Auditor Report of Pharmaids Pharmaceuticals Ltd.

Mar 31, 2013

Report on Financial Statements

We have audited the accompanying financial statements of PHARMAIDS 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 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.

Auditor''s Responsibility

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

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

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

Opinion

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

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

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

and

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

Emphasis of Matter

We draw attention to Note No. 14.2 to the financial statements regarding non confirmation / reconciliation of balances of Sundry Debtors, Sundry Creditors, Un-Secured Loans and Advances, the impact of which is unascertained. Our opinion is not qualified in respect of this matter.

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

Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our Report of even date On the basis of such checks as we considered appropriate and according to the information and explanations 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 on the basis of available information.

(b) All the assets have not been physically verified by the management during the year, but 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) 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 assumption.

2. (a) As explained to us, inventories have been physically verified during the year by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

(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 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 loans, secured or unsecured, to companies, firms or other parties listed in the register to be maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses 3(b), 3(c) and 3(d) of the order are not applicable to the Company.

(e) According to the information and explanations given to us, during the year the company has taken unsecured loan of Rs. 4.95 Lakhs from three parties and repaid Rs 0.38 Lakhs to two parties and total amount outstanding as on 31st March2013 was Rs.16.08 Lakhs payable to six parties covered in the register maintained under section 301 of the Companies Act, 1956.

(f) In our opinion, the rate of interest and other terms and conditions on which loans were taken from Companies, Firms, or other parties covered under the register maintained under Sec. 301 of the Companies Act. 1956, are not prima facie, prejudicial to the interest of the Company.

(g) According to the information and explanations given to us, the company is regular in repayment of the principal and interest wherever applicable.

4. In our opinion and according to the information and explanations given to us, there is 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 for the 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 transactions made in pursuance of contracts or arrangements that need to be entered in the register to be maintained under Section 301 of the Act have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the

Register maintained under Section 301 of the Companies Act and exceeding value ofRs. Five Lakh in respect of each party during the financial year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. During the year, the company has not accepted any deposits from the public within the meaning of Sec. 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules frame there under.

7. In our opinion, the Company has an internal audit system by their own staff, which needs to be further strengthened.

8. We have broadly reviewed the books of accounts relating to material, 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

Sec. 209(i)(d) and are of the opinion that prima-facie prescribed accounts and records have been made and maintained. We have not however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident Fund, Investor education and protection fund, Employees state Insurance, Income tax, wealth tax, sales tax, customs duty, Excise duty, cess and other Material statutory dues applicable to it, except Service Tax. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2013 for a period of more than six months from the date of becoming payable except Service Tax.

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

10. In our opinion the accumulated losses of the company are not more than fifty percent

For Laxminiwas & Jain Suresh Kumar Jain

Place: Hyderabad Chartered Accountants Partner

Date: 30-05-2013 Firm Reg No. 001859S (M. No.:018465)

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of PHARMAIDS PHARMACEUTICALS LIMITED as at 31 st March 2012 the Profit And loss Account and also the Cash Flow Statement for the year ended on that annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit

2. We conducted our audit in accordance with the auditing standards generally accepted 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 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 of our opinion.

3. As required by the Companies (Auditor's Report) Order 2003 issued by the Central Government of India in terms of sub-sec (4A) of Sec.227of the companies Act.1956 of India. 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:

(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 accounts as required by law have been kept by the company so far as appears from our examination of the books;

(c) TheBalarHMSheet'ProfitandLDssAccountandCashRowStatementdeattwithby this report are in agreement with the books of account

(d) In our opinion' the Balance Sheet' Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standard referred to in Sub Sec (3C) of Sec.211 of the Companies Act' 1956;

(e) On the basis of written representations received from the directors as on 31.03.2012 and taken on record by the board of Directors' we report that none of the Director is disqualified as on 31 -03- 2012 from being appointed as a Director in terms of clause (g) of sub section (1) of the section 274 of the Companies Act 1956.

(f) In our opinion and to the best of our information and according to the explanation given to us' the said account read with the accounting policies and notes forming part of accounts appearing in Subject to note No. 14.2 regarding non confirmation / reconciliation of balances shown Sundry debtors' Sundry Creditors' Un-Secured Loans' Loans and Advances' the impact of which is unascertained' give the information required by 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.

