We have audited the attached Balance Sheet of MANGALAM CEMENT LIMITED,
 as at 31st March, 2011, the annexed Profit and Loss Account for the
 year ended on that date, and also the Cash Flow Statement for the year
 ended on that date. 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.
 
 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 any 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 statements
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 We report that:
 
 1.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended) issued by the Central Government in terms of Section 227(4A)
 of the Companies Act, 1956 and on the basis of such checks as we
 considered appropriate and according to the information and
 explanations given to us, we annex a statement on the matters specified
 in paragraphs 4 and 5 of the said order.
 
 2.  Further to our comments in the Annexure referred in paragraph 1
 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, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) In our opinion, Balance Sheet, Profit and Loss Account and the
 Cash Flow Statement dealt with by this report comply with the
 accounting standards as referred to in sub-section (3C) of Section 211
 of the Companies Act, 1956.
 
 (v) On the basis of written representation received from the Directors
 and taken on record by the Board of Directors of the Company we report
 that none of the Directors of the Company 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
 other notes thereon give the information required by the Companies Act
 1956, in the manner so required 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 31st March, 2011;
 
 (b) in the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT (Referred To In Paragraph 1 Of Our
 Report Of Even Date) For The Year Ended 31St March, 2011 Of Mangalam
 Cement Limited
 
 i. (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets;
 
 (b) Fixed assets have been physically verified by the management
 according to the regular programme of periodical verification in phased
 manner which in our opinion is reasonable having regard to the size of
 the Company and the nature of its fixed assets.  No material
 discrepancies were noticed on such verification;
 
 (c) The Company has not disposed off any substantial part of its fixed
 assets;
 
 ii. (a) As explained to us, the inventories of the Company at all its
 locations (except stocks lying with third parties and in transit) have
 been physically verified by the management at reasonable intervals;
 
 (b) The procedures for 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) On the basis of our examination, we are of the opinion that, the
 Company is maintaining proper records of inventory. The discrepancies
 which were noticed on physical verification of inventory as compared to
 book records were not material;
 
 iii. (a) The Company has not granted any loans, secured or unsecured to
 Companies, firm or other parties covered in the register maintained
 under section 301 of the Companies Act except interest free unsecured
 loan of Rs.3 crores to Mangalam Timber Products Ltd. as referred in
 note no. 4.
 
 (b) Rate of interest and other terms and conditions of the loan given
 by the Company are not prima facie prejudicial to the interest of the
 Company.
 
 (c) Such loan has been received back by the Company before the close of
 the year.
 
 (d) No amount of such loan is overdue for recovery.
 
 (e) The Company has not taken any loan secured or unsecured from
 companies, firms or other parties covered in the register maintained
 under section 301 of the Act, hence our comments on para iii(e) to
 iii(g) of the order are not applicable.
 
 iv. In our opinion and according to the information and explanations
 given to us, there are adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory, fixed assets and for sale of goods and
 services During the course of our audit we have not observed any
 continuing failure to correct major weaknesses in internal control
 system of the Company.
 
 v. (a) On the basis of the audit procedures performed by us, and
 according to the information and explanations and representations given
 to us, we are of the opinion that particulars of contracts or
 arrangements referred to in section 301 of the Act have been entered in
 the register maintained under that section;
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Act and exceeding the value of Rs 5 lacs in respect of any party
 during the year have been made at prices which are reasonable having
 regard to the prevailing market prices at that relevant time;
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has not taken any deposit from public as
 referred in Section 58A and 58AA of the Companies Act 1956 and the
 rules framed thereunder;
 
 vii. In our opinion the Company has an internal audit system
 commensurate with the size of the Company and nature of its business;
 
 viii. We have broadly viewed 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 in respect of the Companys products to which the said rules
 are made applicable, and are of the opinion that, prima- facie,
 prescribed accounts and records have been made and maintained. We have,
 however, not made a detailed examination of the said records with a
 view to determine whether they are accurate and complete;
 
 ix. (a) According to the information and explanations and records of
 the Company, the company is 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, Custom Duty, Excise Duty, Cess and other material Statutory Dues
 with the appropriate authorities. There are no undisputed statutory
 dues payable for a period of more than six months from the date it
 became payable as on 31st March, 2011;
 
