1.  We have audited the attached Balance Sheet of PRISM CEMENT LIMITED
 (the Company) as at March 31, 2012, the Profit and Loss Statement and
 the Cash Flow Statement of the Company 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 the Standards on Auditing
 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 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 as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (the 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 paragraphs 4
 and 5 of the said Order.
 
 4.  H & R Johnson (India) and RMC Readymix (India) divisions of the
 Company have been audited separately by branch auditors appointed by
 the Company. The branch auditors'' reports provided to us have been
 considered for overall reporting for the Company.
 
 5.  We draw the attention to Note No. 38 to the financial statements
 relating to excess managerial remuneration charged to the profit and
 loss statement of the current year. The excess of Rs 6.54 Crores is
 subject to the approval of the Central Government and Shareholders of
 the Company.
 
 6.  Further to our comments in the Annexure referred to in paragraphs 3
 to 5 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 of the Company;
 
 (iii) the Balance Sheet, the Profit and Loss Statement and the Cash
 Flow Statement dealt with by this report are in agreement with the
 books of account;
 
 (iv) in our opinion, the Balance Sheet, the Profit and Loss Statement
 and the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in sub-section (3C) of
 Section 211 of the Companies Act, 1956;
 
 (v) in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon 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 March 31, 2012;
 
 (b) in the case of the Profit and Loss Statement, of the loss 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.
 
 (vi) on the basis of written representations received from the
 directors, as on March 31, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 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;
 
 ANNEXURE TO THE AUDITORS'' REPORT OF PRISM CEMENT LIMITED
 
 (Referred to in paragraph 3 of our report of even date on the financial
 statements for the year ended March 31, 2012)
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) According to the information and explanations given to us, the
 Company has formulated a programme of verification by which all the
 assets of the Company are being verified in a phased manner over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the Company and nature of its assets. No material
 discrepancies were noticed on verification conducted during the year as
 compared with the book records.
 
 (c) Fixed assets disposed off during the year were not substantial to
 affect Going Concern Assumption.
 
 (ii) (a) Inventories have been physically verified during the year by
 the Management. In our opinion, the frequency of verification is
 reasonable.
 
 (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 is maintaining proper records of inventory.
 The discrepancies noticed on physical verification as compared to the
 book records were not material and have been properly dealt with in the
 books of account.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to/from companies, firms or parties covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 (iv) 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 with regard to purchases of inventories and fixed assets and
 with regard to the sale of goods. During the course of our audit, we
 have not observed any major weakness in the internal control system.
 
 (v) In respect to contracts or arrangements entered in the register
 maintained in pursuance to 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 need to be entered in the Register maintained under the said
 section have been so entered.
 
 b) Where each of such transaction is in excess of Rs five lacs 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.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA of the Companies Act, 1956 and the rules framed there
 under with regard to the deposits accepted from the public. We are
 informed by the Management that no order has been passed by the Company
 Law Board or National Company Law Tribunal or Reserve Bank of India or
 any Court or any other Tribunal in this regard.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) According to the information and explanations given to us, the
 Central Government has prescribed maintenance of cost records under
 Section 209(1) (d) of the Companies Act, 1956 for the products
 manufactured by the Cement Division of the Company. We have broadly
 reviewed the books of account maintained and in our opinion; prima
 facie, the prescribed accounts and records have been made and
 maintained by the Company. We have not, however, made a detailed
 examination of the records with a view to determine whether they are
 accurate or complete.
 
 (ix) (a) According to the information and explanations provided to us,
 the Company is generally regular in depositing undisputed statutory
 dues including Provident Fund, Investor Education and Protection Fund,
 Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom duty, Excise
 duty, Cess and other applicable statutory dues with the appropriate
 authorities. No undisputed statutory dues payable were in arrears as at
 March 31, 2012, for a period of more than six months from the date they
 became payable.
 
 (b) According to the information and explanations given to us, the
 details of statutory dues which have not been deposited with the
 concerned authorities on account of dispute are given below :
 
 Nature of dues      Period to       Forum where 
                                     dispute is pending           Amount
                     which the                                  involved
                     amount 
                     relates                               (Rs in Crores)
 
 Excise Duty        1997 - 2002      Custom, Excise & 
                                     Service Tax
                                     Appellate Tribunal             0.33
 
                    2006 - 2010      Commissioner of Appeal         0.02
 
                    1997 - 1998      Custom, Excise & 
                                     Service Tax
                                     Appellate Tribunal             0.08
 
                    2006 - 2011      Joint Commissioner             0.23
 
                    2010 - 2011      Commissioner                   0.57
 
                    2010 - 2011      Asst. Commissioner               ##
 
                    2005 - 2011      Commissioner                   7.64
 
                    2005 - 2011      Custom, Excise & 
                                     Service Tax
                                     Appellate Tribunal             0.02
 
