Sun Pharmaceutical Industries Ltd.

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF  SUN PHARMACEUTICAL INDUSTRIES LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SUN PHARMACEUTICAL INDUSTRIES LIMITED (hereinafter referred to as "the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the financial information of erstwhile Ranbaxy Laboratories Limited, now a division of the Company (hereinafter referred to as "erstwhile Ranbaxy" or "amalgamating company") for the year ended on that date, consequent to its amalgamation into the Company which has been effected on 24th March, 2015, with the appointed date of 1st April, 2014, audited by other auditors (division / component auditors), referred in the 'Other Matter' section below.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (hereinafter referred to as "the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act read together with our remarks in paragraph 2 of the 'Emphasis of Matter' section below. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.  We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors (division / component auditors) of the amalgamating company in terms of their report referred in the 'Other Matter' section below is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the report of the other auditors (division / component auditors) on the financial information of the amalgamating company referred in the 'Other Matter' section below, and read together with paragraphs 1 and 2 of the 'Emphasis of Matter' section below, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

1. We draw attention to Note 51 to the standalone financial statements. As referred to in the said Note, the financial statements of the Company for the year ended 31st March, 2015 were earlier approved by the Board of Directors at their meeting held on 29th May, 2015 which were subject to revision by the Management of the Company so as to give effect to the Scheme of Arrangement for amalgamation of Sun Pharma Global Inc., a wholly owned subsidiary, into the Company w.e.f 1st January, 2015. Those financial statements were audited by us and our report dated 29th May, 2015, addressed to the Members of the Company, expressed an unqualified opinion on those financial statements and included an Emphasis of Matter paragraph drawing attention to the foregoing matter. Consequent to the Company obtaining the required approvals, the aforesaid financial statements are revised by the Company to give effect to the said Scheme of Arrangement.

2. Apart from the foregoing matter and the provision for proposed dividend, the attached financial statements do not take into account any events subsequent to the date on which the financial statements referred to in paragraph 1 above were earlier approved by the Board of Directors and reported upon by us as aforesaid.

3. a) We draw attention to Note 55 to the standalone financial statements. As referred to in the said Note, remuneration to the  Managing Director and the Whole–time Directors for the previous year ended 31st March, 2014 is in excess of the limits specified under Schedule XIII to the Companies Act, 1956 by Rs. 44.7 Million and commission of Rs.  6.4 Million for the previous year ended 31st March, 2014 to the Non–Executive Directors is in excess, since there is absence of net profits for the previous year under section 309(4) read with section 309(5) of the Companies Act, 1956. In this regard, the Company has made necessary applications to the Central Government for the waiver of the excess remuneration and commission for the previous year ended 31st March, 2014. The Company is awaiting Central Government approval in respect of the said applications.

b) We draw attention to Note 55 to the standalone financial statements. As referred to in the said Note, remuneration to the Managing Director and the Whole–time Director for the year is in excess of the limits specified under Schedule V to the Companies Act, 2013 by Rs.  20.7 Million. In this regard, the Company has made necessary applications to the Central Government for approving the amounts of maximum remuneration payable, which includes the excess amounts already paid / provided. The Company is awaiting Central Government approval in respect of the said applications.

Our opinion is not modified in respect of these matters.

Other Matter

The standalone financial statements include the financial information of erstwhile Ranbaxy consequent to its amalgamation into the Company which has been effected on 24th March, 2015, with the appointed date of 1st April, 2014 (Refer Note 48 to the standalone financial statements). We did not audit the financial information of erstwhile Ranbaxy, included in the standalone financial statements of the Company, whose financial information reflect total assets of Rs.  88,083.7 Million as at 31st March, 2015, total revenue of Rs.  55,867.3 Million and net cash outflow of Rs.  4,674.2 Million for the year ended on that date, as considered in the standalone financial statements. This financial information of erstwhile Ranbaxy has been audited by other auditors (division / component auditors) whose report has been furnished to us and our opinion, in so far as it relates to the amounts and disclosures included in respect of erstwhile Ranbaxy and our report in terms of sub–sections (3) and (11) of Section 143 of the Act, insofar as it relates to erstwhile Ranbaxy is based solely on the report of such other auditors (division / component auditors).

Our opinion on the standalone financial statements, and our report on the Other Legal and Regulatory Requirements below, is not modified in respect of the above matter with respect to our reliance on the work done and the report of the other auditors (division / component auditors).

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government in terms of Section 143(11) of the Act, based on our comments and in terms of the comments in the report of the other auditors (division / component auditors) in respect of the amalgamating Company referred in the 'Other Matter' section above, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and the financial information adequate for the purpose of our audit have been received in respect of the amalgamating company audited by the other auditors (division / component auditors) referred in the 'Other Matter' section above.

