We have audited the attached Balance Sheet of BIRLA CORPORATION LIMITED
 as at 31st March, 2011, 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 these
 financial statements based on our audit.
 
 We have 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.
 
 As required by the Companies (Auditors Report) Order, 2003, as amended
 by the Companies (Auditors Report) (Amendment) Order, 2004 issued by
 the Central Government in terms of sub-section (4A) of section 227 of
 the Companies Act, 1956 (the act), we enclose as Annexure, a statement
 on the matters specified in paragraphs 4 and 5 of the said order.
 
 Further to our comments in the Annexure referred to above, we report
 that:
 
 1) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit;
 
 2) 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 and proper returns, adequate for the purpose of our
 audit;
 
 3) The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account.
 
 4) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report and read with notes
 comply with the Accounting Standards referred to in sub-section (3C) of
 section 211 of the Companies Act, 1956;
 
 5) On the basis of the 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 except
 in case of Mr. N K Kejriwal, in absence of his declaration, we are
 unable to comment on his status under section 274(l)(g).
 
 6) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read with other notes
 and in particular notes no. (B) 3 and 14 in schedule 23 , 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 31st March, 2011;
 
 b) In the case of the Profit and Loss Account, of the PROFIT for the
 year ended on that date; and
 
 c) In the case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 1.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets have been physically verified wherever practicable
 on a phased manner by the management / internal auditors and the
 reconciliation of the quantities with the book records has been done on
 continuous basis except in case of Soorah Jute Mills unit where
 verification could not be done due to suspension of work. Further the
 differences, if any, arising out of such reconciliation so far have
 been adjusted and no serious discrepancies between book records and
 physical inventory have been noticed.
 
 (c) Substantial part of fixed assets has not been disposed off during
 the year so as to affect the going concern.
 
 2.  (a) The inventory has been physically verified at reasonable
 intervals during the year by the ManagemenVInternal Auditors except in
 case of Soorah Jute Mills unit where verification could not be done due
 to suspension of work.
 
 (b) In our opinion, the procedure of physical verification of inventory
 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 examination of the records of inventory, we are
 of the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and the book stocks, wherever ascertained were not
 significant and have been properly dealt with in the books of account.
 
 3.  (a) The Company has not granted loans secured or unsecured to
 companies, firms or other parties covered in the register maintained
 u/s 301 of the Companies Act, 1956. However interest free unsecured
 advances have been given to four subsidiaries, the maximum balance
 outstanding at any time during the year and closing balance of such
 advances as on 31.03.11 wereRs. 298.80 Lacs and 204.36 lacs respectively.
 The advances to three subsidiaries have been adjusted during the year.
 Advance amounting to Rs. 204.36 lacs to one subsidiary will be realized /
 adjusted on implementation of the project.  Accordingly clauses (b) and
 (c) of the Order are not applicable.
 
 (b) There was no overdue amount of more than Rs. 1 lac in respect of the
 above advance granted by the Company.
 
 (c) The Company has not taken any loans secured or unsecured from
 companies, firms or other parties covered in the register maintained
 u/s 301 of the Companies Act, 1956. Accordingly clauses (f) and (g) of
 the Order are not applicable.
 
 4.  In our opinion, and according to the information and explanations
 given to us, there is 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.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in section 301 of the Act have been duly entered in the
 register required to be maintained in pursuance of Section 301 of the
 Companies Act 1956.
 
 (b) According to the information available and explanations given to
 us, the transactions made in pursuance of such contracts or
 arrangements aggregating during the year to Rs. 5,00,000/- or more in
 respect of each party have been made at prices which are reasonable
 having regard to prevailing market prices for such goods, materials or
 services or the prices at which transactions for similar items have
 been made with other parties.
 
 6.  (a) In our opinion and according to the information and
 explanations given to us, the Company has complied with the directives
 issued by the Reserve Bank of India and the provisions of Section 58A
 and Section 58AA of the Companies Act, 1956 and the rules framed there
 under with regard to deposits accepted from the public.
 
 (b) There have been no proceedings before the Company Law Board,
 National Company Law Tribunal, Reserve Bank of India.  any Court and
 any other Tribunal in this matter.
 
 7.  The Company has internal audit system commensurate with the size
 and nature of the business of the Company.
 
 8.  The Central Government has prescribed maintenance of cost records
 under Section 209(l)(d) of the Companies Act, 1956 for the Companys
 Cement, Jute , Power and Auto Trim Units. We have broadly reviewed such
 accounts and records and are of the opinion that prima facie the
 prescribed accounts and records have been maintained but no detailed
 examination of such records and accounts has been carried out by us.
 
 9.  (a) According to the information and explanations given to us and
 
 on the basis of our examination of the books of account, the Company
 has generally been regular in depositing undisputed statutory dues
 including provident fund, investor education and protection fund,
 employees State Insurance, income-tax, sales- tax, wealth tax, service
 tax, custom duty, excise duty, cess and any other dues during the year
 with the appropriate authorities.  According to information and
 explanations given to us no undisputed statutory dues as above were
 outstanding as at 31st March 2011 for a period of more than six months
 from the date they became payable.
 
 (b) According to the records of the Company, there are no dues
 outstanding of income tax, sales tax, wealth tax, service tax, custom
 duty, excise duty and cess on account of any dispute.  other than the
 following:
 
 Name of           Nature of         Amount        Period to which
 the Statute         Dues          (Rs. In Lacs)     the amount
                                                   relates
 
 Sales Tax &      Sales Tax& VAT     700.62       1993-2008
 
                  VAT Laws         1,477.61       1989-2008
 
                                     176.34       1993-1994
 
 Central Excise   Excise Duty      1,391.15       1980-2010
 Act, 1944                           154.89       2008-2009
 
                                      42.55       1988-1999
 
 Finance Act,     Service Tax         72.56       2008-2010
 
                                 1944314.21       2005-2010
 
 Income Tax       Income Tax       4,102.73       2007-2008
 Act, 1961   
 
 
 
 Name of the Statue           Forum where pending
 
 Sales Tax &
 VAT Laws                  Department/1st Appellate Authority
                           Tribunals
                           Honble High Court & above         
 
 Central Excise
 Act, 1944                 Department/1st Appellate Authority
 
                           Tribunals
 
                           Honble High Court & above
 
 Finance Act,
 1944                      Department/1st Appellate Authority
                           Tribunals
 
 Income Tax
 Act, 1961                 Honble High Court & above
 
 10.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the current
 financial year and in the immediately preceding financial year.
 
 11.  According to the information and explanations given to us the
 company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holder.
 
 12.  According to the information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.
 
 13.  The Company is not a chit fund/nidhi/mutual benefit fund/society.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 15.  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.
 
 16.  According to the information and explanations given to us, term
 loans were applied for the purpose for which the loans were obtained.
 
 17.  On the basis of our review of statements of accounts and as
 confirmed by the management, funds raised on short-term basis have not
 been used for long-term investment.
 
 18.  The company has not made any preferential allotment of shares
 during the year to parties and companies covered in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 19.  The security/charges have been created in respect of the
 debentures issued.
 
 20.  The Company has not raised any money by way of public issue during
 the year.
 
 21.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the company
 has been noticed or reported during the year.
 
                                       For R R KHANDELWAL & CO.  
                                          Chartered Accountants
 
                                                   Rajiv Singhi
 1B, Old Post Office Street,                            Partner
 
 Kolkata- 700 001                         Membership No. 053518
 
 Date : the 28th day of April, 2011.     (Firm Registration 
                                          No. 302050E)