1.  We have audited the attached Balance Sheet of M/s.  Ahluwalia
 Contracts (India) Limited, as at 31st March, 2011 and also the Profit
 and Loss Account of the Company for the year ended on that date annexed
 thereto and the cash flow statement for the year ended on that date.
 These financial statements are the responsibility of the Company’s
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We have conducted our audit in accordance with the auditing
 standards generally accepted in India. Those standards require that we
 plan and perform the audit to obtain reasonable assurance about whether
 the financial statements are free of material mis-statement. 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.
 We believe that our audit provides a reasonable basis for our opinion.
 
 3.  As required by the Companies (Auditors’ Report) Order, 2003, issued
 by Central Govt. of India in terms of section 227(4A) of the Companies
 Act, 1956, we annex hereto a statement on the matters applicable to the
 company as specified in the paragraph 4 and 5 of the said order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 a) We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 b) In our opinion, proper books of accounts as required by law, have
 been kept by the company so far as appears from our examination of the
 books except for as referred to in point No.(i)(a) of the Annexure to
 the report;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in section 211(3C) of the Companies Act, 1956;
 
 e) On the basis of written representations received from the directors
 as on 31st March 2011 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on 31st March,
 2011 from being appointed as a director in terms of clause (g) of
 Sub-section (1) of section 274 of the Companies Act, 1956;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read with significant
 accounting policies and notes there on in schedule 19 give a true and
 fair view in conformity with the accounting principles generally
 accepted in India:
 
 i) in the case of Balance Sheet, of the state of affairs of the Company
 as at 31st March, 2011;
 
 ii) in the case of Profit and 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 flow for the year
 ended on that date.
 
 Annexure to Auditors’ Report
 Annexure referred to in paragraph 3 of our report of even date
 Ahluwalia Contracts (India) Limited
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets except for shuttering and scaffolding materials for which
 considering the nature of the business of the company, maintenance of
 record is not feasible.
 
 (b) All fixed assets have not been physically verified by the
 management during the year. There is a regular programme of
 verification of fixed assets except for shuttering and scaffolding
 materials which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. In accordance with
 the said programme part of the fixed assets have been physically
 verified by the management during the year. As informed, no material
 discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of major
 items of inventory at reasonable intervals during the year.
 
 (b) The procedures of physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) The company is mainly engaged in the business of construction. In
 view of multifarious jobs at different sites spread at different
 locations and practical difficulties, proper records of inventory of
 only major inputs have been maintained. No material discrepancies were
 noticed on physical verification of such stocks.
 
 (iii) (a) The company has granted interest free unsecured loans to its
 five subsidiary companies listed in the register maintained under
 Section 301 of the Companies Act, 1956. The maximum amount involved
 during the year was Rs.472.25 lacs and the year end balance of loans
 granted to such companies was Rs.472.25 lacs and the terms and conditions
 of the loans are not prima facie prejudicial to the interest of the
 company.
 
 (b) The aforesaid loan is repayable on demand & there is no repayment
 schedule.
 
 (c) Since the loan is repayable on demand, we are unable to comment
 whether there has been default in repayment.
 
 (d) As informed to us, the company has not taken any loans, secured or
 unsecured from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Accordingly the provisions of clause 4(iii) (e, f and g) of the
 companies (Auditor’s Report) order, 2003 are not applicable to the
 company.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business for the purchase of inventory and fixed assets and also for
 the sale of goods and services. During the course of our audit, no
 major weakness has been noticed in the internal controls in respect of
 these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the transactions that need to be
 entered into the register maintained under section 301 of the Companies
 Act, 1956 have been so entered.
 
 (b) According to the information and explanations given to us, the
 transactions made in pursuance of contracts or arrangements entered
 into the register maintained under section 301 of the Companies Act
 1956 have been made at prices which are reasonable having regard to
 prevailing market prices wherever available at the relevant time.
 
 (vi) According to the information and explanations given to us, the
 company has not accepted any deposits from the public within the
 meaning of section 58A & 58AA of the companies Act, 1956 and the rules
 framed there under.
 
 (vii) In our opinion, the company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) The Central Government has not prescribed for maintenance of
 cost records under Section 209 (I) (d) of the Companies Act, 1956, for
 the Company.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 value added tax, wealth-tax, custom duty, excise duty, service tax,
 cess have generally been regularly deposited with the appropriate
 authorities except for delays in some cases in Service Tax & TDS.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 sales-tax, wealth-tax, custom duty, excise duty, service tax, cess and
 other undisputed statutory dues were outstanding at the year end for a
 period of more than six months from the date they became payable.
 
 (c) According to the records of the company, the dues outstanding of
 sales-tax, income-tax, custom duty, wealth-tax, excise duty, service
 tax, cess on account of any dispute, are as follows:
 
 Name of the Statute   Nature of Dues           Amount         Period to
                                              (Rs.in Lacs)       which the
                                                          amount relates
 
 Central Excise Act    Demand for Excise Duty   46.37          1998-1999
                                                             & 2000-2001
 
 Income Tax Act        Income Tax Demand         1.37          2008-2009
 
 Indian Stamp Act      Stamp duty on 
                       Real Estate              57.42          1990-1991
                       Project
 
 Work Contract 
 Tax Act,              Works Contract 
                       Tax Demand               15.26          2004-2005
 Delhi
 
 Work Contract 
 Tax Act,              Works Contract 
                       Tax Demand                3.01          1998-1999
 
