Auditor Report of Sterling Biotech Ltd.

Mar 31, 2016

Report on the Financial Statements

I have audited the accompanying financial statements of Sterling Biotech Limited (the "Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit & Loss and the Cash Flow Statement for the fifteen months ended on that date 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 a true and fair view of the financial position, financial performance and Cash Flow of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

My responsibility is to express an opinion on these financial statements based on my audit.

I have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

I conducted my audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that I 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 financial control relevant to the Company''s preparation of the financial statements that give true and fair view 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 Company''s Directors, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion on the financial statements.

Opinion

In my opinion and to the best of my information and according to the explanations given to me, the aforesaid financial statements give the information required by the Companies Act, 2013 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the company as at 31^st March, 2016, and its loss and its Cash Flows for the period ended on that date.

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 sub Section (11) of section 143 of the Companies Act 2013, I give in the Annexure ''A'', a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a) I have sought and obtained all the information and explanations, which to the best of my knowledge and belief, were necessary for the purposes of my Audit;

b) In my opinion, proper books of account, as required by law, have been kept by the company, so far as appears from my examination of those books;

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

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

e) On the basis of written representations received from the directors as on 31^st March, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2016, 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 my separate Report in Annexure ''B''; and

g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the companies (Audit & Auditors) Rules, 2014, in my opinion and to the best of my information and according to the explanations given to me:

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

ii. The company did not have any material foreseeable losses 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.

Report on Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government in terms of Section 143(11) of the Companies Act, 2013 (''the Act'') of Sterling Biotech Limited (''the Company'').

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

(b) The Company has regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In my opinion, this periodicity of physical verification is reasonable having regard to the size of the company and the nature of its assets. In accordance with this programme, certain fixed assets were verified during the period and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to me and on the basis of my examination of the records of the Company, title deeds of immovable properties are held in the name of the Company.

(ii) As explained to me, the inventories were physically verified during the period by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) During the period Company has not granted unsecured loan to companies covered in the register maintained under section 189 of the companies Act, 2013.

(a) In my opinion, terms and conditions on which loans had been granted to companies listed in the register maintained under section 189 of the Act were not, primafacie, prejudicial to the interest of the company.

(b) The parties have repaid the principal amount as stipulated.

(c) There are no overdue amounts of Loans granted to companies listed in the register maintained under section 189 of the Act.

(iv) In my opinion and according to the information and explanations given to me, 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 any deposits from the public.

(vi) I have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the companies Act, 2013 and am of the opinion that prima facie, the prescribed accounts and records have been made and maintained. I have not, however, made a detailed examination of the same.

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

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

There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of Customs, duty of Excise, Cess and other material statutory dues in arrears as at March 31, 2016 for a period of more than six months from the date they became payable except '' 303,420/- processed demand raised by TDS CPC .

(b) According to the information and explanations given to me, the following dues of Income Tax, Sales Tax, Service Tax and Value Added Tax have not been deposited by the Company on account of disputes.

Name of the Statute	Nature of the dues	Amount unpaid	Period to which the amount relates	Forum where dispute is pending
The Central Excise Act, 1994	Central Excise Duty/ Service Tax	4,47,269	2015-2016	Commissioner Excise
The Central Excise Act, 1994	Central Excise Duty/ Service Tax	1,98,226	2014-2015	Commissioner Excise
The Central Excise Act, 1994	Central Excise Duty/ Service Tax	11,036	2014-2015	Excise officer
The Central Excise Act, 1994	Central Excise Duty/ Service Tax	Not identified	2014-2015	Commissioner Excise
State Sales Tax/VAT and CST	Sales tax	1,38,94,892	2001-2002	Supreme Court
State Sales Tax/VAT and CST	Sales tax	1,43,58,662	2002-2003	Supreme Court
State Sales Tax/VAT and CST	Sales tax	14,17,651	2003-2004	Supreme Court
The Central Excise Act, 1944	Excise duty	1,02,65,154	2003-2004	CESTAT
The Central Excise Act, 1944	Excise duty	1,03,90,753	2004-2005	CESTAT
The Central Excise Act, 1944	Excise duty and Penalty	1,03,00,000	2004-2005	CESTAT
The Central Excise Act, 1944	Excise duty	18,49,925	2004-2005	CESTAT
The Central Excise Act, 1944	Excise duty	1,59,18,617	2004-2005 to 2005-2006	CESTAT
The Central Excise Act, 1944	Excise duty	1,25,53,250	2006-2007 to 2007-2008	CESTAT
The Central Excise Act, 1944	Excise duty	1,24,45,900	2006-2007	CESTAT
The Central Excise Act, 1944	Excise duty	1,60,96,386	2006-2007 to 2007-2008	CESTAT

