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Auditor Report of Bafna Pharmaceuticals Ltd.

Mar 31, 2019

STANDALONE - AUDITORS'' REPORT_

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF BAFNA PHARMACEUTICALS LIMITED Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of Bafna Pharmaceuticals Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, notes to financial statements and the significant accounting policies and other explanatory information (hereinafter referred to as" the standalone financial statements").

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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("IndAS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Companies Act, 2013.Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia(ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. 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.

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 Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the IndAS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significantaudit findings, including any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Key Audit Matter

Auditor''s Response

Compliance with IND AS 36 and IND AS 113:

With a view to resolve the Insolvency and Bankruptcy proceedings initiated on the Company, the Promoter had submitted Resolution plan which was approved by NCLT, Chennai bench. The Resolution plan had proposed restructuring and restating of all assets liabilities which would have resulted in write offs as well as write backs in the books of accounts. However, due to appeal by an aggrieved party, NCLAT has stayed the handing over of the Corporate Debtor to the Resolution applicant and has also instructed that the status of the corporate debtor be maintained as a Going concern.

In view of the above, the Company did not test the assets for recovery/impairment as per principles of IND AS 36 nor restated them at fair values as per IND AS 113.

Similar is the case of non-restatement at fair values in the case of current liabilities.

The Company has deferred the above to be carried out in the ensuing financial year (Ref: Foot note no. 5 of Audited Financial results as well as Note No.3 of IND AS notes to Financial Statements)

We have given a modified opinion in our "Independent Auditors'' report on the standalone financial results pursuant to clause 33 of SEBI (Listing obligations and disclosure requirements) Regulations 2015 as follows:

a. Major Components of Current Assets - Receivables outstanding for over one year, Long outstanding Advances to suppliers besides Stock of spares and Stores, which have all not been tested for recovery/ impairment as per IND AS 36, consequently not restated at fair values in accordance IND AS 113 and not provisioned in the accounts.

b. Major Components of Current Liabilities - Sundry creditors whose balances are yet to be confirmed, hence not restated at fair values in accordance with IND AS 113.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (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.

1. As required by Section 143(3) of the Act, based on our audit 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 including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books ofaccount.

d) In our opinion, the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,2014, except for the modified opinion expressed under Key Audit matter:

c. Major Components of Current Assets - Receivables outstanding for over one year, Long outstanding Advances to suppliers besides Stock of spares and Stores, which have all not been tested for recovery/impairment as per IND AS 36, consequently not restated at fair values in accordance IND AS 113 and not provisioned in the accounts.

d. Major Components of Current Liabilities - Sundry creditors whose balances are yet to be confirmed, hence not restated at fair values in accordance with IND AS 113.

e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".

g) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

h) 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, as amended in our opinion and to the best of our information and according to the explanations given toes:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

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

2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

We have audited the internal financial controls over financial reporting of BAFNA PHARMACEUTICALS LIMITED ("the Company") as of March 31, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

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

Auditor''s Responsibility

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

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

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

Meaning of Internal Financial Controls Over Financial Reporting

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

Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

Inouropinion,tothebestofourinformationandaccordingtotheexplanationsgiventous, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, except for the following areas:

a. Certain Balances of Debtors, Creditors and Deposits with Corporate bodies are subject to confirmation.

b. Balances pertaining to Advances given to suppliers for supply of materials and others remain unconfirmed.

However the company has an established set of "internal control over financial reporting criteria" duly taking into consideration the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

ANNEXURE ''B'' TO the Independent Auditors'' Report on the IND AS Financial Statements of BAFNA PHARMACEUTICALS LIMITED

On the basis of such checks as we considered appropriate and according to information and explanations given to us during the course of audit, we report that:

i. In respect of the Company''s fixed assets:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification. In our opinion the frequency of verification is reasonable

(c) According to the information and explanations given to us, the records examined by us, we report that, the title deeds, comprising all the immovable properties of land and buildings are held in the name of the Company as at the balance sheet date.

ii. a) As explained to us, inventories have been physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. The Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

The maintenance of Stocks of Stores and spares requires to be assessed in respect of usefulness and value carried in the books of accounts.

iii. According the information and explanations given to us, the Company had granted unsecured loans to its subsidiary listed in the Register maintained under section 189 of the companies act, 2013. Since the subsidiary did not have any operations for the past few years, and has not been a going concern, the loan has been written off during the year with the approval of the Board.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

v. The Company has not accepted deposits during the year and does not have any unclaimed deposits as at March 31, 2019 and therefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company.