(0 In the case of the Balance Sheet of the state of affairs of the Company as at 31.03-2012 (ii) In the case of Profit and Loss account of the Profit for the year ended on that date and (ii) In the case of Cash flow statement' of the Cash flows for the year ended on that date.

ANNEXURE TO AUDITOR'S REPORT Ref. PHARMAIDS PHARMACEUTICALS LIMITED

(Referred to in paragraph 3 of our report of even date)

(i) (a) The Company is maintaining proper records showing full particulars including Quantitative details and situation of Fixed Assets.

(b) All the assets have not been physically verified by the management during the year' but 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) According to the information and explanations furnished to us' the company has not disposed off a substantial part of its fixed assets during the year.

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

(b) The procedures of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and the nature of the business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (a) The Company has not granted loans' secured or unsecured' to Companies' Firms' or other parties covered in the register maintained under Sec. 301 of the Companies Act. 1956.

(b) During the year the Company has taken unsecured loans' amounting to Rs 30975007- from 7 parties covered in the register maintained under section 301 of the Companies Act' 1956. The balance payable as on 31.03.2012 is Rs. 1150337/-.

(c) In our opinion' the rate if interest and other terms and conditions on which loans were taken from Companies' Firms' or other parties covered under the register maintained under Sec. 301 of the Companies Act 1956' are not prima facie' prejudicial to the interest of the Company.

(d) According to the information and explanation given to us' the company is regular in repayment of the principle and interest wherever applicable.

(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 the purchase of inventory' fixed assets and with regard to the sale of goods and services. During the course of our audit' we have not observed any continuing failure to correct 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 Sec. 301 of the Companies Act. 1956 have been so entered. (b) In our opinion and according to the information and explanations given to us' there is no transaction made in pursuance of contracts or arrangements entered in the register maintained under Sec. 301 of the Companies Act. 1956 and exceeding the value of Rs. Five lakhs in respect of any party during the year.

(vi) In our opinion and according to the information and explanations given to us' the company has not accepted any deposits from the public within the meaning of Section 58A & 58 AA or any other relevant provisionsoftheCompaniesAct'1956andrulesframed there under.

(vii) In our opinion' The Company has an internal audit system by their own staff' which needs to be further strengthened.

(viii) We have broadly reviewed the books of accounts relating to material 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 Sec. 209(i)(d) and are of the opinion that prima-facie prescribed accounts and records have been made and maintained. We have not however' made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records of The company examined by us' the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident Fund investor education and protection fund' employees state Insurance' Income tax' wealth tax' sales tax' customs duty' cess and other Material statutory dues applicable to it except Service Tax'(Goods transport Agencies (b) According to the information and explanations given to us' there are no dues of sales tax' income tax. Customs duty' wealth tax' excise duty' service tax and cess' which have not been deposited on account of any dispute.

(x) In our opinion the accumul at edlosses of the company at then do the year are less than fifty percent of its net worth. It has not incurred cash losses in the current year' where as there were cash losses in the immediately preceding financial year.

(xi) According to the information and explanation given to us' the company has not defaulted in repayment of dues to financial institution' Bank and Debenture holders as at Balance Sheet date.

(xii) In our opinion and 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. Accordingly the provisions of Clause 4

(xii) of the Companies (Auditor's Report) Order' 2003 are not applicable to the company.

(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 provision of Clause 4

(xiv) of the Companies (Auditor's Report) Order is not applicable to the company.

(xv) According to the information and explanation given to us' the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

(xvi) In our opinion' the term loans have been applied for the purposes for which they were raised. (xvii) According to the information and explanations given to us and on the overall examination of the Balance Sheet of the Company' we report that no funds raised on short-term basis have been used for long-term investments.

(xviii) According to the information and explanation given to us' the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act 1956. Accordingly' the provisions of Clause 4

(xviii) of the Companies (Auditor's Report) order' 2003 are not applicable to the company.

(xix) According to the information and explanation given to us' during the year the company has not issued any debentures. There fore' the provision of Clause 4

(xix) of Companies (Auditor's Report) Order' 2003 are not applicable to the company. (xx) According to the information and explanation given to us' the company has not raised any money by public issues during the year. Therefore' the provision of Clause 4

(xx) of Companies (Auditor's Report) £t Order' 2003 are not applicable to the company. ptxi) According to the information and explanation given to us' no fraud on or by the company has been noticed For reported during the course of our audit

Sd/-

For Laxminiwas & Jain

Suresh Kumar Jain Place: Hyderabad Chartered Accountants

Partner

Date: 21-08-2012 Firm Reg No. 001859S

(M. No.:018465)

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of PHARMAIDS PHARMACEUTICALS LIMITED AS AT 31st March 2010 the Profit And loss Account and also the Cash Flow Statement for the year ended on that annexed thereto, These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted 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 of our opinion.