Name of the Statute	Nature of the dues	Amount unpaid	Period to which the amount relates	Forum where dispute is pending
The Central Excise Act, 1944	Excise duty and Penalty	50,00,000	2006-2007 to 2007-2008	CESTAT
The Central Excise Act, 1944	Excise duty	2,76,20,043	2007-2008	CESTAT
The Central Excise Act, 1944	Excise duty and Penalty	25,00,000	2007-2008	CESTAT
The Central Excise Act, 1944	Excise duty	4,30,93,913	2008-2009	CESTAT
The Central Excise Act, 1944	Excise duty	1,53,62,946	2008-2009	CESTAT
The Central Excise Act, 1944	Excise duty	1,16,36,753	2009-2010	CESTAT
The Central Excise Act, 1944	Excise duty	2,17,73,984	2010-2011	CESTAT
The Central Excise Act, 1944	Excise duty	1,98,35,655	2011-2012	CESTAT
The Central Excise Act, 1944	Excise duty	1,42,93,983	2011-2012 to 2012-2013	CESTAT
The Central Excise Act, 1944	Excise duty	1,16,47,766	2012-2013 to 2013-2014	Commissioner of central excise
The Central Excise Act, 1944	Excise duty	1,98,22,934	2013-2014	Commissioner of central excise
The Central Excise Act, 1944	Excise duty	2,09,67,416	2014-2015	Commissioner of central excise
The Central Excise Act, 1944	Excise duty	2,01,54,465	2014-2015 to 2015-2016	CESTAT
The Finance Act, 1994- service tax	Service tax and penalty	5,83,644	2005-2006 to 2008-2009	Assistant Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	1,68,422	2008-2009 to 2009-2010	Assistant Commissioner of central excise

Name of the Statute	Nature of the dues	Amount unpaid	Period to which the amount relates	Forum where dispute is pending
The Finance Act, 1994- service tax	Service tax	79,104	2009-2010	Assistant Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	1,65,720	2010-2011	Assistant Commissioner of central excise
The Finance Act, 1994- service tax	Service tax	26,074	2010-2011 to 2011-2012	Assistant Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	3,93,311	2009-2010 to 2010-2011	Assistant Commissioner of central excise
The Finance Act, 1994- service tax	Service tax	3,33,182	2010-2011 to 2011-2012	Assistant Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	2,18,304	2007-2008 to 2009-2010	Assistant Commissioner of central excise
The Finance Act, 1994- service tax	Service tax	3,92,926	2008-2009 to 2010-2011	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax	1,03,522	2011-2012 to 2012-2013	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax	1,01,030	2012-2013 to 2013-2014	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	2,88,966	2013-2014 to 2014-2015	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	2,21,124	2014-2015 to 2015-2016	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	98,297	2015-2016	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	20,75,866	2008-2009 to 2013-2014	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax and penalty	14,017	2012-2013 to 2013-2014	Commissioner of central excise
The Finance Act, 1994- service tax	Service tax, penalty and Interest	38,556	2013-2014 to 2014-2015	Commissioner of central excise

Name of the Statute	Nature of the dues	Amount unpaid	Period to which the amount relates	Forum where dispute is pending
The Finance Act, 1994 - service tax	Service tax, penalty and Interest	36,334	2014-2015 to 2015-2016	Commissioner of central excise
The Finance Act, 1994 - service tax	Service tax	8,112	2015-2016	Commissioner of central excise
The Finance Act, 1994 - service tax	Service tax and penalty	9,24,210	2010-2011	Commissioner of central excise
The Finance Act, 1994 - service tax	Service tax	54,70,079	2010-2011 to 2014-2015	Commissioner of central excise
The Finance Act, 1994 - service tax	Service tax	8,47,328	2015-2016	Commissioner of central excise
The Income Tax Act, 1961	Income Tax and interest	58,74,002	A.Y. 2011-12	CIT(A), Mumbai
The Income Tax Act, 1961	Income Tax and interest	60,78,40,880	A.Y. 2013-14	CIT (A), Mumbai

(viii) According to the information and explanations given to me by the management, and on the basis of records examined by me, the company has defaulted in the repayment of the dues to financial institutions or banks or debenture holders as under:

( Rs.in Crores)

