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Auditor Report of Wockhardt Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Wockhardt Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of 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 standalone 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 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 and ensuring their operating effectiveness and the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' 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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone 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 accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone 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, its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

(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 written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors are 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 Auditors'' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 47 on Contingent Liabilities;

(ii) The Company did not have any long-term contracts including derivative contracts. Hence, the question of any material foreseeable losses does not arise;

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

[Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditors'' Report of even date to the members of Wockhardt Limited on the standalone financial statements for the year ended March 31, 2015]

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

(b) During the year, fixed assets have been physically verified by the management as per the regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(ii) (a) The inventory (excluding stocks lying with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. As informed, no material discrepancies were noticed on physical verification carried out during the year.

(iii) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions stated in paragraph 3 (iii)(a) and 3 (iii)(b) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system 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. During the course of our audit, we have not observed any continuing failure to correct any major weaknesses in the aforesaid internal control system of the Company.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detail examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, value added tax, customs duty, excise duty, cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, were outstanding, at the year end, for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us, the dues outstanding with respect to income tax, sales tax, wealth tax, service tax, value added tax, customs duty, excise duty or cess as applicable to it, on account of any dispute, are as follows:

Name of the Nature of dues Amount statute (Rs. in crore)

Central Excise Penalty for Classification 0.37 Act, 1944

Differential Duty 2.19

Education Cess 0.02

Demand and Penalty for 2.20 Classification.

Demand and Penalty for 4.44 Classification.

Denial of concessional rate 21.23 of duty on sale to DTA

UP VAT Act Demand under Section 28 0.27 & Section 9(2)

UP VAT Act Sales Tax due to under 0.08 invoicing and late deposit of Tax

Patna VAT Act VAT on free goods 0.54 supplied as bonus offer and deposited

Maharashtra Demand under Section 23 10.16 VAT Act, 2002 of MVAT, 2002 and under and Central Section 9(2) of Central Sales Tax Act Sales Tax Act

Central Demand under 0.30 Sales Tax Section 9(2)



Central Demand under CST and 1.25 Sales Tax VAT Act.

Income Tax Demand under 4.05 Act, 1961 Section 143(3)

Demand under 12.80 Section 143(3)

Demand under 0.46 Section 143(3)

Demand under 1.11 Section 143(3)

TDS Assessment order 0.13 u/s 201/201(A)



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

Central Excise February 2001 to February 2003 CESTAT Act, 1944

November 1996 to April 1998 Commissioner, Aurangabad.

July 2004 to August 2004 Joint Commissioner, Ankleshwar.

September 1991 to July 1993 CESTAT

April 2005 to March 2009 CESTAT

May 2004 to March 2007 CESTAT

Addl. Commissioner UP VAT Act April 2008 to March 2011 Grade 2 ( Appeals) First



UP VAT Act 2003 - 04 Joint Comm. 2005 - 06 Commercial Taxes (Appeals)

Patna VAT Act 2009-10 to 2012-2013 Joint Comm. Commercial Taxes (Appeals)

Maharashtra April 2008 to March 2009 Joint Commissioner, VAT Act, 2002 Appeal V and Central Sales Tax Act

Deputy Commissioner Central April 2005 to March 2006 of Sales Tax Appeals Sales Tax - 3,Mumbai

Central 2006-2007 Addl. Commissioner Sales Tax of Commercial tax, Panaji

Income Tax FY 2003-04 High Court Act, 1961 FY 2006-07 Income Tax Appellate Tribunal

FY 2007-08 Income Tax Appellate Tribunal

FY 2009-10 Commissioner of Income Tax (Appeals)

January 2007 to March 2011 Commissioner of Income Tax (Appeals) /TDS Officers

Note: Out of the above, amount paid under protest by the Company in respect of Delhi and Patna VAT and Income-tax is Rs. 0.29 crore and Rs. 16.13 crore respectively.

(c) According to the information and explanations given to us, there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

(viii) The Company does not have accumulated losses at the end of the financial year nor has incurred cash losses in the current and immediately preceding financial year.

(ix) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

(x) In our opinion and as explained in Note 47 to the financial statements, the terms and conditions of the guarantees given by the Company, for loans taken by its subsidiaries from banks or financial institutions are not prejudicial to the interest of the Company.