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

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

(a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company has not been regular in depositing the undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income Tax, TDS and Service Tax. However, the Company has has been regular in remittance of Goods & Service Tax, Custom Duty, Excise Duty, Value Added Tax, cess and other material statutory dues, as applicable, with the appropriate authorities. During the course of our audit, we observed certain instances of non-deduction of TDS on eligible payments made during the year.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues f income tax, sales tax, service tax, duty of customs and duty of excise duty, value added tax as at 31^st March 2019 which have not been deposited, are as follows:

Name of the statue	Nature of dues	Amount (Rs.in Lakhs)	Payment to which the amount relates	Due date	Date of payment
EPF & MP Act 1952	PF Contribution	233.14	Jan 2016 to March 2019	15^th Day of the following month	Not paid
ESI Act 1948	ESI Contribution	40.43	June 2016 to March 2019	21st Day of the following month	Not paid
Service Tax	Service Tax	19.02	June 2016 to March 2019	05th Day of the following month	Not paid
Income Tax Act 1961	TDS	14.83	April 2017 to March 2019	07th Day of the following month	Not paid
Income Tax Act 1961	Income Tax Dues	892.80	AY 2015-16	31^st March 2015	Not paid

viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of loans or borrowings to State Bank of India, and was classified as Nonperforming asset as of March 31, 2017 itself, and the same position continues as at the date of Balance sheet under audit. The Company has also availed facilities from other banks namely, IDBI Bank Ltd and Development Credit Bank, Bank of Ceylon and DBS Bank Limited for working capital purposes. The Company has not taken loans or borrowing from Government and has not issued debentures during the year.

ix. During the year, an Operational Creditor filed under Section 9 of The Insolvency and Bankruptcy Code 2016 a Petition with The National Company Law Tribunal (NCLT), Single Bench, Chennai which was admitted as CP/682/IB/2017 against the Company. The Hon''ble NCLT, Single Bench, Chennai passed an order on 16^thJuly 2018 for initiation of Corporate Insolvency Resolution Process (CIRP) against the Company. Committee of Creditors (COC) approved Resolution plan was submitted by the promoter was in turn approved by the Hon''ble NCLT, Chennai on 1^st February 2019. However, an aggrieved shareholder filed an appeal with Hon''ble NCLAT (National Company Law Appellate Tribunal), and the handing over of corporate debtor to the resolution applicant was stayed by them on 28^th February 2019. Post several hearing proceedings, which were held between the financial year end and the date of this report, the final judgment is reserved to be passed by the Hon''ble NCLAT, New Delhi.

x. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause 3 (ix) of the Order is not applicable to the Company.

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

xii. In our opinion and according to the information and explanations given to us, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.

xiii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.

xv. As per the provisions of clause 3 (xiv) of the order and according to the information and explanations given to us, the Company had made preferential allotment of 50,00,000 equity shares or private placement of shares during the previous year and all the requirements of section 42 of Companies Act, 2013 were complied with and amount raised has been used for the purpose for which funds were raised. . The Company had already obtained in principle approval and during the year, have obtained final approval of 50,00,000 equity shares which were allotted on preferential basis from both BSE Ltd and National Stock Exchange of India Limited.

xvi. In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its directors and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

xvii. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act,1934. Accordingly, the provisions of clause 3(xvi) of the Order is not applicable to the Company.

For R.SATHYANARAYANAN & CO

Chartered Accountants

(Firm''s Registration No.003656S)

Sd/-

R. SATHYANARAYAN

Place : Chennai Partner

Date : 27.05.2019 (Membership No.028377)

Mar 31, 2016

THE MEMBERS OF BAFNA PHARMACEUTICALS LIMITED ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Bafna Pharmaceuticals Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, 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

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 the true and fair view of the financial position, financial performance and cash flows of the Company with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of the appropriate accounting policies, making judgments and estimates that are reasonable and prudent, and the 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.

AUDITORS'' RESPONSIBILITY

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

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

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

OPINION

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

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2016;

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

a. We have 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, 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013

e. On the basis of the written representations received from the directors as on March 31, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect to the other matters included in the auditor''s report and to the best of our information and according to the explanation given to us.