Bank	Total Overdue 31.03.2016	Overdue for more than 90 days	Overdue for less than 90 days
Allahabad Bank	15.01	11.39	3.62
Andhra Bank	13.20	6.30	6.90
Bank of Baroda	32.77	25.70	7.07
Bank of India	25.05	18.76	6.29
Bank of Maharashtra	8.69	4.14	4.55
IDBI Bank Ltd	46.88	45.03	1.85
Indian Overseas Bank	30.73	18.68	12.05
JM Financial ARC co pvt Ltd	61.65	59.64	2.01
Laxmi Vilas Bank	4.22	2.78	1.43
LIC of India	555.68	536.62	19.06
Oriental Bank of Commerce	18.73	17.46	1.26
Punjab National Bank	25.21	17.56	7.65
State Bank of India	91.37	91.33	0.04
Syndicate Bank	162.16	152.84	9.32
UCO Bank	323.85	311.12	12.73
United Bank of India	1.48	-	1.48
Vijaya Bank	1.57	0.52	1.05
JP Morgan Chase	76.73	-	76.73
	1,494.98	1,319.88	175.09

Note: All the above figures are subject to reconciliation and confirmation.

(ix) The Company did not raise any moneys by way of initial public offer or further public offer (including Debt Instruments) during the period. In my opinion and according to the information and explanations given to me, the term loans taken by the Company have been applied for the purposes for which they were raised.

(x) According to the information and explanations given to me, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of my audit.

(xi) According to the information and explanations given to me and based on my examination of the records, 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.

(xii) In my opinion and according to the information and explanations given to me, the Company is not a Nidhi Company.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to me, the Company has made private placement of Redeemable cumulative non participating non convertible preference shares during the period and complied with the requirements of section 42 of the Act and the amount raised have been used for the purposes for which the funds were raised.

(xv) According to the information and explanations given to me and based on my examination of the records, the Company has not entered into non-cash transactions with directors or persons connected with him.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For and on behalf of

For H. S. Hathi & Co.

Chartered Accountants

Firm Regn No. 103596W

Hemant S. Hathi

Proprietor

Mumbai : May 30, 2016 Membership No 037109

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Dec 31, 2014

I have audited the accompanying financial statements of Sterling Biotech Limited (the "Company"), which comprise the Balance Sheet as at December 31, 2014, and the Statement of Profit & Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information, which I have signed under reference to this report.

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 accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013, issued by the Ministry or Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. 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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosure 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion and to the best of my information and according to the explanations given to me, 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 December 31, 2014;

b) In the case of the Statement of Profit & Loss, of the Loss of the company 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'', as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (hereinafter referred to as the "Order") , and on the basis of such checks of the books and records of the company as I considered appropriate and according to the information and explanation given to me, I 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, I report that:

a) I have obtained all the information and explanations, which to the best of my knowledge and belief, were necessary for the purposes of my Audit;

b) In my opinion, proper books of account, as required by law, have been kept by the company, so far as appears from my examination of those books;

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

d) In my opinion, the Balance Sheet, the Statement of Profit & Loss and Cash Flow Statement comply with the Accounting Standards notified under the Act read with General Circular 15/2013 dated 13 September 2013, issued by 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 December 31, 2014 and taken on record by the Board of Directors, I report that none of the Directors of the company are disqualified as on December 31, 2014 from being appointed as a Director in terms of Clause (g) of the sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of my report of even date.

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

(b) Fixed assets have been physically verified by the management based on a phased program of verification of all the assets during the year, which in my opinion is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification.

(c) As per the information and explanations given to me, during the year, the company has not disposed off any substantial part of fixed assets that would affect the going concern.

(ii) (a) As explained to me inventories have been physically verified by the management at reasonable intervals during

the year.

(b) In my opinion and according to information and explanations given to me, the procedure 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 its business.

(c) On the basis of my examinations of records of inventories, I am of the opinion that the company is maintaining proper records of the inventory. As explained to me, no material discrepancies have been noticed on physical verification of inventories as compared to Books records.

(iii) (a) The Company has granted unsecured loan to companies covered in the register maintained under section 301

of the companies Act, 1956. The Maximum amount involved during the year was Rs. 83.68 crores and the year end balance of loans granted to such parties was Rs. 0.06 crores. The company has not taken any unsecured loan from companies, firms and other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(b) In my opinion, terms and conditions on which loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(c) The parties have repaid the principal amounts as stipulated.

(d) There are no overdue amounts of Loans granted to companies listed in the register maintained under Section 301 of the Companies Act, 1956.

(iv) According to information and explanations given to me, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and sales of Goods and service. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to me, I have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

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

(b) In my opinion and according to the information and explanations given to me, there are no transactions of purchase of Goods and materials and sales of Goods, material & services made in pursuance of contracts or arrangements required to be entered in the register maintained under section 301 of the Companies Act, 1956, aggregating during the year to Rs. 5,00,000/- or more in respect of each party.