(xi) According to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

(xii) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such instance by the management.

For Haribhakti & Co. LLP Chartered Accountants ICAI Firm Registration No. 103523W

Shailesh Haribhakti Partner Membership No. 030823

Place : Mumbai Date : May 28, 2015


Mar 31, 2014

1. We have audited the accompanying financial statements of Wockhardt 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 year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting 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.

Auditors’ Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ 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 efectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

4. 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 afairs of the Company as at March 31, 2014;

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

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

Emphasis of Matter

5. We draw attention to Note 47 to the financial statements with regard to regulatory alert received by the Company on certain manufacturing units from the USFDA and UKMHRA due to which there has been a decline in sales and Profitability for the year and inventory write off amounting to Rs. 69.33 crore has been charged to Wockhardt Bio AG. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

6. As required by the Companies (Auditors'' 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.

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

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

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

ANNEXURE TO INDEPENDENT AUDITORS’ REPORT [Referred to in paragraph & under''Report on Other Legal and Regulatory Requirements''in the Independent Auditors''Report of even date to the members of Wockhardt Limited on the financial statements for the year ended March 31, 2014]

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

(b) The Company has a program for phased physical verification of all its fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, certain fixed assets have been physically verifed by the management during the year and discrepancies noticed on such verifcation, which were not material, have been properly dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

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

(iii) (a) As informed, 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. Accordingly, the provisions stated in paragraph 4 (iii)(b), (c) and (d) of the Order are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii)(f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct any major weakness in the aforesaid internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs. five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanation given to us and on the basis of records of the Company examined by us, in our opinion, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company and as informed to us, there are no dues outstanding of income-tax, sales-tax, wealth- tax, service tax, customs duty, excise duty and cess that have not been deposited on account of any dispute, except as follows:

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

Central Excise Penalty for Classification 0.37 February 2001 to February 2003 Act, 1944

Differential Duty 2.19 November 1996 to April 1998

Education Cess 0.02 July 2004 to August 2004

Demand and Penalty for 2.20 September 1991 to July 1993 Classifcation

Demand and Penalty for 4.44 April 2005 to March 2009 Classifcation



Name of the statue Forum where the dispute is pending

Central Excise Act, 1944 CESTAT

Commissioner, Aurangabad

Joint Commissioner, Ankleshwar.

CESTAT

CESTAT

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

Aurangabad Demand Under Local 10.28 July 2011 to August 2011 Municipal Body Tax Corporation

UP VAT Act Demand under 0.27 April 2009 to March 2011 Section 28 & Section 9(2)

Central Sales Demand under 0.30 April 2005 to March 2006 Tax Section 9(2)

Income Tax Act, Demand under 4.05 FY 2003-04 1961 Section 143(3)

Demand under 12.80 FY 2006-07 Section 143(3)

Demand under 0.46 FY 2007-08 Section 143(3)

TDS Assessment order 1.00 January 2007 to December 2010 u/s 201/201(A)

Penalty under 3.08 FY 2003-04 Section 271 (1)(c)

Penalty under 2.59 FY 2004-05 Section 271 (1)(c)



Name of the statue Forum where the dispute is pending

Aurangabad Municipal Corporation Bombay High Court

UP VAT Act Add. Commissioner Grade 2 (Appeals) First

Central Sales Tax Deputy Commissioner of Sales Tax Appeals - 3, Mumbai

Income Tax Act, 1961 High Court

Income Tax Appellate Tribunal

Income Tax Appellate Tribunal

Commissioner of Income Tax (Appeals) /TDS Officers

Commissioner of Income Tax (Appeals)

Commissioner of Income Tax (Appeals)

Note: Out of the above, amount paid under protest by the Company for Local Body Tax, Delhi VAT and Income-tax is Rs. 2.00 Crore, 0.13 Crore and 16.13 Crore respectively.

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. Further, the Company has not incurred cash losses during the financial year covered by our audit and 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 repayment of dues to financial institution, bank or debenture holders.

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

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

(xv) In our opinion and as explained in Note 46 to the financial statements, the terms and conditions of the guarantees given by the Company, for loans taken by its subsidiaries from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which they were obtained.

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

(xviii) According to the information and explanation 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.

