1.  We have audited the attached Balance Sheet of PRISM CEMENT LIMITED
 (the Company) as at March 31, 2011, the Profit and Loss Account 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 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 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 (Auditors Report) Order, 2003 as
 amended by the Companies (Auditors 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.  Further to our comments in the Annexure referred to in paragraph 3
 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 Account 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 Account 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) on the basis of written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 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 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, 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 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, 2011)
 
 (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 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 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 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.
 
 (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 thereunder
 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(l)(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, 2011, 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 
               which        Forum where dispute 
               the          is pending                  Amount
               amount                                 involved
               relates                             (Rs. crores)
 
 Excise Duty     1997 - 
                 1998      Commissioner of Appeal         0.08
 
                 2006 - 
                 2011 
                                                          0.17 
                 1997 - 
                 2002      Custom, Excise & Service 
                           Tax                            0.33
                           Appellate Tribunal
 
                 2006 - 
                 2010      Commissioner of Appeal         0.02
 
 Sales Tax 
 (Central & 
 State)          1999-
                 2002      Sales Tax Appellate Tribunal   0.50
 
                 2004 - 
                 2005                                     0.18 
 
                 2000 - 
                 2006      High Court of Chhattisgarh     7.56 
 
                 2002 -
                 2004      Deputy Commissioner of Appeals 0.02
 
                 2005 - 
                 2006                                     0.88
 
                 2007 - 
                 2008      Assistant Commissioner         0.01 
 
                 2002 - 
                 2005      Joint Commissioner
                           of Commercial                  0.56
                           Tax of Appeals 
 
                 2002 - 
                 2005      Commissioner of Appeal         0.07
 
                 2005 - 
                 2007      Appellate Deputy Commissioner  0.09
                           of Commercial Tax 
 
                 2005 - 
                 2006      Deputy Commissioner of Appeal  0.04
 
                 2005 - 
                 2006      Deputy Commissioner of Sales 
                           Tax                            0.20
 
                 2009-
                 2010      High Court of Kerala           0.01
 
                 2009 - 
                 2011      High Court of Madhya Pradesh   0.68
 
                 2010 - 
                 2011      Assistant Commissioner         0.01
 
 Madhya Pradesh 
 Entry Tax       2001 - 
                 2002      High Court of Madhya Pradesh   0.14
 
                 2007 - 
                 2011                                    14.67
 
                 2006 - 
                 2007      The Supreme Court              0.18
 
 Uttar Pradesh 
 Entry Tax       2003 - 
                 2010      High Court of Uttar Pradesh   20.52
 
 Cess on Land    1990 - 91 
                 to        Tehsildar Court                0.37
                 2003 - 04
 
 Energy 
 Development 
 Cess            2000 - 
                 2006      The Supreme Court             11.90
  
 Royalty on 
 Limestone 
 mining          1996 - 
                 2009      The Supreme Court             13.63
 
 Madhya Pradesh 
 Commercial      2004-
 Tax             2006      Appellate Tribunal             0.10
 
 
                 2007 - 
                 2008      Commissioner of Appeal         0.10
 
 Uttar Pradesh 
 Commercial Tax  1996-
                 2011      High Court of Uttar Pradesh    0.05
 
                 2010 - 
                 2011      Deputy Commissioner of Appeals 0.02
 
 Income Tax      2007 - 
                 2008      Commissioner of Income Tax -   1.82
                           Appeal
 
 Service Tax     June 
                 2005 -    Service tax Appellate Tribunal 0.45
 
                 July
                 2007
 
 Royalty on 
 mining 
 minerals        2007 - 
                 2010      Appellate Authority - Mines &  0.05 
                           Geology Department
 
 
 (x) The Company does not have accumulated losses as at March 31, 2011
 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, except in Mutual Fund units. The Company has
 maintained proper records of the transactions in respect of its
 dealings 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 : April 29, 2011