1) The company has disclosed the impact of pending litigation on its financial position in its financial statement.

2) The company has made provision, as required under the applicable law or Accounting Standards, for material foreseeable losses, if any, on long term contracts including derivative contracts.

3) There has been no delay in transferring amounts, required to be transferred, to the investor''s education and protection fund by the company.

The Annexure referred to in paragraph 1 of Our Report of even date to the members of BAFNA PHARMACEUTICALS LIMITED. On the accounts of the Company for the year ended 31^st March, 2016.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

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

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 189 of the Companies Act, 2013. Therefore the provision of clause 3(3a), (3b) and (3c) of the said order are not applicable to the Company.

4. In our opinion, and according to the information and explanations given to us, the Company has not given any loan nor made any investment and not provided guarantee or any security as such the provisions of Section 185 and 186 of the Companies Act, 2013 is not applicable on the Company.

5. The Company has not accepted any Deposits from the public within the meaning of section 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified.

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

7. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is irregular in depositing the undisputed statutory dues, including provident fund, employees'' state insurance, income tax. TDS deducted on various parties.

Name of the statute	Nature of dues	Amount (Rs.)	Period to which the amount relates	Due date	Date of Payment
EPF & MP Act, 1952	PF Contribution	2306710	Dec, 15 to Mar, 16	15^th Day of Following Month	Not Paid
E.S.I. Act, 1948	ESI Contribution	172402	Feb,16 to Mar, 16	21^st Day of Following Month	Not Paid
Income Tax Act, 1961	TDS	4144090	Oct, 15 to Mar. 16	7^th Day of Following Month	Not Paid
Income Tax Act, 1961	Income Tax Dues	44674037	Asst/y 2015-16	31^st Mar, 15	Not Paid

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, service tax, duty of customs and duty of excise duty, value added tax as at [balance sheet date] which have not been deposited on account of a dispute, are as follows:

Name of the statute

Nature of dues

Amount

(Rs.)

Period to which the amount relates

Forum where the dispute is pending

Income Tax Act, 1961

Income Tax Dues

Rs. 11,83,300/-

A/Y 2013-14

CIT(A),

Chennai

8. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government as at the balance sheet date.

9. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(9) of the Order are not applicable to the Company.

10. 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 material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

11. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

12. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(12) of the Order are not applicable to the Company.

13. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

14. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review³⁹. Accordingly, the provisions of Clause 3(14) of the Order are not applicable to the Company.

15. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(15) of the Order are not applicable to the Company.

16. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(16) of the Order are not applicable to the Company.

For ABHAY JAIN & Co.,

Chartered Accountants

(FRN. 000008S)

Place: Chennai (A K JAIN)

Date: 30.05.2016 Partner

M No 70224

Mar 31, 2015

We have audited the accompanying financial statements of Bafna Pharmaceuticals Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, 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

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 the true and fair view of the financial position, financial performance and cash flows of the Company 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 the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of the appropriate accounting policies, making judgements and estimates that are reasonable and prudent, and the 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.

AUDITORS' RESPONSIBILITY

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

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

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

OPINION

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

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

(c) In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order, 2015 (the Order) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. We have 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, 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013

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

f. With respect to the other matters included in the auditor's report and to the best of our information and according to the explanation given to us.

1) The company has disclosed the impact of pending litigation on its financial position in its financial statement.

2) The company has made provision, as required under the applicable law or Accounting Standards, for material foreseeable losses, if any, on long term contracts including derivative contracts.

3) There has been no delay in transferring amounts, required to be transferred, to the investor's education and protection fund by the company.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of BAFNA PHARMACEUTICALS LIMITED. On the accounts of the Company for the year ended 31st March, 2015.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

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

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

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 189 of the Companies Act, 2013. Therefore the provision of clause 3(iii), (iiia) and (iiib) of the said order are not applicable to the Company

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. The Company has not accepted any Deposits from the public within the meaning of section 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified.

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

7. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities.

(b)According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, wealth tax, service tax, sales tax, customs duty and excise duty and cess as on 31st of March, 2015 which have not been deposited on account of a dispute, are as follows:

Â© There is no amount required to be transferred by the company to the Investor Education and Protection Fund Account in accordance with provision of the Companies Act and the rule made there under.

8. The Company has no accumulated loss at the end of the financial year ended as on 31st March, 2015 and not incurred any cash loss in the financial year ended on that date or in the immediately preceding financial year.

9. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

10. 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 material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For ABHAY JAIN & Co., Chartered Accountants (FRN. 000008S)

Place: Chennai (A K JAIN) Date: 29.05.2015 Partner M No 70224

Mar 31, 2014

We have audited the accompanying financial statements of Bafna Pharmaceuticals Limited (the Company), which comprise the Balance Sheet as at March 31, 2014, 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

The Company''s 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 notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS'' RESPONSIBILITY

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

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

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

OPINION

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

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

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

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

c. The Balance Sheet, 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013

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

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of BAFNA PHARMACEUTICALS LIMITED. On the accounts of the Company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

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

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

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted / taken any loans, secured or unsecured, to / from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act and exceeding five lakhs rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the time.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956 and the provision of Clause VI of the Paragraph 4 of the order is not applicable to the company.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

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

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities.

(b)According to the information and explanations given to us there were undisputed amounts payable in respect of income tax of Rs. 97.61 lakhs and Profit Distribution Tax of Rs. 18.25 Lakhs as on 31st March 2014 which were paid subsequently, other than these Wealth tax, service tax, sales tax, customs duty and excise duty and cess were not in arrears as on 31st of March, 2014 for a period of more than six months from the date they became payable.

10. The Company does not have accumulated loss and has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

12. According to the information and explanations given 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.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not trading in Shares, Mutual funds & other Investments. In case of subsidiary, Proper records & timely entries have been maintained in this regard & further investments specified are held in their own name.

15. According to the information and explanations given to us, the Company has given corporate Guarantee to the extent of Rs. 6.50 Crores to M/s. Bank of Ceylon on behalf of M/s. Bafna Lifestyles Remedies Limited, according to the information and explanation given to us , we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

16. The company has raised new term loan during the year. The Term loans outstanding at the beginning of the year and those raised during the year have been applied for the purpose for which they were raised.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year nor we have been informed of such case by the management.

For ABHAY JAIN & Co. Chartered Accountants FRN:000008S

A K JAIN Place: Chennai (Partner) Date: 30.05.2014 M No. :070224

Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

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

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

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

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

Opinion

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

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

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

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

Report on other Legal and Regulatory Requirements:

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

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

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

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

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 Companies Act, 1956.

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.

The Annexure referred to in paragraph 1 of Our Report of even date to the members of BAFNA PHARMACEUTICALS LIMITED on the accounts of the company for the year ended 31st March, 2013.

On the basis of such checks, as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no fixed asset has been disposed during the year and therefore does not affect the going concern status.

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

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

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted / taken any loans, secured or unsecured, to / from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii (c), iii (d), iii (f) and iii (g) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to us and in our opinion, the transaction made in pursuance of contract/ arrangement entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/-, in respect of each party during the year have been made in prices which appear reasonable as per information available with the Company.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956. And the provision of Clause VI of Paragraph 4 of the Order is not applicable to the Company.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. We have broadly reviewed the Cost Records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rule 2011, prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of the opinion that prima facie the prescribed Cost records have been maintained. We have however, not made a detailed examination of the Cost Records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

10. The Company does not have any accumulated loss and has not incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. According to the information and explanations given 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.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this Clause XIII of Paragraph 4 of the Order is not applicable to the Company.

14. According to information and explanations given to us, the Company is not trading in Shares, Mutual funds & other Investments. Hence, the provision of Clause XIV of Paragraph 4 of the Order is not applicable to the Company.

15. The Company has given Corporate Guarantee to the extent of Rs. 6.50 Crores to M/s. Bank of Ceylon on behalf of Bafna Lifestyles Remedies Limited, according to the information and explanations given to us, we are of the opinion that the Terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

16. The Company has raised new Term loans during the year. The Term loans outstanding at the beginning of the year and those raised during the year have been applied for the purpose for which they were raised.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. The Company issued 23,18,000 Share Warrants on 17.03.2011 which was due for conversion during the year under audit. According to the information and explanation given to us the company converted and allotted 2,75,000 equity shares and the balance of 20,43,000 share warrants were forfeited. We also report that the Company has not made any preferential allotment of shares during the year to parties and companies covered in the Register maintained u/s 301 of the Companies Act, 1956.

19. The Company has no outstanding debentures during the period under audit. Hence, the provision of Clause XIX of Paragraph 4 of the Order is not applicable to the Company.