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

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

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants

Firm Registration No. 103523W

Shailesh Haribhakti

Partner

Membership No. 30823

Place : Mumbai Date : May 26, 2014


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Wockhardt Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting 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.

Auditors'' Responsibility

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

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

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

Opinion

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

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

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

Emphasis of Matter

5. We draw attention to Note no. 37(i) of the Financial Statements regarding reassessment and revision thereof of recognition criteria for capitalization of product development costs incurred by the Company, which being technical in nature has been relied upon by us. Consequently, the Company has (a) expensed off carried forward cost of products under development as at June 30, 2012 amounting to Rs. 319.05 crore to the Statement of Profit and Loss under the head ''Exceptional Items'' and (b) charged off product development expenditure incurred during the period July 2012 to March 2013 amounting toRs. 121.05 crore to the Statement of Profit and Loss under respective expense heads. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

6. 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.

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

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act;

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

Referred to in paragraph 6 of the Auditors''Report of even date to the members of WOCKHARDT LIMITED on the financial statements for the year ended March 31, 2013.

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

(b) The Company has a program for phased physical verification of all its fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the year and discrepancies noticed on such verification, which were not material, have been properly dealt with in the books of account.

(c) I n our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory and as informed, no material discrepancies were noticed on such physical verification carried out.

(iii) (a) As informed, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii)(b), (c) and (d) of the Order are not applicable.

(b) As informed, the Company has not taken any loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii)(f)and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct any major weakness in the aforesaid internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered during the year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the information and explanations given to us and on the basis of the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees''state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the end of the year, for more than six months from the date they became payable.

(c) According to the records of the Company and as informed to us, there are no dues outstanding of income-tax, sales-tax, wealth- tax, service tax, customs duty, excise duty and cess that have not been deposited on account of any dispute, except as follows:

Name of the Nature of dues Amount statute (Rs. in crore)

Central Excise Reversal of CENVAT credit 0.04 Act, 1944

Penalty for classification 0.37

Differential Duty 2.19

Education Cess 0.03

Penalty for Valuation 0.35

Demand and Penalty for 2.20 classification

Demand and penalty for 4.44 fire at Ankleshwar.

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

Central Excise Act, 1944 April 1999 to August 1999 Commissioner Appeal

February 2001 to February 2003 CESTAT

November 1996 to April 1998 Commissioner

July 2004 to August 2004 Deputy Commissioner

December 2001 to January 2004 Commissioner Appeals

September 1991 to July 1993 CESTAT

April 2005 to March 2009 CESTAT

Name of the Nature of dues Amount statute (Rs. in crore)

Himachal Duty demand notice 12.55 Pradesh Excise under M&TP Act. Act

Aurangabad Demand under Local 10.28 Municipal Body Tax Corporation

Income Tax Act, Demand under 4.05 1961 Section 143(3)

Demand under 12.80 Section 143(3)

Demand under 0.46 Section 143(3)

TDS Assessment order 3.79 u/s 201/201(IA)

Penalty under 3.08 Section 271(1)(c)

Penalty under 2.59 Section 271(1)(c)

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

Himachal Pradesh Excise Act July 2012 to December 2012 Shimla High Court

Aurangabab Municipal Corporation July 2011 to August 2011 Bombay High Court

Income Tax Act, 1961 FY 2003-04 High Court

FY 2006-07 Income Tax Appellate Tribunal

FY 2007-08 Commissioner of Income Tax (Appeals)

April 2007 to March 2011 Commissioner of Income Tax (Appeals)

FY 2003-04 Commissioner of Income Tax (Appeals)

FY 2004-05 Commissioner of Income Tax (Appeals)

Note: Out of the above, amount paid under protest by the Company for Income-tax is Rs. 17.13 crore.

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. Further, the Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xi) (a) In our opinion and according to the information and explanations given to us, considering the loan liabilities being restructured under the aegis of Corporate Debt Restructuring (CDR) Scheme, there has been no default in repayment of principal and interest to CDR lenders as per the terms of CDR Scheme.