 West Bengal
 Value Added Tax Act,  VAT Demand                5.93          2005-2006
 Haryana
 
 Value Added Tax Act,  VAT Demand                7.79          2006-2007
 Karnataka
 
 Value Added Tax Act,  VAT Demand              305.75          2006-2010
 Karnataka
 
 Value Added Tax Act,  VAT Demand               16.43          2005-2006
 Maharashtra
 
 Value Added Tax Act,  VAT Demand              492.98          2005-2008
 Punjab
 
 Value Added Tax Act,  VAT Demand               31.59          2006-2007
 Ghaziabad
 
 Value Added Tax Act,  VAT Demand            12597.39          2006-2009
 Delhi
 
 Name of the Statute                 Forum where dispute is pending
 
 Central Excise Act                  CESTAT, New Delhi
 
 Income Tax Act                      Commissioner of Income Tax
                                     (Appeal), New Delhi
 
 Indian Stamp Act                    Allahabad Revenue Tribunal
 
 Work Contract Tax Ac Delhi          Hon’ble Delhi High Court
 
 Work Contract Tax Ac West Bengal    Tribunal, Kolkata
 
 Value Added Tax Act, Haryana        VAT Tribunal, Chandigarh
 
 Tribunal Court, Bangalore
 
 Value Added Tax Act, Karnataka      Joint Commissioner (Appeal-3),
                                     Karnataka
 
 Value Added Tax Act, Maharashtra    Dy. Commissioner (Audit), Mumbai
 
 Value Added Tax Act, Punjab        High Court, Chandigarh
 
 Value Added Tax Act, Ghaziabad     Commissioner Appeals-IV /
                                    Tribunal-I, Ghaziabad
 Value Added Tax Act, Delhi         Commissioner, DVAT, New Delhi
 
 
 
 Name of the Statute   Nature of Dues           Amount         Period to
                                              (Rs.in Lacs)       which the
                                                          amount relates
 
 
 Value Added Tax Act,  VAT Demand                56.66         2004-2005
 West Bengal                                                 & 2006-2007
 
 Value Added Tax Act,  VAT Demand                 1.54         1997-1998
 West Bengal
 
 The Finance Act 2004  Service Tax Demand      7309.99         2004-2009
 and the Service 
 Tax Rules
 
                       Service Tax Demand       211.95         2008-2009
 
                       Service Tax Demand      7078.83         2008-2010
 
                       Service Tax Demand       829.80         2008-2009
 
                       Service Tax Demand      1434.97  Sept.04 to Jan &   
                                                        Apr 08 to Aug 08 
                       Service Tax Demand        99.09         2006-2009   
 
                       Service Tax Demand        15.74         2006-2009
 
                       Service Tax Demand      1240.99         2004-2008
 
                       Service Tax Demand      1381.42      July 2004 to 
                                                              March 2008  
 
                       Service Tax Demand         8.71         2007-2008
 
 
 Name of the Statute                Forum where dispute is pending
 
 Value Added Tax Act,               Directorate of Commercial Tax/
 West Bengal                        Jt. Commissioner, Kolkata
 
 Value Added Tax Act,               Settlement Commissioner,
 West Bengal
 
 The Finance Act 2004               Appeal Tribunal, CETATE,
 and the Service Tax Rules
                                    Tribunal, CESTATE, New Delhi
                                    Commissioner Service Tax,
                                    Delhi
 
                                    Commissioner Service Tax, Gurgaon
 
                                    Commissioner Service Tax, Kolkata
                              
                                    Commissioner / Joint Commissioner 
                                    Service Tax, Ludhiana
 
                                    Superintendent (AR Service Tax), 
                                    Jamnagar
                                    Asstt. Commissioner, Division-
                                    III, Service Tax, Mumbai
                                    Superintendent, Service Tax,
                                    Range-27, Noida
                                    Asstt. Commissioner Service
                                    Tax, Rajkot
 
 (x) The company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) 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 repayment of dues to a financial
 institution 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 other securities.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the nature of activities of the Company does not attract
 any special statute applicable to chitfund, nidhi / mutual benefit fund
 and societies.
 
 (xiv) In respect of dealing in shares, securities, debentures and other
 investments, in our opinion and according to the information and
 explanations given to us, proper records have been maintained for the
 transactions and contracts and timely entries have been made therein.
 The shares, debentures and other securities have been held by the
 company in its own name.
 
 (xv) According to the information and explanations given to us, the
 company has given corporate guarantee for loans taken by its wholly
 owned subsidiary namely M/s. Ahlcon Ready Mix Concrete Pvt. Ltd. from
 bank amounting to Rs.27.00 crores. In our opinion the terms & conditions
 are not prejudicial to the interest of the company.
 
 (xvi) Based on information and explanations given to us by the
 management, 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 and cash flow statement of
 the company, we report that no funds raised on short-term basis have
 been used for long-term investment.
 
 (xviii) The company has not made preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Companies Act 1956.
 
 (xix) The company did not have any debenture outstanding during the
 year.
 
 (xx) The company has not raised any money by public issue during the
 year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the company has been noticed or reported during
 the course of our audit.
 
                                        For Arun K. Gupta & Associates
 
                                         Firm Registration No. 000605N
 
                                                 Chartered Accountants
 
                                                 Gireesh Kumar Goenka
 
 Place : New Delhi                                            Partner
 
 Date : 30.05.2011                                        M.No. 96655