1.  We have audited the attached Balance Sheet of IFGL Refractories
 Limited (the Company) as at 31 st March 2011, the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date, both 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 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 misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the significant estimates
 made by the 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 (CARO)
 issued by the Central Government 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.
 
 4.  Without qualifying our report, attention is invited to Note 12 (d)
 on Schedule 15 regarding remuneration paid to the Chairman and Managing
 Director in excess of the limits laid down in the Companies Act, 1956
 aggregating Rs. 86.94 lacs awaiting approval of the Central Government.
 
 5.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows :
 
 (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 account as required by law have
 been kept by the Company so far as it appears from our examination of
 those books;
 
 (c) 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;
 
 (d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211 (3C) of the
 Companies Act, 1956;
 
 (e) 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 :
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 st March 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 6.  On the basis of the written representations received from the
 Directors as on 31 st March 2011 taken on record by the Board of
 Directors, none of the Directors is disqualified as on 31 st March 2011
 from being appointed as a director in terms of Section 274(1 )(g) of
 the Companies Act, 1956.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 (REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)
 
 (i) Having regard to the nature of the Company''s business/activities,
 clauses (x), (xii), (xiii) and (xiv) of CARO are not applicable.
 
 (ii) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets.
 
 (b) The fixed assets were physically verified during the year by the
 Management in accordance with a regular programme of verification
 which, in our opinion, provides for physical verification of all the
 fixed assets at reasonable intervals.  According to the information and
 explanation given to us, no material discrepancies were noticed on such
 verification.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (iii) In respect of its inventory:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 (iv) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties listed in the Register maintained
 under Section 301 of the Companies Act, 1956.
 
 In respect of loans, secured or unsecured, taken by the Company from
 companies, firms or other parties covered in the Register maintained
 under Section 301 of the Companies Act, 1956, according to the
 information and explanations given to us:
 
 (a) The Company has taken and repaid loans aggregating Rs. 200 lacs from
 a party during the year. At the year-end, the outstanding balance of
 such loans taken aggregated Rs. Nil and the maximum amount involved
 during the year was Rs. 208.41 lacs (number of party -one).
 
 (b) The rate of interest and other terms and conditions of such loans
 are, in our opinion, prima facie not prejudicial to the interests of
 the Company.
 
 (c) The payments of principal amounts and interest in respect of such
 loans are as per stipulations.
 
 (v) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased are of special nature and suitable alternative sources are
 not readily available for obtaining comparable quotations, there is an
 adequate internal control system commensurate with the size of the
 Company and the nature of its business with regard to purchases of
 inventory and fixed assets and the sale of goods and services.  During
 the course of our audit, we have not observed any major weakness in
 such internal control system.
 
 (vi) In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transaction is in excess ofRs. 5 lakhs in respect
 of any party, the transactions have been made at prices which are prima
 facie reasonable having regard to the prevailing market prices at the
 relevant time except in respect of sale of certain goods for which
 comparable quotations are not available and in respect of which we are
 unable to comment.
 
 (vii) According to the information and explanations given to us, the
 Company has not accepted any deposit from the public during the year.
 At the year end the Company had no unclaimed deposits in respect of any
 earlier years.
 
 (viii) In our opinion, the internal audit functions carried out during
 the year by a firm of Chartered Accountants appointed by the Management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 (ix) To the best of our knowledge and according to the information and
 explanations given to us, the Central Government has not prescribed the
 maintenance of cost records for any of the products of the Company.
 
 (x) According to the information and explanations given to us in
 respect of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 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 other material statutory dues
 applicable to it with the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of IncomeTax,
 Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory
 dues in arrears as at 31 st March 2011 for a period of more than six
 months from the date they became payable.
 
 (c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax,
 Custom Duty, Excise Duty and Cess which have not been deposited as on
 31 st March 2011 on account of disputes are given below:
 
 statute       Nature of 
               Dues         Forum where           Period to 
                                                  which         Amount
                                                              involved
                            Dispute is pending    the amount 
                                                  relates       (Rs. in 
                                                                  lacs)
 
 Sales Tax
 
 Central Sales 
 Tax Act,1956  Sales Tax    Sales Tax Tribunal     1995-96       1.14
 
               Sales Tax    Additional 
                            Commissioner of        1997-98       0.47
                            SalesTax
 
               Sales Tax    Orissa High Court      1999-00       2.17
 
               Sales Tax    Assistant 
                            Commissioner of        2003-04       0.25
                            Sales Tax
 
 Orissa Sales
 Tax Act,1947  Sales Tax    Orissa Sales Tax 
                            Tribunal               1996-97 and 
                                                   1997-98      39.91
 
               Sales Tax    Orissa High Court      1999-00       0.11
 
               Total                                            44.05
 
 Income Tax
 
 The Income 
 Tax Act, 1961 Income Tax   Income Tax Appellate   Assessment 
                                                   Year         15.88
                            Tribunal, Kolkata      2005-06
 
               Fringe 
               Benefit Tax  Deputy Commissioner    Assessment 
                                                   Year          0.51
                            of lncome Tax          2007-08
 
               Income Tax   Deputy Commissioner of Assessment
                                                   Year         68.00
                            IncomeTax              2008-09
 
               Fringe 
               Benefit Tax  Deputy Commissioner of Assessment 
                                                   Year          1.19
                            Income Tax             2008-09
 
               Total                                            85.58
 
 Service Tax
 
 Service Tax 
 Rules,1994    Service Tax  Joint Commissioner of  2006-07       1.54
                            Central Excise, Customs
                            & Service Tax
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 any banks. The Company has neither any outstanding dues to any
 financial institutions or debenture holders at the beginning of the
 year nor has it obtained any loans from such parties during the year.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks and financial institutions
 are not prima facie prejudicial to the interests of the Company.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained.
 
 (xiv) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year for long-term investment.
 
 (xv) According to the information and explanations given to us, the
 Company has made preferential allotment of shares to parties and
 companies covered in the Register maintained under Section 301 of the
 Companies Act, 1956 at a price which is prima facie not prejudicial to
 the interests of the Company.
 
 (xvi) According to the information and explanations given to us, the
 Company has neither any outstanding debenture at the beginning of the
 year nor has it issued any debentures during the year.
 
 (xvii) The Company has not raised any money by public issues during the
 year.
 
 (xviii) To the best of our knowledge and according to the information
 and explanations given to us, no fraud by the Company and no fraud on
 the Company has been noticed or reported during the year.
 
 
                                         For DELOITTEHASKINS& SELLS
 
                                              Chartered Accountants
 
                                           Registration No. 302009E
 
                                                     A Bhattacharya
 
 Kolkata                                                    Partner
 
 25th May 2011                                Membership No. 054110