(b) With respect to the amount due towards Zero Coupon Foreign Currency Convertible Bonds which were due for repayment in October 2009, the Company has filed a consent decree in the Hon''ble High Court of Bombay and has agreed to pay the FCCB holders, the amounts outstanding along with interest on reducing balance by August, 2012. In accordance with the orders passed by Hon''ble High Court of Bombay, the Company has repaid entire amount along with interest on reducing balance to the FCCB holders by August 2012 and has complied with the orders of Hon''ble High Court of Bombay.

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

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) In our opinion and as explained in Note 46(c) to the financial statements, the terms and conditions of the guarantees given by the Company, for loans taken by its subsidiaries from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which the loans were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis to the tune of Rs. 325.56 crore have been used for long-term investment by way of capital expenditure, Research & Development and repayment of borrowings.

(xviii) 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 Act.

(xix) According to the information and explanations given to us, the Company has created security in respect of debentures outstanding during the year.

(xx) The Company has not raised any money by public issue during the year covered under our audit.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants

Firm Registration No. 103523W

Shailesh Haribhakti

Partner

Membership No. 30823

Place : Mumbai

Date : May 27, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Wockhardt Limited ('the Company') as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003, (as amended), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956' of India (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

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

(ii) In our opinion, the Company has kept proper books of account as required by law, so far as it appears from our examination of those books;

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

(iv) In our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

5. 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 Act in the manner so required and also give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

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

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

ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of the Auditors' Report of even date to the members of WOCKHARDT LIMITED on the financial statements for the year ended March 31, 2012.

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

(b) The Company has a program for phased physical verification of all its fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the year and discrepancies noticed on such verification, which were not material, have been properly dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory and as informed, no material discrepancies were noticed on such physical verification carried out.

(iii) (a) As informed, the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii)(b), (c) and (d) of the Order are not applicable.

(b) As informed, the Company has not taken any loan, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii)(f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct any major weakness in the aforesaid internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered during the year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the information and explanations given to us and on the basis of the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth- tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the end of the year, for more than six months from the date they became payable.

(c) According to the records of the Company and as informed to us, there are no dues outstanding of income- tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess that have not been deposited on account of any dispute, except as follows:

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

Central Excise Reversal of CENVAT 0.04 April 1999 to August 1999 Commissioner Appeal Act, 1944 credit

Penalty for 0.37 February 2001 to February 2003 CESTAT classification

Differential Duty 2.19 November 1996 to April 1998 Commissioner

Education Cess 0.03 July 2004 to August 2004 Deputy Commissioner

Penalty for Valuation 0.35 December 2001 to January 2004 Additional Commissioner

Demand and Penalty 2.20 September 1991 to July 1993 CESTAT for classification

Income Tax Demand under 4.05 FY 2003-04 High Court Act, 1961 Section 143(3)

Demand under 12.80 FY 2006-07 Commissioner of Income Section 143(3) Tax (Appeals)

Demand under 0.46 FY 2007-08 Commissioner of Income Section 143(3) Tax (Appeals)

TDS Assessment 3.79 April 2007 to March 2011 Commissioner of Income order u/s 201/201(IA) Tax (Appeals)

Note: Out of the above, amount paid under protest by the Company for Income tax is Rs. 16.13 crore.

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has not incurred any cash losses during the current financial year but had incurred cash losses during the preceding financial year.

(xi) (a) In our opinion and according to the information and explanations given to us, considering the loan liabilities being restructured under the aegis of Corporate Debt Restructuring (CDR) Scheme, there has been no default in repayment of principal and interest to CDR lenders as per the terms of CDR Scheme.

(b) As explained in Note 48 to the financial statements, with respect to the amount due towards Zero Coupon Foreign Currency Convertible Bonds which were due for repayment in October 2009, the Company has filed a consent decree in the Hon'ble High Court of Bombay and has agreed to pay the FCCB holders, the amounts outstanding alongwith interest on reducing balance by August, 2012. The Company has been depositing with the High Court, the installments as per the dates specified by the Hon'ble High Court.

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

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) In our opinion and as explained in Note 47(c) to the financial statements, the terms and conditions of the guarantees given by the Company, for loans taken by its subsidiaries from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanation given to us, the term loans have been applied for the purpose for which the loans were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis to the tune of Rs. 411.73 crore have been used for long-term investment.

(xviii) 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 Act.

(xix) According to the information and explanations given to us, the Company has created security in respect of debentures outstanding during the year.