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

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

(viii) I have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records of the company, the company has been regular in depositing with appropriate authorities, Undisputed statutory dues including Provident Fund, Income tax, Sales Tax / VAT, Wealth tax, Service Tax, Custom duty, Cess and other statutory dues.

(b) According to the information and explanations given to me, no undisputed amounts payable in respect of such statutory dues were outstanding as at the 31st December 2014 for a period of more than six months from the date they became payable .

(c) According to the information and explanations given to me, there are no such statutory dues which have not been deposited on account of any dispute.

(x) In my opinion, the accumulated losses of the company are not more than fifty percent of its net worth. The company has incurred cash losses during the year and in the immediately preceding financial year.

(xi) According to the information and explanations given to me by the management, and on the basis of records examined by me, the company has defaulted in the repayment of the dues to financial institutions or banks or debenture holders. The amount outstanding and overdue for less than 60 days is Rs. 226.85 crores and for more than 60 days is Rs. 1337.83 crores.

(xii) According to the information and explanations given to me and based on the documents and records produced to me, 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 my opinion, the Company is not a chit fund, a nidhi or a 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 my opinion, the company is maintaining proper record and making timely entries in respect of shares, securities, debentures and other investments. Further all the investments made by the company are held in its own name.

(xv) In my opinion, the terms and conditions on which the company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

(xvi) According to the information and explanations given to me by the management, the term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to me and on an overall examination of the balance sheet of the company, I report that no funds raised on short term basis have been used for long term investments.

(xviii) According to the information and explanations given to me, the Company has made preferential allotment of shares to companies covered in the register maintained under section 301 of the companies Act, 1956. In my opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

(xix) During the period covered by my report, the company has not issued any debentures and hence clause 4(XIX) of the companies (Auditor''s Report) Order, 2003 is not applicable to the company.

(xx) During the period covered by my report, the company has not raised any money by way of public issue.

(xxi) During the course of my 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 me, I have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have I been informed of any such case by the Management.

For H. S. HATHI & CO.

Chartered Accountants

Firm Regn No. 103596W

HEMANT S. HATHI

Proprietor

Membership No. 037109

Place : Mumbai

Dated : 28th February, 2015

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Dec 31, 2013

I have audited the accompanying financial statements of Sterling Biotech Limited (the "Company"), which comprise the Balance Sheet as at December 31, 2013, and the Statement of Profit & 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 accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013, issued by the Ministry or Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. 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 free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosure 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion and to the best of my information and according to the explanations given to me, 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 December 31, 2013;

b) In the case of the Statement of Profit & Loss, of the Loss of the company 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'', as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) f section 227 of the Act (hereinafter referred to as the "Order") , and on the basis of such checks of the books and records of the company as I considered appropriate and according to the information and explanation given to me, I 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, I report that:

a) I have obtained all the information and explanations, which to the best of my knowledge and belief, were necessary for the purposes of my Audit;

b) In my 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 & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In my opinion, the Balance Sheet, the Statement of Profit & Loss and Cash Flow Statement comply with the Accounting Standards notified under the Act read with General Circular 15/2013 dated 13 September 2013, issued by 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 December 31, 2013 and taken on record by the Board of Directors, I report that none of the Directors of the company are disqualified as on December 31, 2013 from being appointed as a Director in terms of Clause (g) of the sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

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

(b) Fixed assets have been physically verified by the management based on a phased program of verification of all the assets during the year, which in my opinion is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification.

(c) As per the information and explanations given to me, during the year, the company has not disposed off any substantial part of fixed assets that would affect the going concern.

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

(b) In my opinion and according to information and explanations given to me, the procedure 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 its business.

(c) On the basis of my examinations of records of inventories, I am of the opinion that the company is maintaining proper records of the inventory. As explained to me, no material discrepancies have been noticed on physical verification of inventories as compared to Books records.

(iii) (a) The Company has granted unsecured loan to companies covered in the register maintained under section 301 of the companies Act, 1956. The Maximum amount involved during the year was Rs.83.68 crores and the yearend balance of loans granted to such parties was Rs.83.68 crores.

(b) In my opinion, terms and conditions on which loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(c) There are no overdue amounts of Loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1956.

(d) According to the information and explanations given to me, the company has not taken any unsecured loan from companies, firms and other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(iv) According to information and explanations given to me, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and sales of Goods and service. I have not observed any continuing failure to correct major weakness in internal controls.

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

(b) In my opinion and according to the information and explanations given to me, there are no transactions of purchase of Goods and materials and sales of Goods, material & services made in pursuance of contracts or arrangements required to be entered in the register maintained under section 301 of the Companies Act, 1956, aggregating during the year to Rs.5,00,000/- or more in respect of each party.