3. As required by the companies (Auditors Report) Order 2003 issued by the Central Government of India in terms of sub-sec (4A) of Sec.227of the companies Act, 1956 of India. 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 :

(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 accounts as required by law have been kept by the company so far as appears from our examination of the books;

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

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standard referred to in Sub Sec (3C) of Sec.211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors as on 31.03.2010 and taken on record by the board of Directors, we report that none of the Director is disqualified as on 31-03-2010 from being appointed as a Director in terms of clause (g) of sub section (I) of the section 274 of the Companies Act 1956.

(f) In our opinion and to the best of our information and according to the explanation given to us, the said account read with the accounting policies and notes forming part of accounts appearing in Schedule no. 12 Subject to note No. 3 of the Schedule 12, regarding non confirmation /reconciliation of balances shown under debtors,Creditors, Un-Secured Loans and Advances, the impact of which is unascertained, and Note no. 4 of Schedule 12 regarding non-provision of interest on Cash Credit and Term Loan,account impact of which is uncerterned, give the information required by Companies Act 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

(i) In the case of the Balance Sheet of the state of affairs of the Company as at 31.03-10

(ii) In the case of Profit and Loss account of the loss for the year ended on that date and

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

ANNEXURE TO AUDITORS REPORT Ref. PHARMAIDS PHARMACEUTICALS LIMITED (Referred to in paragraph 3 of our report of even date)

(i) (a) The Company is maintaining proper records showing full particulars including Quantitative details and situation of Fixed Assets

(b) All the assets have not been physically verified by the management during the year, but 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) According to the information and explanations furnished to us, the company has not disposed off a substantial part of its fixed assets during the year.

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

(b) The procedures of .physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and the nature of the business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanation given to us, the company has Neither granted nor taken any loans secured or unsecured to/from companies, Firms or other parties covered in the register maintained under Sec. 301 of the Companies Act. 1956 hence clause iii ( a to g) are not applicable.

(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 the purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct 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 Sec. 301 of the Companies Act. 1956 have been so entered. (b) In our opinion and according to the information and explanations given to us, there is no transaction made in pursuance of contracts or arrangements entered in the register maintained under Sec. 301 of the Companies Act. 1956 and exceeding the value of Rs. Five lakhs in respect of any party during the year.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Section 58A & 58 AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under. The company has not accepted any deposits from the public within the meaning of Sec. 58A and 58AA or any party during the year.

(vii) In our opinion, The Company has an internal audit system by their own staff, which needs to be further strengthened.

(viii) We have broadly reviewed the books of accounts relating to material 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 Sec. 209(i)(d) and are of the opinion that prima- facie prescribed accounts and records have been made and maintained. We have not however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records of The company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident Fund investor education and protection fund, employees state Insurance, Income tax, wealth tax, service tax, sales tax, customs duty, cess and other Material statutory dues applicable to it.

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

(x) In our opinion the accumulated losses of the company at the end of the year are less than fifty percent of its net worth. It has incurred cash losses in the current year aswell as in the immediately preceding financial year.

(xi) According to the information and explanation given to us, the company has not paid dues to Central Bank against Cash Credits, Term Loan Accounts in view of the pending court proceedings in respect of non acceptance of One Time Settlement by bank as requested by the company. Subject to the above the Company has not defaulted in repayment of dues to financial institution, Bank and Debenture holders at Balance Sheet date.

(xii) In our opinion and 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. Accordingly the provisions of Clause 4 (xii) of the- Companies (Auditors Report) Order, 2003 are not applicable to the company.

(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 provision of Clause 4(xiv) of the Companies (Auditors Report) Order is not applicable to the company.

(xv) According to the information and explanation given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

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

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

(xviii) According to the information and explanation given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of Clause 4 (xviii) of the Companies (Auditors Report) order, 2003 are not applicable to the company,

(xix) According to the information and explanation given to us, during the year the company has not issued any debentures. There fore, the provision of Clause 4 (xix) of Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xx) According to the information and explanation given to us, the company has not raised any money by public issues during the year. Therefore, the provision of Clause 4 (xx) of Companies (Auditors Report) Order, 2003 are not applicable to the company.