(xx) The Company has not raised any money by public issue during the year covered under our audit.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants

FRN No.103523W

Shailesh Haribhakti

Partner

Membership No. 30823

Place : Mumbai

Date : May 22, 2012


Mar 31, 2011

1. We have audited the attached balance sheet of Wockhardt Limited ('the Company') as at March 31, 2011 and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003, (as amended), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'The Companies Act, 1956' of India (the 'Act'), we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

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

(ii) In our opinion, the Company has kept proper books of account as required by law, so far as it appears from our examination of those books;

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

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

5. Without qualifying our opinion, we draw attention

(a) to Note 32 of the financial statements, wherein as explained, Corporate Debt Restructuring (CDR) Scheme is effective from April 15, 2009. The outstanding liabilities of the Company have been substantially restructured under the aegis of CDR Scheme, which extends till 2018.

(b) to Note 36 and 37 of the financial statements, wherein as explained, certain lenders have filed winding up petitions against the Company and the Company has filed affidavit in reply. In one case, the Hon'ble High Court of Bombay has admitted winding up petition filed by certain holders of Zero Coupon Foreign Currency Convertible Bonds and the High Court has granted stay thereon upon appeal by the Company. The matter is sub-judice and outcome of which cannot be currently ascertained. The Company's ability to continue as a going concern is dependent on the successful outcome of the winding up petitions.

(c) to Note 35(c) of the financial statements, wherein as explained, the Company has given corporate guarantee for US$ 250 million syndicate loan obtained by its Swiss subsidiary, which is being rescheduled. Terms and conditions for rescheduling of 31% of the loan are still under negotiation.

6. In respect of crystallized derivative losses oft 1,843.79 million forming part of 'exceptional items', we have relied on appropriate written representations.

1. As explained in Note 35(e) to the financial statements, the Company and its Swiss subsidiary had, on certain derivative contracts with banks/financial institutions, stopped payment of margins called by the banks/financial institutions. The banks/financial institutions, based on the Early Termination clause in the agreement, terminated these contracts and claimed an amount of Rs. 3,322.51 million (including a demand oft 669.15 million as guarantor for derivatives contracts executed by Swiss subsidiary), being the loss incurred on termination of such contracts, which the Company and its subsidiary have disputed.

No provision has been made in the accounts for above amounts, which have been considered as contingent liabilities. The consequential impact upon relevant assets and liabilities and loss for the year is not ascertainable.

8. In our opinion, and to the best of our information and according to the explanations given to us, subject to the matter included in paragraph 6 and 7 above, the effect of which cannot be currently ascertained, the said accounts give the information required by the Act in the manner so required and also give a true and fair view in conformity with the accounting principles generally accepted in India;

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

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

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

ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of the Auditors' Report of even date to the members of WOCKHARDT LIMITED on the financial statements for the year ended 31st March, 2011.

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

(b) The Company has a program for phased physical verification of all its fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the year and discrepancies noticed on such verification, which were not material, have been properly dealt with in the books of accounts.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory and as informed, no material discrepancies were noticed on such physical verification carried out.

(iii) (a) As informed, 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. Accordingly, the provisions stated in paragraph 4 (iii)(b),(c) and (d) of the Order are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions stated in paragraph 4 (iii)(f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct any major weakness in the aforesaid internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs. five lakhs have been entered during the year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business, except that scope needs to be enlarged in respect of Treasury Operations.

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

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

Further, since the Central Government has till date not prescribed the amount of cess payable under Section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the end of the year, for more than six months from the date they became payable.

(c) According to the records of the Company and as informed to us, there are no dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess that have not been deposited on account of any dispute, except as follows:

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

Central Excise Reversal of CENVAT 0.40 April 1999 to August 1999 Commissioner Appeal Act, 1944 credit

Penalty for 3.66 February 2001 to February 2003 CESTAT classification

Differential Duty 21.92 November 1996 to April 1998 Commissioner

Education Cess 0.24 July 2004 to August 2004 Deputy Commissioner

Penalty for Valuation 3.62 December 2001 to January 2004 Additional Commissioner

Demand and Penalty 21.96 September 1991 to July 1993 CESTAT for classification

Income Tax Demand under 36.42 April 2001 to March 2002 High Court Act, 1961 Section 143(3)

Demand under 231.21 April 2005 to March 2006 Commissioner of Income Section 143(3) Tax (Appeals)

Demand under 128.01 April 2006 to March 2007 Commissioner of Income Section 143(3) Tax (Appeals)

TDS Assessment 25.98 April 2007 to March 2009 Commissioner of Income order u/s 201/201 (IA) Tax (Appeals)

Note: Amount paid under protest by the Company and not included above for Income tax are Rs. 202.66 million.