(vi) The Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and provisions of section 58A and 58AA or any other relevant provisions of the companies Act, 1956 and rules framed there under are not applicable for the year under audit.

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

(viii) I have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records of the company, the company has been regular in depositing with appropriate authorities, Undisputed statutory dues including Provident Fund, Income tax, Sales Tax / VAT, Wealth tax, Service Tax, Custom duty, Cess and other statutory dues.

(b) According to the information and explanations given to me, no undisputed amounts payable in respect of such statutory dues were outstanding as at the 31st December 2013 for a period of more than six months from the date they became payable .

(c) According to the information and explanations given to me, there are no such statutory dues which have not been deposited on account of any dispute.

(x) The Company has no accumulated losses at the end of the financial year, however company has incurred cash losses during the year and in the immediately preceding financial year.

(xi) According to the information and explanations given to me by the management, and on the basis of records examined by us, the company has defaulted in the repayment of the dues to financial institutions or banks or debenture holders. The amount outstanding and overdue for less than 60 days is Rs.216.64 crores and for more than 60 days is Rs.2,017.68 crores.

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

(xiii) In my opinion, the Company is not a chit fund, a nidhi or a 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 my opinion, the company is maintaining proper record and making timely entries in respect of shares, securities, debentures and other investments. Further all the investments made by the company are held in its own name. (xv) In my opinion, the terms and conditions on which the company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

(xvi) According to the information and explanations given to me by the management, the term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to me and on an overall examination of the balance sheet of the company, I report that no funds raised on short term basis have been used for long term investments.

(xviii)According to the information and explanations given to me, during the year the Company has not made any preferential allotment of shares to the parties or companies covered in the register maintained under section 301 of the companies Act, 1956.

(xix) During the period covered by my report, the company has not issued any debentures and hence clause 4(XIX) of the companies (Auditor''s Report) Order, 2003 is not applicable to the company.

(xx) During the period covered by my report, the company has not raised any money by way of public issue.

(xxi) According to the information and explanations given to me no frauds on or by the company has been noticed or reported during the year.



For H. S. HATHI & CO.

Chartered Accountants

Firm Regn No. 103596W



HEMANT S. HATHI

Proprietor

Membership No. 037109

Place : Mumbai

Dated : 28th February, 2014

---

Dec 31, 2012

1. We have audited the attached Balance Sheet of STERLING BIOTECH LIMITED as at 31st December 2012 and also the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company''s Management. Our responsibility is to express an opinion on this financial statement based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. These 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 paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we state that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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 appears from our examination of those books;

c) The Balance Sheet, Profit & 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 & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the Directors as on 31st December, 2012, and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified as on 31st December, 2012 from being appointed as a Director in terms of Clause (g) of the sub-section (1) of section 274 of the Companies Act, 1956.

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

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st December, 2012;

ii) In the case of the Profit & Loss Account, of the loss of the company 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 REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF STERLING BIOTECH LIMITED ON THE ACCOUNTS AS AT AND FOR THE PERIOD ENDED 31st DECEMBER, 2012.

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

(b) Fixed assets have been physically verified by the management based on a phased program of verification of all the assets during the year, which in our opinion is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification.

(c) As per the information and explanations given to us, during the year, the company has not disposed off any substantial part of fixed assets that would affect the going concern.

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

(b) In our opinion and according to information and explanations given to us, the procedure 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 its business.

(c) On the basis of our examinations of records of inventories, we are of the opinion that the company is maintaining proper records of the inventory. As explained to us, no material discrepancies have been noticed on physical verification of inventories as compared to Books records.

(iii) (a) The Company has granted unsecured loan to companies covered in the register maintained under section 301 of the companies Act, 1956. The Maximum amount involved during the year was'' 221.46 crore and the year end balance of loans granted to such parties was Rs. 83.68 crore.

(b) In our opinion, terms and conditions on which loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(c) There are no overdue amounts of Loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1956.

(d) According to the information and explanations given to us, the company has not taken any unsecured loan from companies, firms and other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(iv) According to information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and sales of Goods and service. 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 particulars of contracts or arrangements that need to be entered in to the register maintained under section 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 are no transactions of purchase of Goods and materials and sales of Goods, material & services made in pursuance of contracts or arrangements required to be entered in the register maintained under section 301 of the Companies Act, 1956, aggregating during the year toRs.5,00,000/- or more in respect of each party.

(vi) The Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and provisions of section 58A and 58AA or any other relevant provisions of the companies Act, 1956 and rules framed there under are not applicable for the year under audit.

