Ambuja Cements

1.  We have audited the attached Balance Sheet of Ambuja Cements
 Limited (the Company) as at December 31, 2008 and also the Profit and
 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 these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation.  We believe that our audit provides a reasonable basis
 for our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended) 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 above, we
 report that:
 
 i. We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 ii. 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;
 
 iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the Balance Sheet, Profit and 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.
 
 v. On the basis of the written representations received from the
 directors, as on December 31, 2008, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 December 31, 2008 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at December 31, 2008;
 
 b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 c) in the case of 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
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a programme for physical verification on a
 rotational basis, which, in our opinion, is reasonable having regard to
 the size of the Company and the nature of its business. Accordingly,
 certain fixed assets have been physically verified by the management
 during the year and no material discrepancies were identified on such
 verification.
 
 (c) During the year, there was no substantial disposal of fixed assets.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals, other than materials lying with
 third parties, which have been substantially confirmed by them.
 
 (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 has maintained proper records of inventory and no
 material discrepancies were noticed on physical verification as
 compared to book records.
 
 (iii) (a) The Company has not granted any loans, secured or unsecured
 to companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956.  (b) 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.  (iv) In our opinion and according to the
 information and explanations given to us, there is an adequate internal
 control system commensurate with the size of the Company and the nature
 of its business, for the purchase of inventory and fixed assets and for
 the sale of goods and services. During the course of our audit, no
 major weakness has been noticed in the internal control system in
 respect of these areas.  (v) (a) According to the information and
 explanations provided by the management, we are of the opinion that the
 particulars of contracts or arrangements referred to in section 301 of
 the Act that need to be entered into the register maintained under
 section 301 have been so entered.  (b) In our opinion and according to
 the information and explanations given to us, the transactions made in
 pursuance of such contracts or arrangements exceeding value of Rupees
 five lakhs have been entered into during the financial year at prices
 which are reasonable having regard to the prevailing market prices at
 the relevant time.  (vi) The Company has not accepted any deposits from
 the public to which the directives issued by the Reserve Bank of India
 and the provisions of sections 58A, 58AA or any other relevant
 provisions of the Act and the rules framed there under apply.  (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 account 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. We have however not made a detailed examination of
 the records with a view to determine that they are accurate.  (ix) (a)
 The Company is regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, investor education
 and protection fund, employees state insurance, income-tax, sales-tax,
 wealth-tax, service tax, customs duty, excise duty, cess and other
 material statutory dues applicable to it.
 
 (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,
 wealth-tax, service tax, sales-.  tax, customs duty, excise duty, 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 disputed statutory
 dues on account of provident fund, investor education and protection
 fund, employees state insurance, income-tax, wealth-tax, service tax,
 sales-tax, customs duty, excise; duty, cess dues outstanding on account
 of any dispute, are as follows:
 
 Name of the       Nature of dues                   Amount**
 statute                                          (Rs. in crores)
 
 Central Excise    Demand of Excise Duty on            0.13
 Act, 1944         Clearance of Cement & Others        0.68
 
                                                       0.11
 
                   Denial of MODVAT credit on          0.02
 
                   Inputs and Capital Goods            0.75
 
                                                       3.18
                                                       2.32
                                                       0.45
                                                       1.28
 
                   Denial of Service Tax Credit        0.56
 
                                                       3.06
                                                       0.90
 
 Period to which       Forum where dispute
      the amount          is pending
         relates
 
 1999-2008             CESTAT*
                       CESTAT
                       Commissioner (A)
 
 1994-1997             Supreme Court*
 
 1993-1996             High Court*
 
 2002-2007             CESTAT*
 
 2002-2007             CESTAT
 
 1995-2008             Commissioner (A)*
 
 1995-2008             Commissioner (A)
 
 2005-2006             High Court
 2005-2007             CESTAT
 2005-2008             Commissioner (A)
 
 Name of the       Nature of dues                   Amount**
 statute                                        (Rs. in crores)
 
 Central Sales     Demand of Sales Tax /                3.30
 Tax Act, 1956     Additional Tax / Purchase Tax        7.18
 and Various State                                      0.89
 Sales Tax Act                                          9.62
 
 Custom Act, 1962  Demand of Custom Duty                0.93
 
                                                        0.06
                                                        0.44
 
 State Land        Demand of Land Tax                  14.57
 Tax Act                                                0.60
                   Environmental Cess                   1.18
 
 Chhattisgarh      Energy Development Cess              4.26
 Upkar
 (Sanshodhan
 Adhiniyam) 2004
 
 Period to which  Forum where dispute
      the amount  is pending
         relates
 
 1999-2006        Supreme Court
 
 2000-2008        High Court
 
 1991-2002        Tribunal
 
 1991-2005        Commissioner (A)
 
 2001-2007        CESTAT*
 
 2000-2007        Commissioner (A)*
 
 2000-2007        Commissioner (A)
 
 2006-2009        High Court
 
 2006-2008        Tax Board
 
 2008             High Court
 
 2006 onwards     High Court
 
 * In respect of these cases the Department is in appeal ** Net of
 amount deposited (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 the information and explanations given by the management,
 we are of the opinion that the Company has not defaulted in repayment
 of dues to debenture holders. The Company has no outstanding dues in
 respect of the financial institution or bank.
 
 (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 or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. The Company has invested
 surplus funds in marketable securities and mutual funds. According to
 the information and explanations given to us proper records have been
 maintained of the transactions and contracts and timely entries have
 been made therein. The marketable securities and mutual funds have been
 held by the Company, in its own name.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) The Company did not have any term loans outstanding during the
 year.  (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 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) According to the information and explanations given to us, the
 Company has created security on the debentures issued.
 
 (xx) The Company has not raised any money through a 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 S. R. BATLIBOI & ASSOCIATES
                                                Chartered Accountants
 
                                                      per Sudhir Soni
                                                              Partner
                                                Membership No.: 41870
 Mumbai
 February 6, 2009