20. The Company has not raised any money by public issue during the year. Hence, the provision of Clause XX of Paragraph 4 of the Order is not applicable to the Company.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For ABHAY JAIN & Co.,

Chartered Accountants

FRN: 000008S

A K JAIN

(Partner)

Membership No: 70224

Place: Chennai

Date: 20.05.2013

Mar 31, 2012

1. We have audited the attached Balance Sheet of M/S. BAFNA PHARMACEUTICALS LIMITED as at 31st March, 2012 and the Profit & Loss Account of the company 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 have 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 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, we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order;

(i) Further to our comments in the annexure referred to above, we report that: We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for of the audit; In our opinion proper books of accounts as required by law have been kept by the company, so far as appear from the examination of the books.

(ii) The Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account.

(iii) In our opinion, the Balance Sheet and Profit & Loss account dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 212 of the Companies Act 1956.

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

(v) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet of the state of affairs of the company as at 31st March, 2012 and

b) In the case of the Profit and Loss Account of the Profit for the year ended on that date.

c) In the case of Cash Flow Statement of Cash Flow for the Year ended as of that date.

ANNEXURE REFERRED TO THE AUDITORS' REPORT REFERRED TO IN PARAGAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF M/S BAFNA PHARMACEUTICALS LIMITED, CHENNAI ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2012.

(i) (a)The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. On the basis of information available except in respect Grantlyon Unit where, the fixed assets register is being maintained.

(b)All the fixed Assets have been physically verified by the management during the year. There is a regular programme of verification which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c)The Company has not disposed off any substantial part of fixed assets so as to affect its going concern status.

(ii) (a) According to information and explanation given to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories 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 record of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) According to Information and Explanation given to us, the company has not taken any loan secured/ Unsecured from the company/ firm/or other parties covered in the Register Maintained U/S 301 of the Companies Act, 1956.

(b) According to the information and explanation given to us, during the year, the company has not granted any loan to a company, firm or other parties covered in the Register maintained U/S 301 of the Companies Act, 1956.

(c) According to information and explanations given to us, the loans and advances granted is interest free and in the opinion of the Management of the company, it is not prima facie prejudicial to the interest of the company.

(d) According to information and explanations given to us, there is no overdue amount of loans taken from or granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanation given to us, there are adequate Internal Control Procedures 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. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that the

transactions that need to be entered into the register maintained under section 301 of Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contracts or arrangements entered in the register maintained under section

301 of the Companies Act, 1956 and exceeding the value of five lakhs rupees in respect of any party covered during the year have been made at prices which are reasonable having regard to 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 deposit from the public during the year under report.

(vii) In our opinion, and according to the information and explanations given to us, company has an Internal Audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Vat, Wealth Tax, Custom Duty, Excise Duty , Cess and other material statutory dues as applicable

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there were no dues of Sales Tax, Income Tax, Excise Duty, Custom Duty, Wealth Tax and cess, which have not been deposited on account of any dispute.

(x) The company does not have accumulated losses at the end of the financial year. 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 institutions and bank.

(xii) We are of the opinion that the company has not granted loans or 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 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 are not applicable to the company.

(xv) In our opinion, the terms and conditions on which the company has given guarantees for Rs.6.50 Crores for loans taken by M/s. BAFNA LIFESTYLES REMEDIES LIMITED from M/s. AXIS Bank is not prejudicial to the interest of the company.

(xvi) In our opinion the term loans have been applied for the purpose for which they 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 terms basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

(xviii) (a)According to the information and explanation given to us, the company has made preferential allotment of 9,00,000 Equity Shares of the face value of Rs.10/- each at a premium of Rs.40/- per share aggregating to Rs.4,50,00,000/- to strategic Investors and they are not covered in the register maintained U/s 301 of the Companies Act,1956.

(b) Further, 25,00,000 Convertible Share Warrants have been allotted to Promoters & Strategic Investors on 13th January, 2012 convertible into equal number of Equity Shares of face value of Rs.10/- each at a premium of Rs.40/- per warrant. For the aforesaid Share Warrants, the allottee has already paid Rs.12.50/- per Warrant aggregating to Rs.3,12,50,000/-. For the aforesaid Warrants right to exercise conversion option is available within 18 months from the date of allotment of Warrants.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

(xx) The Company has not raised any money by public issue during the year accordingly the provision of Paragraph 4(xx) of the Companies (Auditor's Report) order 2003 is not applicable.