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

For LAXSHMINIWAS & JAIN Chartered Accountants

Sd/-

SURESH KUMAR JAIN

Place: Hyderabad Partner

Date: 01-09-10 (M. No.:018465)

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Mar 31, 2009

1. We have audited the attached Balance Sheet of PHARMAIDS PHARMACEUTICALS LIMITED AS AT 31st March 2009 the Profit and Loss Account and also the Cash Flow Statement for the year ended on that annexed thereto. These financial statements are the responsibility of the Companys management..Our responsibility is to express an opinion on these financial

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 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 of our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government

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

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

(b) In our opinion, proper books of accounts as required by law have been kept by the company so far as appears from our examination of the books ;

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

(d) In our opinion this the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Sub Sec (3C) o Sec. 211 of the Companies Act, 1956ec

(e) On the basis of written representations received from the directors, as on 31.08.2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31.03 2009 from being appointed as a director in terms of Clause (g) of Sub-section (1) of the Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given non confirmation / reconciliation of balances shown under debtors, creditors unsecured loans and loans and advances, the impact of which is understated give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

(i) In the case of the Balance Sheet, of the State of affairs of the Company as at31.03.2009;

(ii) ln the case of Profit and Loss Account of the Loss for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Ref: PHARMAIDS PHAKMA CEUTICALS LTD ANNEXURE TO AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

(i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(ix) All the assets have not been physically verified by the management during the year, but 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.

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, the company has neither granted nor taken any loans secured or unsecured to/from companies firms or other

(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 the purchase of inventory fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct 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 maintained under Sec. 301 of the Companies Act, 1956 have been so entered.

(d) In our opinion and according to the information and explanations given to us, there is no transaction made in pursuance of contracts or arrangements entered in the register maintained under Sec 301 of the Companies Act, 1956 and exceeding the value of Rs. Five lakhs in respect of any party during the year.

(vi) The company has not accepted any deposits from the public within the meaning of Sec.58Aand 58AA or any other relevant provisions of the Companies Act, 1956.

(vii) In our opinion, The Company has an internal audit system by their own staff, which needs to be further strengthened.

(viii) We have broadly reviewed the books of accounts 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 Sec.209(l)(d) and are of the opinion that prima-facie prescribed accounts and records have been made and maintained. We have not however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutorydues including provident Fund investor education and protection fund, employees state Insurance, income tax, wealth tax, service tax, sales tax, customs duty, cess and other material statutory dues applicable to it.

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

(x) In our opinion, the accumulated losses of the company at the end of the year are less than fifty percent of its net worth. It has incurred cash losses in the current year as well as in the immediately preceding financial year.

(xi) According to the information and explanation given to us, the company has not paid dues to Central Bank against Cash Credits Term Loan Accounts in view of the pending court proceedings in respect of non acceptance of One Time Settlement by bank as requested by the company. Subject to the above the Company has not defaulted in repayment of dues to financial institutions Bank and Debenture holders has at Balance Sheet date.

(xii) In our opinion and 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. Accordingly the provisions of Clause 4

(xii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. (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)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 provision of Clause 4(xiv) of the Companies (Auditors Report) order is not applicable to the company.

(xv) According to the information and explanation given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the (xvi) In our opinion, the term loans have been applied for the purposes for which they were raised.

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

(xviii) According to the information and explanation given to us, the company ha, not made preferential allotment of shares to partres and companies covered the rigister maintained under Section 301 of the Companies Act, J956. Accordingly, the provisions| of Clause 4(xviii) of the Companies (Auditors Report.) Order, 2003 are not applicable the company.

(xix) According to the information and explanation given tous, the company has not issued any debentures. Therefore, the provisions of CIause 4(xix) of the Companins . Auditor,s Report) Order, 2003 are not applicable to the company.

(xx) , According to the information and explanation given to us, the company has not raised any money by public issues during the year. Accordingly, the provisions of Clause

(xx) of the Companies (Auditors Report) Order 2003 are not applicable to the company. (xxi) According to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For LAKSHMINIWAS & JAIN Chartered Accountants Sd/-

Place: Hyderabad SURESH KUMAR JAIN

Date : 01-09-2009 (M.No:18465)