We have audited the attached Balance Sheet of GUJARAT REFRACTORIES
 LIMITED as at March 31, 2001 and the Profit and Loss Account annexed
 thereto for year ended on that date and report that:
 
 1.  As required by the Manufacturing and Other Companies (Auditors
 Report) Order, 1988 issued by the Central Government under Section
 227(4A) of the Companies Act, 1956, we give in the Annexure a statement
 on the matters specified in paragraph 4 and 5 of the said Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 above, we report that:
 
 (a) We have obtained all the information and explanations which to the
 best of our knowledge and belief where necessary for the purposes of
 our audit;
 
 (b) The Balance Sheet and Profit & Loss Account dealt with by this
 report are in agreement with the Books of Account maintained by the
 Company;
 
 (c) 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 the
 books;
 
 (d) In our opinion, the Balance Sheet and the Profit & Loss Account
 comply with the mandatory Accounting Standards referred to in Section
 211 (3C) of the Companies Act, 1956 ;
 
 (e) On the basis of written representations received from the Directors
 of the Company as at March 31, 2001 and taken on record by the Board of
 Directors of the Company, we report that none of the directors is
 disqualified as at March 31, 2001 from being appointed as a director in
 terms of clause (g) of subsection (1) of section 274 of the Companies
 Act, 1956
 
 (f) Attention is invited to Note No. 1 in Schedule 12B regarding
 preparation of the accounts on going concern assumption, which is
 inappropriate under the facts and circumstances stated In the note.
 Under the circumstances, the extent of resultant adjustments in the
 assets and liabilities with effects on the year-end net worth and loss
 for the year is not ascertainable.
 
 Subject to the above, 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 thereon, give the information required by the
 Companies Act, 1956, in the manner so required and give a true and fair
 view,
 
 (i) in the case of the Balance Sheet of the state of affairs of the
 Company as at 31st March, 2001 and
 
 (ii) in the case of the Profit & Loss Account, of the loss for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (Referred to in paragraph (1) of our report of even date on the
 accounts of Gujarat Refractories Limited for the year ended on 31st
 March, 2001)
 
 (i) As no business transactions are carried out by the Company, the
 requirements of clauses (iii), (iv), (v), (vi), (x), (xii) and (xvi) of
 para 4(A) are not applicable to the Company.
 
 (ii) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets. In
 respect of factory buildings, the records do not show cost of each
 building separately, but the aggregate cost of buildings is recorded.
 We are informed that the management has physically verified fixed
 assets during the year and we are informed that no material
 discrepancies have been noticed by the management on such verification.
 
 
 (iii) None of the fixed assets have been revalued during the year.
 
 (iv) Except loans obtained from directors, the Company has not obtained
 any loans from companies, firms or other parties listed in the register
 maintained under section 301 of the Companies Act, 1956. The interest
 on loans obtained from directors would be chargeable as mutually
 agreed, since at present no interest has been agreed upon, terms of
 payment of the loans are also not specified. Other terms and conditions
 of said loans are not prima facie prejudicial to the interest of the
 Company. We are informed that there are no companies under the same
 management as definied under sub- section (1B) of section 370 of said
 Act.
 
 (v) The Company has not granted any loan to Companies, firms or other
 parties listed in the register maintained under section 301 of the
 Companies Act, 1956. We are informed that there are no companies under
 the same management as definied under sub-section (1B) of section 370
 of said Act.
 
 (vi) The Company has not given any loans or advances in the nature of
 loans to any parties during the year.
 
 (vii) According to the information and explanations given to us, there
 are no transactions of purchases of goods and materials and, sale of
 goods, material and services, by the company in pursuance of contracts
 or arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and aggregating during the period to Rs.
 50,000/- or more.
 
 (viii) During the year under review, the Company has not accepted any
 deposits from the public.
 
 (ix) In our opinion, reasonable records have been maintained by the
 Company for the sale and disposal of realisable scrap.
 
 (x) The Company had no internal audit system during the year under
 review.
 
 (xi) According to the records of the Company, Provident Fund dues have
 been regularly deposited during the year with the appropriate
 authorities. As explained to us, the provisions of Employees State
 Insurance Ac are not applicable to the Company.
 
 (xii) According to the information and explanations given to us, no
 undisputed amount payable in respect o Income-tax, Wealth-tax,
 Sales-tax, Custom duties and Excise duties as at 31st March, 2001 were
 outstanding for a period of more than six months from the date thebecame payable.
 
 (xiii) According to information and explanations given to us and on the
 basis of records examined by us, no personal expenses of employees or
 directors have been charged to revenue account other than those payable
 under contractual obligations or in accordance with generally accepted
 business practice.
 
 (xiv) As informed to us, the Company is out of the purview of
 provisions of the Sick Industrial Companies (Special Provisions) Act,
 1985 as it is registered a Small Scale Industrial undertaking.
 
                                              For C. C. CHOKSHI & CO
                                                Chartered Accountant
 AHMEDABAD                                              GAURAV SHMH
 [DATED: 14th August, 2001.]                               PARTNER