(xxi) According to information and explanation given to us, that no fraud on or by the company have been noticed or reported during the course of our audit.

for ABHAY JAIN & CO, Chartered Accountants FRN:000008S

(A.K.JAIN) Partner M. NO 70224

Date: 30.05.2012

Place: Chennai

Mar 31, 2011

1. We have audited the attached Balance Sheet of M/S. BAFNA PHARMACEUTICALS LIMITED as at 31st March, 2011 and the Profit & Loss Account of the company 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 issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order;

(i) Further to our comments in the annexure referred to above, we report that: We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for of the audit; In our opinion proper books of accounts as required by law have been kept by the company, so far as appear from the examination of the books.

(ii) The Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account.

(iii) In our opinion, the Balance Sheet and Profit & Loss account dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act 1956.

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

(v) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet of the state of affairs of the company as at 31st March 2011: and

b) In the case of the Profit and Loss Account of the Profit for the year ended on that date.

c) In the case of Cash Flow Statement of Cash Flow for the Year ended as of that date.

Annexure referred to the auditors' report referred to in Paragraph 3 of our report of even date to the members of M/S Bafna Pharmaceuticals Limited, Chennai on the accounts for the year ended 31st March 2011.

(i) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. On the basis of information available except in respect Grantlyon Unit where, the fixed assets register is being maintained.

(ii) All the fixed Assets have been physically verified by the management during the year. There is a regular programme of verification which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification. The Company has not disposed off any substantial part of fixed assets so as to affect its going concern status.

(iii) (a) According to information and explanation given to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories 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 record of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) According to Information and Explanation given to us, the company has not taken any loan secured/ Unsecured from the company/ firm/or other parties covered in the Register Maintained U/S 301 of the Companies Act 1956.

(b) According to the information and explanation given to us, during the year, the company has granted loan of Rs.16,10,376/- to a company covered in the Register maintained U/S 301 of the Companies Act 1956.The year end balance of the loan so granted to such company was Rs.16,10,376/-.

(c) According to information and explanations given to us, the loans and advances granted is interest free and in the opinion of the Management of the company, it is not prima facie prejudicial to the interest of the company.

(d) According to information and explanations given to us, There is no over due amount of loans taken from or granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act 1956.

(iv) In our opinion and according to the information and explanation given to us, there are adequate Internal Control Procedures 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. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

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

(b) In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of five lakhs rupees in respect of any party covered during the year have been made at prices which are reasonable having regard to 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 deposit from the public during the year under report.

(vii) In our opinion, and according to the information and explanations given to us, company has in house Internal Audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the Prescribed accounts and records have been made and maintained.

(ix) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, VAT, wealth tax, custom duty, excise duty, cess and other material statutory dues as applicable.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March 2011 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us there were no dues of sales tax, income tax, excise duty, custom duty, wealth tax, and cess, which have not been deposited on account of any dispute.

(x) The company does not have accumulated losses at the end of the financial year. 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 institutions and bank.

(xii) We are of the opinion that the company has not granted loans or 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 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 are not applicable to the company.

(xv) In our opinion, the terms and conditions on which the company has given guarantees Rs.6.50 Crores for loans taken by M/s. BAFNA LIFESTYLES REMEDIES LIMITED from M/s. AXIS Bank is not prejudicial to the interest of the company.

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

(xvii) According to the information and explain given to us and on an overall examination of the balance sheet of the company, we report that the no funds raised on short terms basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

(xviii) (a )According to the information and explanation given to us, the company has made preferential allotment of 15,00,000 Equity Shares to the Strategic Investors on 17th March, 2011 of the face value of Rs.10/- each at a premium of Rs.37. 30/- per share aggregating to Rs.7,09,50,000/-.

(b) Further, 23,18,000 Convertible Share Warrants have been allotted to Promoters & Strategic Investors on 17th March, 2011 convertible into equal number of Equity Shares of face value of Rs.10/- each and premium of Rs.37.30 Per Share. For the aforesaid Share Warrants, the allottee has already paid Rs.11.83/- per Warrant aggregating to Rs.27410350/-. For the aforesaid Warrants right to exercise conversion option is available within 18 months from the date of allotment of Warrants.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

(xx) The Company has not raised any money by public issue during the year accordingly the provision of Paragraph 4(xx) of the Companies (Auditor's Report) order 2003 is not applicable.