                    2010 - 2012      Deputy Commissioner            0.02
 
                    2007 - 2012      Joint Commissioner             0.02
 
                    2007 - 2012      Commissioner                   0.32
 
                    2010 - 2012      Asst. Commissioner             0.01
 
                    2006 - 2011      Custom, Excise & 
                                     Service Tax
                                     Appellate Tribunal             0.04
 
 Sales Tax 
 (Central & State)  1999 - 2002 &
                    2004 - 2005      Sales Tax Appellate 
                                     Tribunal                       0.68
 
                    2005 - 2006 &    Appellate
                                     Deputy Commissioner of
                    2006 - 2007      Commercial Tax                 0.09
 
                    2005 - 2006      Deputy Commissioner 
                                     of Sales Tax                   0.20
 
                    2007 - 2008      Deputy Commissioner of
                                     Commercial Tax                 0.70
 
                    2000 - 2006      The High Court of 
                                     Chhattisgarh                   7.56
 
                    2009 - 2011      The High Court of 
                                     Madhya Pradesh                 0.68
 
                    2002 - 2008      Deputy Commissioner 
                                      - Appeal                      0.91
 
                    2002 - 2005      Appellate Commissioner         0.07
 
 Madhya Pradesh 
 Entry Tax          2001 - 2002 &
                    2007 - 2012      The High Court of 
                                     Madhya Pradesh                21.97
 
                    2006 - 2007      The Supreme Court              0.18
 
 Uttar Pradesh 
 Entry Tax          2003 - 2010      The High Court of
                                     Uttar Pradesh                  3.86
 
 Cess on Land       1990 - 1991 to
                    2003 - 2004      Tehsildar Court                0.41
 
 Energy 
 Development Cess   2000 - 2006      The Supreme Court             11.90
 
 Royalty on 
 Limestone mining   1996 - 2011      The High Court                22.87
 
 Income Tax         2006 - 2007,
                    2007 - 2008 &
                    2008 - 2009      Commissioner of
                                     Income Tax - Appeal            3.71
 
 Service Tax        June 2005 -
                    December 2006    Service Tax 
                                     Appellate Tribunal             0.23
                    January 2005 -
                    July 2007        Service Tax Appellate
                                     Tribunal                       0.22
 
 Entry Tax          2007 - 2008      Deputy Commissioner of
                                     Commercial Tax                 0.35
 
 Royalty on 
 Mining Minerals    2007 - 2010      Appellate Authority, 
                                     Mines & Geology 
                                     Department                     0.05
 
 Madhya Pradesh 
 Commercial Tax     2004 - 2008      Appellate Tribunal             0.20
 
                    2008 - 2009      Additional Commissioner        0.19
 
 Uttar Pradesh 
 Commercial Tax     1998 - 1999      The High Court                 0.07
 
 Gujarat 
 Commercial Tax     2006 - 2007      Deputy Commissioner - 
                                     Appeal                         0.07
 
 ## denotes amount less than Rs 50,000/-.
 
 (x) The Company does not have accumulated losses as at March 31, 2012
 and has not incurred any cash losses during the current financial year
 or in the immediately preceding year.
 
 (xi) According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to any financial
 institutions or banks.
 
 (xii) According to the information and explanations given to 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) The Company is not a chit fund or a nidhi/ mutual benefit
 fund/society. The provisions of clause 4 (xiii) of the Order,
 therefore, are not applicable to the Company.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments. The Company, however, has made short-term
 investments in units of Mutual Funds during the year. The Company has
 maintained proper records of the transactions in respect of its
 investments in Mutual Fund units. The said investments are held in the
 name of the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has given a guarantee for loans taken by one of its wholly
 owned subsidiaries from bank. In our opinion, the terms and conditions
 of the guarantee are prima facie, not prejudicial to the interest of
 the Company, as it is given for the wholly owned subsidiary.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the Company has raised term loans during the year which
 have been applied for the purposes for which they were raised.
 
 (xvii) In our opinion and according to the information and explanations
 given to us, and on an overall examination of the Balance Sheet of the
 Company, we report that funds raised on short-term basis have not been
 utilised for long term investment.
 
 (xviii)According to the information and explanations given to us,
 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.
 
 (xix) According to the information and explanations given to us and the
 records examined by us, securities have been created in respect of the
 debentures issued and outstanding at the year end.
 
 (xx) During the year, the Company has not raised any money by way of a
 public issue.
 
 (xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, we report that no fraud on or
 by the Company has been noticed or reported, during the year.
 
 
                                                For N. M. RAIJI & CO.
 
                                               Chartered Accountants
 
                                                        J. M. GANDHI
 
                                                             Partner
 
                                               Membership No.: 37924 
  
                                      Firm Registration No.: 108296W
 
 Place : Mumbai
 
 Date : May 10, 2012