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has incurred cash losses during the current financial year as well as during the preceding financial period. This is without considering the effect of the qualifications in our main report on accumulated losses, net worth, and cash losses, as the resulting financial impact is not quantifiable.

(xi) (a) In our opinion and according to the information and explanations given to us, considering the loan liabilities being restructured under the aegis of Corporate Debt Restructuring (CDR) Scheme and Master Restructuring Agreement being signed by lenders, as per the terms of CDR Scheme, there has been no default in repayment of principal and interest to CDR lenders.

(b) With respect to Foreign Currency Convertible Bonds aggregating Rs. 4,588.23 million which were due for repayment in October 2009, no repayment has been made and as informed, CDR Scheme comprehensively covers FCCB liabilities.

(c) As informed, the Company is in dispute with certain lenders whose liabilities as per books of accounts aggregate Rs. 261.50 million. Further as stated in Note 35(e), the Company has not acknowledged as debt the demand raised on account of unilateral termination of certain derivative contracts. We are unable to comment in respect of such liabilities whether there has been any default in view of the dispute.

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

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) In our opinion and as explained in Note 35(c) to the financial statements, the terms and conditions of the guarantees given by the Company, for loans taken by its subsidiaries from banks or financial institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion, the term loans have been applied for the purpose for which the loans were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short-term basis to the tune of Rs. 2,671.26 million have been used for long-term investment mainly on account of losses incurred during the year and demerger of nutrition business of wholly owned subsidiary into the Company.

(xviii) 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 Act as required by the Corporate Debt Restructuring Scheme. Accordingly, in our opinion, the prices at which such shares have been issued are not prejudicial to the interest of the Company.

(xix) According to the information and explanations given to us, the Company has created adequate security or charge in respect of debentures outstanding during the year.

(xx) The Company has not raised any money by public issue during the year covered under our audit.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants FRN NO.103523W

Shailesh Haribhakti Partner Membership No. 30823

Place : Mumbai Date : May 19, 2011








Mar 31, 2010

1. We have audited the attached Balance Sheet of Wockhardt Limited (the Company) as at March 31, 2010 and also the Profit and Loss Account and the cash flow statement for the period ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

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

(ii) In our opinion, the Company has kept proper books of account as required by law, so far as it appears from our examination of those books;

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

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

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

5. Without qualifying our opinion, we draw attention

(a) to Note 32 of the financial statements, wherein as explained, the Companys outstanding liabilities are being restructured under the aegis of Corporate Debt Restructuring Scheme (CDR) with effect fromApril 15, 2009 and as required by the Scheme, the Master Restructuring Agreement (MRA) and other necessary documents have been executed and are effective.

(b) to Note 36 of the financial statements, wherein as explained, certain lenders have filed winding up petitions against the Company in Bombay High Court and the Company has filed affidavit in reply. The matter is sub judice and outcome of which cannot be currently ascertained.

The Companys ability to continue as a going concern is dependent on the Company being able to successfully implement the actions proposed in the CDR Scheme and outcome of winding up petition in favour of the Company.

6. (a) With regard to outstanding derivative contracts as on March 31, 2010, the premiums aggregating ? 1,843.79 million are unconfirmed and we are informed that the relevant documents are being put in place. The consequential effect of subsequent adjustment/s - if any - on relevant assets and liabilities and loss for the period is not ascertainable.

(b) In respect of crystallized derivative losses of? 11,303.80 million forming part of exceptional items, we have relied on appropriate written representations.

7. As explained in Note 35(e) to the financial statements, the Company had, on certain derivative contracts with banks, stopped payment of margins called by the banks. The banks, based on the Early Termination clause in the agreement, terminated these contracts and claimed an amount of ? 8,483.22 million, being the loss incurred on termination of such contracts, which the Company has disputed and not acknowledged as debt.

