1.  We have audited the attached Balance Sheet of Heidelberg Cement
 India Limited (''the Company'') as at December 31, 2012 and also the
 Statement of profit and loss and the 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.
 
 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 (Auditor''s 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, statement of profit and loss and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 iv. In our opinion, the balance sheet, statement of profit and loss 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, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 December 31, 2012 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, 2012;
 
 b) in the case of the statement of profit and loss, 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.
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. No material
 discrepancies were noticed on such verification.
 
 (c) There was no disposal of a substantial part of fixed assets during
 the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (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 no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) According to the information and explanations given to us,
 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.  Accordingly, the
 provisions of clause 4(iii)(a) to (d) of the Order are not applicable
 to the Company and hence not commented upon.
 
 (b) According to information and explanations given to us, 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.  Accordingly, the provisions of clause
 4(iii)(e) to (g) of the Order are not applicable to the Company and
 hence not commented upon.
 
 (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 sale of goods. The
 activities of the Company do not include sale of services. During the
 course of our audit, we have not observed any major weakness or
 continuing failure to correct any major weakness in the internal
 control system of the Company 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 Companies Act, 1956 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 and exceeding the 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.
 
 (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, related to the manufacture of cement and are of the opinion
 that prima facie, the prescribed accounts and records have been made
 and maintained.
 
 (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 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 material 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 dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of Statute                   Nature of            Amount
                                   dues                (Rs. in million)
 
 Central Sales Tax                 Sales Tax                62.4
 Act and Various                            
                                                            56.3
 State Sales Tax Act
                                                             0.1 
 
                                                             4.2
 
                                                             5.7
 
                                                           778.8
 
 Various State Entry               UP Entry Tax             73.2
 Tax Act
 
                                   UP Entry Tax             47.7
 
                                   MP Entry Tax            165.0
 
                                   MP Entry Tax            188.1
 
                                   MP Entry Tax              1.5
 
                                   MP Entry Tax              0.7
 
 Income Tax                        Income Tax                2.7 
 Act,1961
 
                                   Income Tax                3.4
 
 Central Excise                    Excise Duty               7.9
 Act,1944                          and Cenvat               21.9
 
                                                            39.7
 
                                                             3.2 
 
 Customs Act, 1962                 Custom Duty               8.9
 
 Finance Act                       Service Tax               2.6
 (Amended 2009)
 
                                   Service Tax               2.7
 
 Name of Statute       Period to which the   Forum where dispute is
                       amount relates        pending
 
 Central Sales Tax 
 Act and Various
 State Sales Tax Act   1998-99 to 2004-05    Supreme Court
 
                       1994-95, 1997-98,     High Court
                       2000-01 to 2004-05
                       and 2009-2010
 
                       1997-98 and 2002-03   Appellate Tribunal
 
                       2000-01 and 2001-02   Deputy Commissioner 
                                            (Appeals) 
 
                       1999-00 to 2002-03    Joint Commissioner of
                                             Commercial Taxes (Appeals)
 
                       1984-85, 1995-96      Assessing Officer
                       to 2007-08
 
 Various State Entry
 Tax Act               2003-04 to 2009-10    Supreme Court
 
                       2003-04 and 2007-08   Assessing Officer Sales Tax
 
                       2005-06 to till date  Supreme Court
 
                       1999-2000 to 2007-08  Assessing Officer Sales Tax
 
                       2000-01, 2004-05,     Assessing Officer
                       2005-06, 2009-10
 
                       1987-88 to 1997-98    High Court
 
 Income Tax Act, 1961  2007-08               Income Tax Appellate
                                             Tribunal
 
                       2003-04               High Court
 
 Central Excise 
 Act, 1944             2007-08               Supreme Court
 
                       1995-96 to 2000-01    High Court
 
                       1992-93, 1995-96,     Central Excise and Service
                                             Tax
                       1996-97, 1999-2000 to Appellate Tribunal 
                       2003-04 and 2005-06 
                       to 2008-09
 
 Customs Act, 1962     2007-08               Commissioner of Central
                                             Excise (Appeal) 
 
                       2006-07, 2009-10
                       to 2011-12            Assessing Officer
 
 Finance Act           2007-08 to 2010-11    Commissioner of Central
                                             Excise (Appeal)
 
                       2007-08 to 2010-11    Central Excise and Service 
                                             Tax Appellate Tribunal
 
 (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 our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to banks. The Company
 has no outstanding dues in respect of debenture holders and financial
 institutions.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced before 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 (Auditor''s Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (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) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained, though idle/surplus funds which were not required for
 immediate utilization have been gainfully invested in liquid
 investments payable on demand.  The maximum amount of idle/surplus
 funds invested during the year was Rs. 2,195 million of which Rs. 150
 million were outstanding at the end of 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) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money through 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 year.
 
 For S.R. Batliboi & Co.
 
 Firm Registration No. 301003E
 
 Chartered Accountants
 
 Sd/-
 
 per Manoj Gupta
 
 Partner
 
 Membership No.:83906
 
 Place : Gurgaon
 
 Date : February 11, 2013