(xxi) According to information and explanation given to us, that no fraud on or by the company have been noticed or reported during the year.

For ABHAY JAIN & CO

Chartered Accountants

(A.K.JAIN)

Partner

M.No. 70224

Date: 30.05.2011

Place: Chennai

Mar 31, 2010

1. We have audited the attached Balance Sheet of M/S-Bafna Pharmaceuticals Limited as at 31st March, 2010 and the Profit & Loss Account of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) order, 2003 issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure, a statement on the matters specified in paragraph 4 & 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 audit; IL In our opinion, proper books of accounts as required by law have been kept by the company so far as it appears from our examination of those books; lit. The Balance Sheet, Profit S 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 and Profit & Loss account 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 from the directors, as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 2 74 of the Companies Act, 19S6; vi. In our opinion and to the best of our information and according to the explanations given to us the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

1. In the case of the Balance Sheet of the state of affairs of the company as at 31st March, 2010;

2. In the case of the Profit and Loss Account, of the Profit for the year ended on that date; and

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

Annexure referred to the auditors report referred to in paragraph 3 of our report of even date to the members of M/s Bafna Pharmaceuticals Limited, Chennai on the accounts for the year ended 31st March, 2010,

i. (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of information available, except in respect Grantlyon Unit, where, the fixed assets register is to be updated.

(b) All the fixed assets have been physically verified by the management during the year There is a regular programme of verification, which in our opinion Is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off any substantial part of fixed assets so as to affect its going concern status.

ii, (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories 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 record of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

Hi. (a) The Company has granted a loan to a body corporate covered in the register maintained under section 301 of the Companies Act, 1956 (the Act). The maximum anount outstanding during the year was Rs,22,85,376/- and the year ended balance of such loans amounted to Rs. 22,85,376/-. Other than above, the Company has not granted any loans, secured or unsecured, to companies, firms or parties covered in the register maintained under Section 301 of the Act,

(b) In our opinion, the rates of interest and terms and conditions on which loans have been taken /given have not prima facie prejudicial to the interest of the company.

(c) The company is regular in repaying the principal amount as stipulated and has been regular in the payment of interest. The parties have repaid the principal amounts as stipulated and have been regular in thepayment of interest

(d) There is no overdue amount of loans taken from or granted to companies, firms or other parlies listed in the register maintained under section 301 of the Companies Act, 1956.

iv. In our opinion and according to the information and explanation given to us, there are adequate Intern Control Procedures commensurate with the size of tte company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls*

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

(b) In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of five takhs rupees in respect of any party covered during the year have been made at prices, which are reasonable having regard to 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 deposit from the public during the year under report. vi: In our opinion, and according to the information and explanations given to us, company has in house Interna) Audit system commensurate with the size and nature of its business.

viii, We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the Prescribed accounts and records have been made and maintained.

ix, (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, incometax, sales tax, VAT, wealth tax, custom duty, excise duty, cess and other material statutory dues as applicable,

(b) According to the information and explanations given to us, no undisputed amounts payable In respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March, 2010 for a period of more than six months from the date they became payable.

(c} According to the information and explanations given to us there were no dues of sales tax, income tax, excise duty, custom duty, wealth tax, and cess, which have not been deposited on account of any dispute.

x. The company does not have accumulated losses at the end of the financial year The company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year

xl In our opinion and according to the information andexplanations given to us, the company has not defaulted in repayment of dues to financial institutions and bank.

xii We are of the opinion that 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 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 clause4

(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable. xv. According to the information and explanation given to us, the Company has not given guarantee for loans taken by others from banks or financial institutions. Accordingly, paragraph 4

(xv) of the Order is not applicable.

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

xvii. According to the information and explanation given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short terms basis have been used for long term investment. No long term funds have been used to finance short term assets, xviit. 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 Act.

xix. According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures. xx. The company has not raised any money by public issue during the year Accordingly, paragraph 4

(xx) of the order is not applicable

xxi. According to information and explanation given to us, that no material fraud on or by the company have been noticed or reported during the course of our audit*

For ABHAY JAIN &CO-

Chartered Accountants

(A.K.JAIN)

Partner

Place: Chennai M.No.70224

Date: 28/05/2010

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