(c) The report on the financial information of the amalgamating company audited by the other auditors (division / component auditors) referred in the 'Other Matter' section above has been sent to us and has been properly dealt with by us in preparing this report.

(d) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and the financial information in respect of the amalgamating company audited by the other auditors (division / component auditors) referred in the 'Other Matter' section above.

(e) In our opinion, and based on the consideration of the report of the other auditors (division / component auditors) on the financial information of the amalgamating company referred in the 'Other Matter' section above, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us and in terms of the report of the other auditors (division / component auditors) in respect of the amalgamating company referred in the 'Other Matter' section above:

i. The standalone financial statements disclose the impact of pending litigations on the financial position of the company –Refer Notes 28(a) and 28(c) to the standalone financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long–term contracts including derivative contracts – Refer Note 6 and Note 10 to the standalone financial statements;

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

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to In Paragraph 1 Under 'Report on Other Legal and Regulatory Requirements' Section of Our Report of Even Date)

Our reporting on the Order includes erstwhile Ranbaxy which has been audited by other auditors (division / component auditors) referred in the 'Other Matter' section of our report of even date and our report in respect of the division (erstwhile Ranbaxy) is based solely on the report of the other auditors (division / component auditors), to the extent considered applicable for reporting under the Order in the case of the standalone financial statements.

(i) In respect of its fixed assets:

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

(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion and the opinion of the other auditors (division / component auditors), is reasonable having regard to  the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us and the other auditors (division / component auditors), no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us and the other auditors (division / component auditors), the inventories, except for goods in transit, were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and the opinion of the other auditors (division / component auditors) and according to the information and explanations given to us and the other auditors (division / component auditors), the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and the opinion of the other auditors (division / component auditors) and according to the information and explanations given to us and the other auditors (division / component auditors), the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us and the other auditors (division / component auditors), the Company has granted loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013 (hereinafter referred to as "the Act"), where:

(a) In respect of loans granted to an associate:

(I) There is no receipt of the principal amount of Rs.  512.0 Million and the interest thereon of X 88.8 Million.

(II) There is no evidence of reasonable steps having been taken for the recovery of the principal outstanding or interest receivable. As represented to us by the Management of the Company, the Company is evaluating various options to recover its dues in respect of the principal amount and the interest thereon.

Refer Note 45 to the Financial Statements.

(b) In respect of the other loans:

(I) The receipts of the principal amounts have been regular / as per stipulations. No interest was due during the year in respect of such loans.

(II) There is no overdue amount remaining outstanding as at the year–end.

(iv) In our opinion and the opinion of the other auditors (division / component auditors) and according to the information and explanations given to us and the other auditors (division / component auditors), having regard to the explanations that some of

the items purchased are of a special nature and suitable alternative sources are not readily available for obtaining comparable quotations and that some of the items sold are of a special nature where there are no similar transactions with other parties, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our and the other auditors (division / component auditors) audit, we and the other auditors (division / component auditors) have not observed any continuing failure to correct major weakness in such internal control system.

(v) According to the information and explanations given to us and the other auditors (division / component auditors), the Company has not accepted any deposit from the public during the year in terms of the provisions of Sections 73 and 76 or any other relevant provisions of the Act.

(vi) We and the other auditors (division / component auditors) have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and the Cost Accounting Records (Pharmaceutical Industry) Rules, 2011 prescribed by the Central Government under sub–section (1) of Section 148 of the Act, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We and the other auditors (division / component auditors) have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us and the other auditors (division / component auditors), 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, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities, though there have been slight delays in few cases.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value added Tax, Cess and other material statutory dues in arrears as at 31st March, 2015 for a period of more than six months from the date they became payable.

(d) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder within time.

(viii) The Company does not have accumulated losses of the Company at the end of the financial year, however the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) In our opinion and the opinion of the other auditors (division / component auditors) and according to the information and explanations given to us and the other auditors (division / component auditors), the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders.

(x) In our opinion and the opinion of the other auditors (division / component auditors) and according to the information and explanations given to us and the other auditors (division / component auditors), the terms and conditions of the guarantees given and letters of comfort issued by the Company for loans taken by others from banks and financial institutions are not prima facie prejudicial to the interests of the Company.

(xi) In our opinion and the opinion of the other auditors (division / component auditors) and according to the information and explanations given to us and the other auditors (division / component auditors), except for term loans lying unutilised as at 31st March, 2015, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xii) To the best of our and the other auditors (division / component auditors) knowledge and according to the information and explanations given to us and the other auditors (division / component auditors), no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 117366W/W–100018)

RAJESH K. HIRANANDANI

Partner

(Membership No. 36920)

Place of Signature: Mumbai

Date: 29th May, 2015 [