No provision has been made in the accounts for above amount, which has been considered as contingent liability. The consequential impact upon relevant assets and liabilities and loss for the period is not ascertainable.

8. In our opinion, and to the best of our information and according to the explanations given to us, subject to the matter included in paragraph 6 and 7 above, the effect of which cannot be currently ascertained, the said accounts give the information required by the Act in the manner so required and also give a true and fair view in conformity with the accounting principles generally accepted in India;

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

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

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

ANNEXURE TO AUDITORS REPORT

Referred to in paragraph 3 of the Auditors Report of even date to the members of WOCKHARDT LIMITED on the financial statements for the period ended 31st March, 2010.

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

(b) The Company has a program for phased physical verification of all its fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the period and discrepancies noticed on such verification, which were not material, have been properly dealt with in the books of accounts.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the period.

(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the period. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory and as informed, no material discrepancies were noticed on such physical verification carried out.

(iii) (a) As informed, 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.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct any major weaknesses in aforesaid internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of ? five lakhs have been entered during the period at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business, except that scope needs to be enlarged in respect of Treasury Operations.

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

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

Further, since the Central Government has till date not prescribed the amount of cess payable under Section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the end of the period, for more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

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

Central Excise Reversal of CENVAT 0.40 April 1999 to August 1999 Act, 1944 credit Penalty for 3.66 February 2001 to February 2003 classification

Differential Duty 21.92 November 1996to April 1998- Education Cess 0.24 July 2004 to August 2004

Penalty for valuation 3.62 December 2001 to January 2004

Demand and Penalty 21.96 September 1991 to July 1993 for classification

Name of the Forum where the Statue dispute is pending

Central Excise Act,1944 Commissioner Appeal

CESTAT

Commissioner Deputy Commissioner Additional Commissioner CESTAT

Name of the Nature of dues Amount Period to which the statute ( In millions) amount relates

Income Tax Demand under 36.42 April 2001 to March 2002 Act, 1961 Section 143(3)

Demand under 47.90 April 2004 to March 2005 Section 143(3)

Demand under 231.21 April 2005 to March 2006 Section 143(3)

Demand under 128.01 April 2006 to March 2007 Section 143(3)

Name of the Statue Forum where the dispute is pending

Income Tax Act, 1961 High Court

Commissioner of Income Tax (Appeals)

Commissioner of Income Tax (Appeals)

Commissioner of Income Tax (Appeals)

(x) In our opinion and according to the information and explanation given to us, the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has incurred cash losses only during the current financial year and not during the preceding financial year. This is without considering the effect of the qualifications in the main report on accumulated losses, net worth, and cash losses, as the resulting financial impact is not quantifiable.

(xi) (a) In our opinion and according to the information and explanations given to us, considering the loan liabilities being restructured under the aegis of Corporate Debt Restructuring (CDR) Scheme and Master Restructuring Agreement being signed by lenders, as per the terms of CDR Scheme, there has been no default in repayment of principal and interest to CDR lenders.

(b) With respect to Foreign Currency Convertible Bonds aggregating ? 4,464.02 million which were due for repayment in October 2009, no repayment has been made and as informed, CDR Scheme comprehensively covers FCCB liabilities.

(c) As informed, the Company is in dispute with certain lenders whose liabilities as per books of accounts aggregate ? 1,490.70 million. Further, as stated in Note 35(e), the Company has not acknowledged as debt the demand raised on account of unilateral termination of certain derivative contracts. We are unable to comment in respect of such liabilities whether there has been any default in view of the dispute.

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

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) 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 or financial institutions during the period, are not prejudicial to the interest of the Company.

(xvi) In our opinion, the term loans have been applied for the purpose for which the loans were raised.

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

(xviii) 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 Act as required by the Corporate Debt Restructuring Scheme. Accordingly, in our opinion, the prices at which shares have been issued are not prejudicial to the interest of the Company.

(xix) According to the information and explanations given to us, the Company has created adequate security or charge in respect of debentures outstanding during the period.

(xx) The Company has not made any public issues during the period covered under our audit.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the period, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants FRN No. 103523W

Shailesh Haribhakti

Partner

Membership No. 30823

Place : Mumbai Date : May 20, 2010

 
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