1.  We have audited the attached Balance Sheet of GUJARAT SIDHEE CEMENT
 LIMITED as at 31 st March, 2011 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 (
 Order) 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 paragraph 4 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 accounts as required by law, have
 been kept by the Company so far as appears from our examination of
 those books.
 
 III.  The Balance Sheet and Profit & Loss Account dealt with by this
 report are in agreement with books of account.
 
 IV.  In our opinion, the Balance Sheet, the Profit & Loss Account and
 the 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 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 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;
 
 VI.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 notes thereon more particularly note no. 1 (a) and 1 (b) in Schedule 13
 regarding rehabilitation scheme sanctioned by Honble AAIFR being under
 implementation and non provision of interest of Rs. 346.02 crores
 claimed by Gujarat Government with Honble High Court for the reasons
 stated in the said note, 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 Balance Sheet of the state of affairs of the Company
 as at 31 st March, 2011;
 
 (b) in the case of Profit & Loss Account of the Loss for the year ended
 on that date; and
 
 (c) in case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO AUDITORS REPORT
 (Referred to in paragraph (3) of our report of even date)
 
 1.  In respect of its fixed assets:
 
 (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 by the management
 during the year, According to the information and explanation given to
 us no material discrepancies were noticed on such verification;
 
 (c) There has not been any significant disposal of fixed assets during
 the year.
 
 2.  In respect of its inventories:
 
 (a) The inventory has been physically verified during the year by the
 management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventories 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 no
 material discrepancies were noticed on physical verification as
 compared to book records.
 
 3.  i) In respect of loans granted to parties covered in the register
 maintained u/s 301 of the Companies Act, 1956.
 
 The Company has not granted any loans or advances to companies, firms
 or other parties covered in the Register maintained under section 301
 of the Companies Act, 1956. Consequently, reporting requirements as per
 clauses (iii) (a) to (iii) (d) of paragraph 4 of the Order are not
 applicable in case of the company.
 
 ii) In respect of loans taken from parties covered in the register
 maintained u/s 301 of the Companies Act, 1956.
 
 The Company has not taken any loans or advances in the nature of loans,
 from parties covered in the register maintained under section 301 of
 the Companies Act, 1956 and therefore reporting requirements as per
 clauses (iii) (e) to (iii) (g) of paragraph 4 of the Order are not
 applicable in case of company.
 
 4.  In respect of internal control
 
 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 with regard to sale of goods. During
 the course of our audit, we have not observed any continuing failure to
 correct major weaknesses in internal control system.
 
 5.  In respect of transactions need to be entered into a register
 maintained u/s 301 of the Companies Act, 1956.
 
 In our opinion and as explained to us, there were no contracts and
 arrangements referred in Section 301 of the Companies Act, 1956 that
 need to be entered in the register required to be maintained under that
 section .
 
 6.  In respect of deposits from public
 
 The Company has not accepted deposits from the public within the
 meaning of section 58A of the Companies Act, 1956 and the Rules framed
 there under. We are informed that no order has been passed by the
 Company Law Board (the CLB) or National Company Law Tribunal (the
 NCLT) or Reserve Bank of India (the RBI) or any Court or any other
 Tribunal.
 
 7.  In respect of internal audit system
 
 Internal Audit has been carried out by a firm of chartered accountants.
 On the basis of reports of internal auditors, in our opinion the
 internal audit system is commensurate with the size of the Company and
 nature of its business.
 
 8.  In respect of maintenance of cost records
 
 We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the Order made by the Central Government for
 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 has
 been made and maintained. We have not, however, made a detailed
 examination of the records.
 
 9.  In respect of statutory dues:
 
 (a) In our opinion and according to the information and explanation
 given to us, the company is generally regular in depositing undisputed
 statutory dues with the appropriate authorities in respect of provident
 fund, employees state insurance, income tax, wealth tax, sales tax,
 investor education and protection fund, profession tax, royalty, cess
 and other material statutory dues applicable to it except there were
 some delays on few occasions in payment of Sales Tax and Excise duty.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of income tax, wealth tax, sales
 tax, customs duty, excise duty, service tax, royalty and cess were in
 arrears, as at 31st March, 2011 for a period of more than six months
 from the date they became payable.
 
