1.  We have audited the attached Balance Sheet of Shree Cement Limited
 as at 31st March, 2011 and also the Profit and Loss Account and the
 Cash Flow Statement 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 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 (Auditors 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 purpose of our
 audit.
 
 (ii) In our opinion, proper books of accounts 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
 accounts.
 
 (iv) In our opinion, the Balance Sheet, Profit and Loss Account 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 information & explanations given to us and
 representations received from the Directors of the Company, we report
 that none of the Directors of the Company, is prima facie, disqualified
 from being appointed as Director of the Company 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 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
 
 1) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, a Substantial portion of fixed assets has been
 physically verified during the year by the management and in our
 opinion the frequency is reasonable having regard to the size of the
 company and the nature of its assets.  No material discrepancies were
 notice on such verification.
 
 (c) During the year, the Company has not disposed off any major part of
 fixed assets that would affect the Going Concern status of the Company.
 
 2) (a) As explained to us, inventories were physically verified by the
 management at reasonable intervals during the year.
 
 (b) In our opinion, 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.  The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material and such discrepancies have been
 properly dealt with in the books of accounts.
 
 3) The company has neither granted nor taken any loans, secured or
 unsecured, to / from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Accordingly, clause (iii) of the Companies (Auditors Report) Order,
 2003, as amended by the Companies (Auditors Report) (Amendment) Order,
 2004 is not applicable to the company for the current year.
 
 4) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and nature of its business with regard to
 purchases of inventory and fixed assets and with regard to the sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in the
 internal control system.
 
 5) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of contracts or arrangement
 referred to in section 301 of the Companies Act, 1956 have been entered
 in the register required to be 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 Companies Act, 1956 and exceeding the value of rupees five lacs in
 respect of any party during the year have been made at prices which are
 prima facie reasonable having regard to prevailing market prices at the
 relevant time.
 
 6) The Company has not accepted any deposit from the public during the
 year.
 
 7) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8) We have broadly reviewed the accounts and records maintained by the
 Company pursuant to the rules made by the Central Government for
 maintenance of cost records under section 209(1) (d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.  We have, however,
 not made a detailed examination of record with a view to determine
 whether they are accurate or complete.
 
 9) (a) According to the information and explanations given to us, the
 company has generally been regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education protection fund, income tax, sales tax, wealth tax,
 service tax, custom duty, excise duty, cess 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 aforesaid dues were
 outstanding as at 31.03.2011 for a period of more than six months from
 the date they become payable.
 
 (c) Further, since the Central Government has till date not prescribed
 the amount of cess payable under Section 441A of the Act, we are not in
 a position to comment upon the regularity or otherwise of the Company
 in depositing the same.
 
 (d) According to the information and explanations given to us, the
 details of disputed amount of Income Tax, Sales Tax, Excise Duty,
 Custom duty, Entry Tax, Service Tax and Cess not deposited by the
 Company are as follows:
 
 Name of Statute        Nature of the dues              Amount under
                                                      dispute not yet
                                                            deposited
                                                          (Rs. in Lac)
 
 A. Entry Tax
 
 Rajasthan Tax on 
 Entry of           Entry Tax including Interest on goods     6917.83
 Goods into Local 
 Area Act, 1999     purchased from outside Rajasthan
 
                    Entry tax including Interest              1465.94
                    - 50% Exemption on Ras Plant       
                                                              1343.98
 UP Tax on Entry 
 of Goods           Entry Tax including Interest              3215.99
 Act, 2000          on stock transfer from
                    Rajasthan to Uttar Pradesh
 
 Total (A)                                                   12943.74
 
 B. Excise and Service Tax
 
 Central Excise 
 Act, 1944          Cenvat credit on Inputs and capital         89.51
                    goods
 
                    Custom Duty (Valuation)                     70.44
 
                    Custom duty payment through DEPB           690.33
 
                    Cenvat credit on Inputs and capital        110.64
                    goods
 
 Finance Act, 1994  Service Tax credit on Road Freight         164.47
                    & Others
 
 Total (B)                                                    1125.39
 
 C Sales Tax
 
 Central Sales Tax 
 Act, 1956          Partial Exemption claim including          612.23
                    Interest
 