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

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

(ix) (a) According to the records of the company, the company has been regular in depositing with appropriate authorities, Undisputed statutory dues including Provident Fund, Income tax, Sales Tax / VAT, Wealth tax, Service Tax, Custom duty, Cess and other statutory dues.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at the 31st December 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 are no such statutory dues which have not been deposited on account of any dispute.

(x) The Company has incurred cash losses during the year but not in the immediately preceding financial year. The company does not have any accumulated losses.

(xi) According to the information and explanations given to us by the management, and on the basis of records examined by us, the company has defaulted in the repayment of the dues to financial institutions or banks or debenture holders. The amount outstanding and overdue for less than 60 days is '' 238.32 crores and for more than 60 days is'' 2,172.07 crores.

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

(xiii) In our opinion, the Company is not a chit fund, a nidhi or a 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 maintaining proper record and making timely entries in respect of shares, securities, debentures and other investments. Further all the investments made by the company are held in its own name.

(xv) In our opinion, the terms and conditions on which the company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

(xvi) According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

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

(xviii) According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to the parties or companies covered in the register maintained under section 301 of the companies Act, 1956.

(xix) During the period covered by our report, the company has not issued any debentures and hence clause 4(XIX) of the companies (Auditor''s Report) Order, 2003 is not applicable to the company.

(xx) During the period covered by our report, the company has not raised any money by way of public issue.

(xxi) According to the information and explanations given to us no frauds on or by the company has been noticed or reported during the year. For H. S. HATHI & CO.

Chartered Accountants Firm Regn No. 103596W

HEMANT S. HATHI

Partner

Membership No 037109

Place : Mumbai

Dated : 1st March, 2013

---

Dec 31, 2011

1. We have audited the attached Balance Sheet of STERLING BIOTECH LIMITED as at 31st December 2011 and also the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on this financial statement based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. These 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 paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we state that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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 appears from our examination of those books;

c) The Balance Sheet, Profit & 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 & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-Section (3C) of Section 21 1 of the Companies Act, 1 956.

e) On the basis of the written representations received from the Directors as on 31st December, 2011 and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified as on 31 stDecember, 2011 from being appointed as a Director in terms of Clause (g) of the sub - section (1) of section 274 of the Companies Act, 1956.

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

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st December, 2011;

ii) In the case of the Profit & Loss Account, of the Profit of the company 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 REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF STERLING BIOTECH LIMITED ON THE ACCOUNTS AS AT AND FOR THE PERIOD ENDED 31st DECEMBER, 2011.

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

(b) Fixed assets have been physically verified by the management based on a phased program of verification of all the assets during the year, which in our opinion is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification.

(c) As per the information and explanations given to us, during the year, the company has not disposed off any substantial part of fixed assets that would affect the going concern.

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

(b) In our opinion and according to information and explanations given to us, the procedure 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 its business.

(c) On the basis of our examinations of records of inventories, we are of the opinion that the company is maintaining proper records of the inventory. As explained to us, no material discrepancies have been noticed on physical verification of inventories as compared to Books records.

(iii) (a) The Company has granted unsecured loan to companies covered in the register maintained under section 301 of the companies Act, 1 956. The Maximum amount involved during the year was Rs 396.31 crore and the year end balance of loans granted to such parties was Rs 221.46 crore.

(b) In our opinion, terms and conditions on which loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1 9 56 are not, prima facie , prejudicial to the interest of the company.

(c) There are no overdue amounts of Loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1956.

(d) According to the information and explanations given to us, the company has not taken any unsecured loan from companies, firms and other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(iv) According to information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and sales of Goods and service. 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 particulars of contracts or arrangements that need to be entered in to the register maintained under section 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 are no transactions of purchase of Goods and materials and sales of Goods, material & services made in pursuance of contracts or arrangements required to be entered in the register maintained under section 301 of the Companies Act, 1956, aggregating during the year to Rs 5,00,000/-or more in respect of each party.

(vi) The Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and provisions of section 58A and 58AA or any other relevant provisions of the companies Act, 1 956 and rules framed there under are not applicable for the year under audit.

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

(viii) We have broadly reviewed the books of accounts 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, 1 956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records of the company, the company has been regular in depositing with appropriate authorities, Undisputed statutory dues including Provident Fund, Income tax, Sales Tax / VAT,.Wealth tax, Service Tax, Custom duty, Cess and other statutory dues.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at the 31 st December, 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 are no such statutory dues which have not been deposited on account of any dispute.