 (b) According the records and information and explanations given to us,
 there are no dues in respect of custom duty, wealth tax and cess that
 have not been deposited on account of any dispute. In our opinion and
 according to the information and explanations given to us, the dues in
 respect of sales tax, service tax, excise duty and income tax that have
 not been deposited with the appropriate authority on account of dispute
 and the forum where the dispute is pending are given below:
 
 Name of Statute      Nature of Dues      Amount
                                        in Lakhs
 
 Central Excise Act   Cenvat                8.70
 
                                          260.72
 
                                           39.13
 
                                            4.27
 
 Income Tax Act       Income Tax            1.14
 
                                           50.80 
 
 Sales Tax (M.P.)     Disallowance of       2.68
                      credit notes 
 
 Central Sales 
 Tax Act              Central Sales Tax   639.22 
 
 Service Tax Act      Service Tax          48.79
 
                                          218.33 
 
                                           67.63 
 
                                           24.97
 
                                          111.84
 
                                            1.81 
 
                                           38.37
 
                                           39.96 
 
 Entry Tax (U.P.)     Entry Tax            28.34
 
                                           59.36
  
                                         1169.37 
 
 Land Tax (Rajasthan) Land tax           1177.05
 
 Government of        Environment and     146.53
 Rajasthan            Health Cess
 
 
 Name of Statute      Period to which the amount  Forum where matter is
                      related                     pending
 
 Central Excise Act   Various matters, from 
                      1995 to 1997                High Court, Jaipur
 
                      Various matters, from 
                      1996 to 2009                CESTAT.New Delhi
 
                      Various matters, from 
                      1995 to 2009                Commissioner (Appeals)
 
                      Various matters, from 
                      2005 to 2006                Addl. Commissioner
 
 Income Tax Act       AY 1992-93                  High Court, 
                                                  Jaipur (appeal
                                                  filed by Department)
 
                      AY 2009-10                  CIT (Appeals)
 
 Sales Tax (M.P.)     Various matters, from 
                      2001 to 2003                Tax Board, M.P.
 
 Central Sales 
 Tax Act              2005-06                     Asst. Commissioner
 
 Service Tax Act      11/97-06/98                 High Court, Jaipur
 
                      Various matters, from 
                      2005 to 2006                CESTAT.New Delhi
 
                      04/09-06/09                 Commissioner
 
                      Various matters, from 
                      2005 to 2010                Commissioner (Appeals)
 
                      Various matters, from 
                      2006 to 2008                Addl. Commissioner
 
                      Various matters, from 
                      2006 to 2009                Asst. Commissioner
 
                      10/08 - 3/09                Commissioner
 
                      10/6 – 9/08                 Addl. Commissioner
 
 Entry Tax (U.P.)     2005-06                     Assessing Authority
 
                      2006-07                     Addl. Commissioner
 
                      Various matters, from 
                      2007 to 2010                High Court, Allahabad
 
 Land Tax (Rajasthan) Various matters, from 
                      2006 to 2009                Supreme Court 
                                                  (appeal filed
                                                  by Federation of 
                                                  mining association 
                                                  of Rajasthan)
 
 Government of        2008 - 2010                 High Court, Jaipur
 Rajasthan
 
 x. There was no accumulated loss at the end of year. The Company has
 not incurred cash losses during current financial year and immediately
 preceding financial year;
 
 xi. The Company has not defaulted in repayment of dues to financial
 institution or bank or debenture holders;
 
 xii. According to information and explanations given to us, the Company
 has not granted any loans or advances on the basis of security by way
 of pledge of shares, debentures and any other securities;
 
 xiii. The Company is not a chit fund or a nidhi/mutual benefit fund/
 society. Therefore, clause 4(xiii) of the Order is 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 Order 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
 banks and financial institutions;
 
 xvi. In our opinion, the term loans have been applied for the purpose
 for which they were raised;
 
 xvii. According to the information and explanations given to us and on
 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 and companies covered in the register maintained under Section
 301 of the Act;
 
 xix. On the basis of the records made available to us, the Company has
 not issued any debentures during the period;
 
 xx. The Company has not raised any money by public issue, during the
 year;
 
 xxi. Based upon the audit procedure performed and the information and
 explanations given to us, we report that no fraud on or by the Company,
 has been noticed or reported during the course of our audit.
 
 
 
                                            For Jain Pramod Jain & Co.
 
                                                 Chartered Accountants
 
                                       (Firm Registration No. 016746N)
 
                                                             P.K. Jain
 
                                                               Partner 
 
                                                   Membership No.10479
 
 New Delhi
 
 The 27th day of April, 2011