We have audited the attached Balance Sheet of Chettinad Cement
 Corporation Ltd (the Company) as at 31 March 2011 and the Profit and
 Loss account and 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 these financial statements based on our audit.
 
 We 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 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.
 
 1) As required by the Companies (Auditor''s Report) Order, 2003 (the
 Order) as amended by the Companies (Auditor''s Report) (Amendment) Order
 2004 issued by the Central Government of India in terms of Section 227
 (4A) 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.
 
 2) 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 examination of those
 books.
 
 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,
 to the extent applicable.
 
 e) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, we report that none of
 the directors as on 31 March 2011 is disqualified from being appointed
 as a director in the company in terms Section 274 (1) (g) of the
 Companies Act, 1956 on the said date.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 schedules and
 
 Note N0.26 regarding change in accounting policy on charging
 depreciation/depletion on land during the year, which has resulted in
 understatement of profit to the extent of Rs.612.13 lakhs includes an
 amount of Rs.460.32 lakhs pertains to earlier years and
 
 subject to Note no.9 regarding the liability, if any under the
 provisions of jute packaging materials (Compulsory use in the Packing
 Commodities) Act , to 87 and 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 March 31,2011.
 
 (ii) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date, and
 
 (iii) In the case of the Cash Flow Statement, of the cash flow for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT REFERRED TO IN PARAGRAPH 1 0F OUR REPORT
 OF EVEN DATE
 
 i. a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of Fixed
 Assets.
 
 b) These Fixed Assets have been physically verified by the management
 at reasonable intervals and no material discrepancies were noticed on
 such verification.
 
 c) No substantial parts of fixed assets of the company have been
 disposed of during the year.  
 
 ii. a) Inventories have been physically
 verified at reasonable intervals by the management.
 
 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 maintaining proper records of inventory and
 discrepancies on physical verification as compared to book records were
 not material and have been dealt properly in the books of account.
 
 iii. a) The Company has taken an unsecured inter corporate deposit of
 Rs.i7crores from Chettinad Morimura Semi Conductor Materials Pvt Ltd.
 in which the Directors of this Company are Directors. The maximum
 amount due during the year was Rs.22 crores and the year end balance of
 Deposit taken was Rs.22 crores.
 
 In our opinion, the rate of interest and other terms and conditions of
 the Deposit are not, prima facie, prejudicial to the interest of the
 company.
 
 The Company is regular in payment of interest and the repayment of the
 principal during the year ended 31 March 2011.
 
 The Company has not given any loans secured or unsecured to parties
 referred to Section 301 of the Companies Act, 1956.
 
 iv. In our opinion, 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 observed in the internal control system.
 
 v. According to the explanation and information furnished by the
 company there are no contracts or arrangements referred to in Section
 301 of the Companies Act 1956, entered into by the company except the
 inter corporate deposit referred in item (iii) above which has been
 entered into the register maintained under section 301 of the Companies
 Act, 1956.
 
 vi. In our opinion, and according to the information and explanations
 given to us, the Company has complied with the provisions of section
 58A and 58AA and the rules framed there under with regard to the
 deposits accepted from the public.
 
 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 relating to manufacture of cement pursuant to the order made by
 the Central Government for the maintenance of cost records under
 Section 209 (i) (d) of the Companies Act 1956 and we are of the opinion
 that prima facie the prescribed accounts and records have been
 maintained. We have not however made a detailed examination of the
 records with a view to determining whether they are accurate or
 complete.
 
 ix. The company has been generally 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, Customs Duty, Excise Duty, Cess and other
 statutory dues with the appropriate authorities in India.
 There are no arrears of outstanding statutory dues as on 31.3.2011 for
 a period of more than six months from the date they became payable. •
 
 At the end of the financial year there were no dues of Sales Tax,
 Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty and
 Cess, which have not been deposited on account of any dispute except as
 follows:
 
 
 NAME OF THE STATUTE  NATURE OF DUES  AMOUNT   FORUM WHERE
                                      (Rs. IN  DISPUTE
                                      LAKHS)   IS PENDING 
 
 TNGST Act 1959       SalesTax and    1.27     Sales Tax Appellate
                      Penalty                  Tribunal,Chennai.
 
 
 x.The company did not have any accumulated losses at the end of the
 financial year, nor had it incurred any cash loss during the financial
 year or in the immediately preceding financial year.
 
 xi. According to the records produced, the company has not defaulted in
 repayment of its dues to any financial institution or bank or debenture
 holders during the year.
 
 xii. The company has not granted any loansand advances on the basis of
 security by way of pledge of shares, debenturesand other securities.
 
 xiii. The provisions of any special statute applicable to chit fund/
 nidhi/ mutual benefit fund/societies are not applicable to the Company.
 
 xiv. In our opinion and according to the information and explanations
 given to us, the company is not a dealer ortrader in shares,
 securities, debentures and other investments.
 
 xv. According to the information given to us, the company has not given
 any guarantee for loans taken by others from banks orfinancial
 institutions.
 
 xvi. On the basis of review of utilization of funds on an overall
 basis, in ouropinion, the term loan taken by the company were applied
 for the purposes for which the loans were obtained.
 
 xvii. On the basis of review of utilization of funds on an overall
 basis, in our opinion, the funds raised on short term basis have not
 been used for the long term investment during the year.
 
 xviii. 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.
 
 xix.The Company has not issued any debentures.
 
 xx.The Company has not raised any money by public issue during the
 year.
 
 xxi. During the course of our examination of the books of account
 carried out in accordance With the generaIIy accepted auditing
 practices in India, we have not come across any instance of fraud on or
 by the company nor have we been informed by the management of any such
 instance being noticed or reported during the year.
 
 for P.B.Vijayaraghavan & Co.
 Chartered Accountants
 Firm Regn.No.oo472iS
 P.B. Srinivasan
 Partner
 (M. No. 203774)
 
 
 for V.Soundararajan & Co
 Chartered Accountants
 Firm Regn.No.oo3943S
 V. S. Ravikumar
 Partner
 (M. No. 018030)
 
 
 for Krishaan & Co.
 Chartered Accountants
 Firm Regn.No.001453S
 V. Krishnan
 Partner
 (M. No. 010970)
 
 
 Place:Chennai
 Date:27.05.2011