(x) The Company neither has Accumulated losses nor it has incurred any cash losses during the year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us by the management, and on the basis of records examined by us, the company has defaulted in the repayment of the dues to financial institutions or banks or debenture holders. The amount outstanding and overdue for less than 60 days is Rs 40.92 crores and for more than 60 days is Rs 306.35 crores.

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

(xiii) In our opinion, the Company is not a chit fund, a nidhi or a 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 maintaining proper record and making timely entries in respect of shares, securities, debentures and other investments. Further all the investments made by the company are held in its own name.

(xv) According to the information and explanations given to us by the management, the company has not given any Guarantee for loan taken by other from banks or financial institutions.

(xvi) According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

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

(xviii) According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to the parties or companies covered in the register maintained under section 301 of the companies Act, 1956.

(xix) During the period covered by our report, the company has not issued any debentures and hence clause 4(XIX) of the companies (Auditor's Report) Order, 2003 is not applicable to the company.

(xx) During the period covered by our report, the company has not raised any money by way of public issue.

(xxi) According to the information and explanations given to us no frauds on or by the company has been noticed or reported during the year.

For H. S. HATHI & CO.

Chartered Accountants

Firm Regn No. 103596W

HEMANT S. HATHI

Place : Mumbai Partner

Date: 29th February, 2012 Membership No. 037109

---

Dec 31, 2009

1. We have audited the attached Balance Sheet of STERLING BIOTECH LIMITED as at 31st December 2009 and also the Profit & Loss Account and the Cash Flow Statement 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 this financial statement based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of subSection (4A) of section 227ofthe Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Furtherto our comments in the annexure referred to in paragraph 3 above, we state that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary forthe 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 appears from ourexamination of those books;

c) The Balance Sheet,Profit & 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 & Loss Account and Cash Flow Statementdealtwithbythisreportcomply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1 956.

e) On the basis of the written representations received from the Directors as on 31st December, 2009, and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified as on 31st December, 2009 from being appointed as a Director in terms of Clause (g) of the sub-section (1) of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the other notes thereon give, the information required by the Companies Act, 1 956 in the manner so required and give a true and fairview 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 at31st,December,2009;

ii) In the case of the Profit & Loss Account, of the Profit of the company forthe yearended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF STERLING BIOTECH LIMITED ON THE ACCOUNTS AS AT AND FOR THE PERIOD ENDED 31ST,DECEMBER2009.

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

(b) Fixed assets have been physically verified by the management based on a phased program of verification of all the assets during the year, which in our opinion is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification.

(c) As per the information and explanations given to us, during the year, the company has not disposed off any substantial part of fixed assets that would affectthe going concern.

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

(b) In our opinion and according to information and explanations given to us, the procedure 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 its business.

(c) On the basis of our examinations of records of inventories, we are of the opinion that the company is maintaining proper records of the inventory. As explained to us, no material discrepancies have been noticed on physical verification of inventories as compared to Books records.

(iii) (a) The Company has granted unsecured loan to companies covered in the register maintained under section 301 of the companies Act, 1 956. The Maximum amount involved during the year was Rs. 41 8.66 crore and the year end balance of loans granted to such parties was Rs. 336.31 crore.

(b) In our opinion, terms and conditions on which loans granted to companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(c) There are no overdue amounts of Loans granted to companies listed in the register maintained under section 301ofthe Companies Act, 1956.

(d) According to the information and explanations given to us, the company has not taken any unsecured loan from companies, firms and other parties covered in the Register maintained under section 301 of the CompaniesAct,1956.

(iv) According to information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and sales of Goods and service. 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 particulars of contracts or arrangements that need to be entered in to the register maintained under section 301 of the Companies Act, 1 956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, there are no transactions of purchase of Goods and materials and sales of Goods, material & services made in pursuance of contracts orarrangements required to be entered inthe register maintained undersection 301 ofthe Companies Act, 1 956, aggregating during the yearto Rs. 5,00,000/- or more in respect of each party. )

(vi) The Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and provisions of section 58A and 58AA or any other relevant provisions of the companies Act, 1 956 and rules framed there under are not applicable for the year under audit.

(vii) In our opinion, the Company has an Internal Audit System commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts 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, 1 956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained .

(ix). (a) According to the records of the company, the company has been regular in depositing with appropriate authorities, Undisputed statutory dues including Provident Fund, Income tax, Sales Tax / VAT, Wealth tax, Service Tax, Custom Duty, Cess and other statutory dues.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at the 31st December 2009 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 are no such statutory dues which have not been deposited on account of any dispute.

(x). The Company neither has Accumulated losses nor it has incurred any cash losses during the year and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are oftheopinionthatthe company has not defaulted in the repayment ofthedues to financial institutions or banks.