 Rajasthan Value    Input Tax Credit on Capital Goods           28.79
 Added Tax, 2003
 
 Total (C)                                                     641.02
 
 (D) Others
 
 The Rajasthan 
 Finance Act, 2008   Environment & Health Cess on             1937.38
                     Limestone including Interest
 
 Total (D)                                                    1937.38
 
 Grand Total (A+B+C+D)                                       16647.53
 
 
 
 Name of Statute         Period to which the     Forum where dispute
                            amount relates             is pending
 
 A. Entry Tax
 
 Rajasthan Tax on 
 Entry of Goods into 
 Local Area Act, 1999   2005-06 to 2010-11      Rajasthan High Court,
                                                Jodhpur
                        2005-06 to 2008-09      Deputy Commissioner
                                               (Appeals), Ajmer
                        2009-10 to 2010-11      CTO, Special Circle, 
                                                Ajmer
 
 UP Tax on Entry of 
 Goods Act, 2000        2003-04 to 2009-10      Uttar Pradesh High Court,
                                                Allahbad
 
 Total (A)
 
 B. Excise and Service Tax
 
 Central Excise Act, 
 1944                   1994-95 to 2009-10      Commissioner (Appeals)
                                                of Central Excise
                        2009-10                 Commissioner (Appeals)
                                                of Central Excise
                        2009-10                 Customs Excise Service 
                                                Tax Appellate Tribunal 
                                               (CESTAT)
                        1997-98 to 2008-09      Customs Excise Service 
                                                Tax Appellate Tribunal
                                               (CESTAT)
 
 Finance Act, 1994     2004-05, 2005-06,       Customs Excise Service Tax
 
                       2007-08 & 2008-09       Appellate Tribunal 
                                              (CESTAT)
 
 Total (B)
 
 C Sales Tax
 
 Central Sales Tax 
 Act, 1956            1998-99 to 2000-01       Rajasthan High Court,
                                               Jodhpur
 
 Rajasthan Value
 Added Tax, 2003      2007-08 & 2008-09        Deputy Commissioner
                                              (Appeals), Ajmer
 
 Total (C)
 (D) Others
 
 The Rajasthan 
 Finance Act, 2008    2007-08 to 2010-11       Rajasthan High Court,
                                               Jodhpur
 
 Total (D)
 
 Grand Total (A+B+C+D)
 
 
 10) The Company does not have any accumulated losses at the end of the
 financial year and the company has not incurred cash losses in the
 financial year covered by our audit and in the immediately preceding
 financial year.
 
 11) Based on the information and explanations given to us, we are of
 the opinion that the Company has not defaulted in repayment of dues to
 the financial institutions, banks or debenture holders.
 
 12) According to the information and explanations given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund company or nidhi / mutual
 benefit fund / society. Therefore, the provision of clause 4(xiii) of
 the order is not applicable to the Company.
 
 14) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 15) As informed to us, the company has not given any guarantees for
 loans taken by others from bank or financial institutions.
 
 16) In our opinion, the term loans have been applied for the purpose
 for which they were raised.
 
 17) According to information and explanations given to us and on an
 overall examination of the balance sheet of the company, we are of the
 opinion that the funds raised on short - term basis have not been used
 for long-term investment.
 
 18) According to the information and explanations given to us, 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 and therefore, the provisions of clause 4 (xviii) of the Order
 are not applicable to the Company.
 
 19) The Company has created securities / charges in respect of secured
 debentures issued during the year.
 
 20) During the year under audit, the Company has not raised money by
 public issue and accordingly, the provisions of clause 4 (xx) of the
 Order are not applicable to the Company.
 
 21) According to the information and explanations given to us, no
 material fraud on or by the Company has been noticed or reported during
 the year.
 
 
 
 
                                              for B.R. MAHESWARI & CO.
 
                                                Chartered Accountants
 
 Place: Kolkata                             (Registration No. 001035N)
 
 Date: 27th May, 2011
 
                                                   (SUDHIR MAHESHWARI)
 
                                                              Partner
 
                                                Membership No. 081075