 (c) According to the information and explanations given to us, there
 are no dues of wealth tax and cess which have not been deposited on
 account of any dispute. In respect of excise duty, customs duty, sales
 tax and income tax, details of disputed dues not deposited are given
 hereunder:
 
 Name of the      Nature of     Amount    Period to     Forum where
 Statute          the Dues      Involved  which         dispute is
                                (Rs.lac)  amount        pending
                                          relates
 
 
 Central
 Excise
 Act, 1944        Excise Duty   36.42     1992-93       Customs, Excise
                                                        & Gold (Control)
                                                        Appellate
                                                        Tribunal  
 
 
 Customs
 Act, 1962        Custom Duty   35.85     1995-96       Customs, Excise
                                                        & Gold (Control)
                                                        Appellate
                                                        Tribunal  
 
 Customs
 Act,1962         Custom Duty   0.62      2008-09       Commissioner
                                                        (Appeal),Custom
 
 Central
 Excise /
 CENVAT Service   Tax Duty      68.12     2005-06       Custom, Excise &
 Credit Rules,                                          service Tax Appe-
 2004                                                   llate Tribunal
 
 
 Central Excise
 / CENVAT         Service Tax   64.35     2005-06       Commissioner of
 Credit Rules                                           Central Excise  
 2004
 
 Central Excise
 /CENVAT          Service Tax   407.84    2006-07       Commissioneratel
 Credit Rules,                                          Level
 2004                                                   at Central
                                                        Excise  
 
 Central Excise
 / CENVAT         Service Tax   184.61    2007-08       Commissioner,
 Credit Rules,                                          at central
 2004                                                   Excise
    
 
 Central Excise
 / CENVAT         Service Tax   188.78    2008-09       Commissioner,
 Credit Rules,                                          central
 2004                                                   Excise 
 
 Central Excise
 / CENVAT         Service Tax   384.47    2009-10       Commissioner,
 Credit Rules,                                          central
 2004                                                   Excise 
 
 
 Income Tax
 Act, 1961        Income Tax    1.30      2007-08       Commissioner,
                  Deducted at                           income Tax
                  Source 
 
 Rajasthan
 Sales Tax
 Act, 1994        Sales Tax     24.73     1997-98       Rajasthan
                                                        High Court
 
 Gujarat
 Sales Tax
 Act,1969         Sales Tax     60.60     2002-03       Jt.Commissioner
                                                        Rajkot
 
 
 Gujarat
 Sales Tax
 Act,1969         Sales Tax     56.29     2003-04       Jt.Commissioner
                                                        Rajkot
 
 
 Gujarat
 Sales Tax
 Act, 1969        Sales Tax     21.65     2004-05       Jt.Commissioner
                                                        Rajkot
 
 
 Gujarat
 Value
 Added Tax        Sales Tax     224.59    2006-07       Tribunal, GVAT
 Act,
 2003  
 
 
 10.  In respect of accumulated losses and cash losses
 
 The accumulated losses of the Company as at the end of the year are not
 more than fifty percent of its net worth.  The Company has incurred
 cash loss during the year, however there was no cash loss in the
 immediately preceding financial year.
 
 11.  In respect of dues to financial institution / banks / debentures
 
 In accordance with the sanctioned rehabilitation scheme (scheme)
 approved by Honble Appellate Authority for Industrial and Financial
 Reconstruction (AAIFR) the repayment schedule of dues to Banks and
 Financial Institutions has been revised/ rescheduled.
 
 The Companys proposal to Banks and Financial Institutions (Lenders)
 for One Time Settlement (OTS) of their dues has been accepted by the
 lenders except New India Assurance Company Limited (NIAC). In respect
 of NIAC, according to the company, in terms of Scheme, the dues are
 repayable over a period of seven years beginning from 1.4.2004, the
 balance of which is under reconciliation. The company has so far not
 made any repayment of dues of NIAC. The amount of Rs. 34.48 Lacs
 towards principal and interest was outstanding as on 31st March, 2011.
 
 12.  In respect of loans and advances granted on the basis of security.
 
 The Company has not granted loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13.  In respect of guarantee given for loans taken by others
 
 According to the information and explanation given to us, the company
 has not provided guarantees for loans taken by others from banks and
 financial institutions.
 
 14.  In respect of application of term loans
 
 The Company has not obtained any term loans during the year.
 
 15.  In respect of fund used
 
 According to records examined by us and the information and
 explanations given to us, on an overall basis, funds raised on short
 term basis have not, prima facie, been used for long term investment.
 
 16.  In respect of preferential allotment of shares
 
 During the year, the Company has not made any preferential allotment of
 shares to parties and companies covered in the Register maintained
 under section 301 of the Companies Act, 1956.
 
 17.  In respect of securities created for debentures
 
 There are no debentures issued and outstanding during the year.
 
 18.  In respect of end use of money raised by public issues
 
 During the year, the Company has not raised money by public issue(s).
 
 19.  In respect of fraud
 
 To the best of our knowledge and belief, and according to the
 information and explanation given to us, no fraud on or by the Company
 was noticed or reported during the year that causes the financial
 statements to be materially misstated.
 
 20.  General
 
 The nature of the Companys activities is such that the requirements of
 clauses (xiii) and (xiv) of paragraph 4 of the Order are not
 applicable.
 
 
                                                 For MANUBHAI & CO.
 
                                              CHARTERED ACCOUNTANTS
                                             Registration No.: 106041W
 
  
                                                 (K.C. PATEL)
 
                                                  PARTNER
                                              MEMBERSHIP NO. 30083
 
 Place: Mumbai
 Dated: May 3, 2011