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

(xiii) In our opinion, the Company is not a chit fund, a nidhi or a 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 maintaining proper records and making timely entries in respect of shares, securities, debentures and other investments. Further all the investments made by the company are held in its own name.

(xv) According to the information and explanations given to us by the management, the company has not given any Guarantee for loan taken by otherfrom banks orfinancial institutions.

(xvi). According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

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

(xviii) According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to the parties or companies covered in the register maintained under section 301 of the companies Act, 1956.

(xix) During the period covered by our report, the company has not issued any debentures and hence clause 4(XIX) of the Companies (Auditors Report) Order, 2003 is not applicable to the company.

(xx) During the period covered by our report, the company has not raised any money by way of public issue.

(xxi) According to the information and explanations given to us no frauds on or by the company has been noticed or reported during the year.

For H. S. HATHI & CO. Chartered Accountants

Place: Mumbai HEMANT S. HATHI

Date: 31st March, 2010 (Partner)

Membership No.: 037109

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Dec 31, 2008

1. We have audited the attached Balance Sheet of STERLING BIOTECH LIMITED as at 31 st December 2008 and also the Profit & Loss Account and the Cash Flow Statement 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 this financial statement based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003, 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 paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we state that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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 appears from our examination of those books;

c) The Balance Sheet, Profit & 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 & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the Directors as on 31st December, 2008, and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified as on 31st December, 2008 from being appointed as a Director in terms of Clause (g) of the sub-section (1) of section 274 of the Companies Act, 1956.

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

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st December, 2008;

ii) In the case of the Profit & Loss Account, of the Profit of the company for the period 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 REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF STERLING BIOTECH LIMITED ON THE ACCOUNTS AS AT AND FOR THE PERIOD ENDED 31ST DECEMBER 2008.

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

b) Fixed assets have been physically verified by the management based on a phased program of verification of all the assets during the year, which in our opinion is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such verification.

c) As per the information and explanations given to us, during the year, the company has not disposed off any substantial part of fixed assets that would affect the going concern.

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

b) In our opinion and according to information and explanations given to us, the procedure 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 its business.

c) On the basis of our examinations of records of inventories, we are of the opinion that the company is maintaining proper records of the inventory. As explained to us, no material discrepancies have been noticed on physical verification of inventories as compared to Books records.

3. The Company has not granted any unsecured loan to a company covered in the register maintained under section 301 of the companies Act, 1956. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. According to information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and sales of Goods and service. We have not observed any continuing failure to correct major weakness in internal controls.

5. a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered in to the register maintained under section 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 are no transactions of purchase of Goods and materials and sales of Goods, material & services made in pursuance of contracts or arrangements required to be entered in the register maintained under section 301 of the Companies Act, 1956, aggregating during the year to Rs.5,00,000/- or more in respect of each party.

6. The Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and provisions of section 58A and 58AA or any other relevant provisions of the companies Act, 1956 and rules framed there under are not applicable for the year under audit.

7. In our opinion, the Company has an internal audit System commensurate with the size and nature of its business.

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(l)(d) of the companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

9. a) According to the records of the company, the company has been regular in depositing with appropriate authorities, Undisputed statutory dues including Provident Fund, Income tax, Sales Tax / VAT, Wealth tax, Service Tax, Custom duty, Cess and other statutory dues.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at the 31st December 2008 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 are no such statutory dues which have not been deposited on account of any dispute.

10. The Company neither has Accumulated losses nor it has incurred any cash losses during the year and in the immediately preceding financial year.

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

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

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

14. In our opinion, the company is maintaining proper record and making timely entries in respect of shares, securities, debentures and other investments. Further all the investments made by the company are held in its own name.

15. According to the information and explanations given to us by the management, the company has not given any Guarantee for loan taken by other from banks or financial institutions.

16. According to the information and explanations given to us by the management, the term loans were applied for the purpose for which the loans were obtained.

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

18. According to the information and explanations given to us, during the year the Company has not made any preferential allotment of shares to the parties or companies covered in the register maintained under section 301 of the companies Act, 1956.

19. According to the information and explanations given to us, during the period covered by our audit report, the company had issued 3000 Secured redeemable nonconvertible debentures of Rs. 10,00,000/- each bearing interest @ 12% p.a.. The company has created security in respect of debentures issued.

20. During the period covered by our report the company has not raised any money by way of public issue.

21. According to the information and explanations given to us no frauds on or by the company has been noticed or reported during the year.

For H. S. HATHI & CO. Chartered Accountants

Place : Mumbai HEMANT S. HATHI

Dated : 31st March, 2009 (Partner)