable and adequate in relation to the size of the company and nature of its business.

c) The company is maintaining proper records for inventory except for stores to the extent of Rs. 37.05 lakh and goods lying with third parties. The discrepancies noticed on such verification as compared to book records are not material and have been properly dealt with in the books of account. In respect of stores, the balance is as per inventory taken and valued by the management. In respect of goods lying with third parties the balances are taken as per declarations received. We are of the opinion that system of maintaining records in respect of goods lying with third parties and for stores require to be strengthened.

3) Loans from/to parties listed in the Register maintained under Section 301 of the Companies Act,1956:

According to the information and explanations furnished to us, no loans secured or unsecured, have been granted or obtained from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 except for an inter corporate deposit of Rs. 400 lakh from a company in which a director of the company is a director. The balance in the said account as on 31-03-2010 is Rs.3,90,84,035. The interest paid on the deposit is found to be reasonable and in terms of the information furnished to us the other terms and conditions are not prejudicial to the interests of the company. The interest has been paid upto date. The principal has not fallen due for repayment.

4) Internal Control for the purchase of inventory and fixed assets and for the sale of goods According to the information and explanations furnished to us, taking into consideration that

some items are of special nature for which comparative alternative quotations cannot be obtained there are prima facie adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods. While no major failure to correct weaknesses in internal control in the above areas have been identified, the procedures and controls have not been documented and the accounting processes still require to be streamlined.

5) Transactions that need to be entered in the register maintained under Section 301 of the Companies Act,1956:

a) Our audit has not disclosed any transactions exceeding the value of five lakh rupees during the financial year in respect of any party that need to be entered in the register maintained under Section 301 and not having been so entered.

b) According to the information and explanations given to us, taking into consideration that some items are of special nature for which comparative alternative quotations cannot be obtained, each of these transactions have been made at prices which are reasonable having regard to the prevailing market price for such goods, materials or services.

6) Fixed Deposits:

The company has generally complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from the public. No order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

7) Internal Audit:

An external firm of Chartered Accountants has done the internal audit for the year under review. The internal audit system needs to be strengthened through proper follow up so as to be commensurate with the size of the company and nature of its business.

8) Cost Records:

We have broadly reviewed the system for maintenance by the company of books of account pursuant to the order made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie the system provides for generation/maintenance of prescribed accounts and records. However we have not made a detailed examination to determine whether these records are accurate and complete.

9) Statutory Dues:

a) The company is generally found to be depositing the undisputed statutory dues (as ascertained and provided in its books )in respect of Provident Fund, Investor Education & Protection Fund, Employees State Insurance, Income tax, Sales Tax, Excise Duty, Customs Duty, Service Tax, etc. though there may be some delay. As per the books, arrears outstanding for period of more than six months from the date they became payable are Rs7.43 lakh in respect of Excise Duty and Rs 11.46 lakh in respect of Income Tax Deducted at Source.

b) Regarding disputed statutory dues, we are informed that Note 9 gives full particulars of dues not deposited on account of dispute/ settlement proceedings.

10) Whether accumulated loss exceeds fifty percent of the Net Worth:

As per the financial statements under report before making adjustments for our observations referred to in para 2(e) of our audit report:

a) The accumulated loss as at the end of the financial year does not exceed fifty percent of the Net Worth.

b) The company has not incurred cash loss during the financial year covered by our audit though it has incurred cash loss in the previous financial year.

11) Loan Defaults

The company has not defaulted in repayment of dues to its bankers. The company has not borrowed from any financial institution nor issued debentures.

12) Corporate Guarantees:

In our opinion, the terms and conditions on which the company had given guarantee in earlier year, in the usual course of business, for working capital finance taken by its associate from a bank are not prejudicial to the interest of the company.

13) Application of Term Loans:

As per our information the term loans availed during the year have been applied/are in the process of being applied for the purposes for which they have been obtained.

14) Funding of Investments:

The long term investments held by the company are backed by long term funds. The company is not holding any short term investments.

15) Preferential Allotment of Shares:

The company has not made any preferential allotment of shares during the year.

16) Frauds:

According to the information and explanations furnished to us no fraud on or by the company has been noticed or reported during the year.

17)Considering the nature of the companys business and the transactions during the year , the provisions of clauses (i)(c),(xii), (xiii), (xiv), (xviii), (xix) and(xx) of paragraph 4 of the Companies (Auditors Report) Order are not found applicable to the company for the year under review.

For RAO & SWAMI

Chartered Accountants

(FRN003105S)

(N.Ramesh)

Palace : BANGALORE Mno: 16153

Date : 04-08-2010 PARTNER