Stone India Ltd has informed BSE that in the limited review report of the Company for the quarter ended December 31, 2007, the Auditors of the Company have made the following observations:

“1. In the absence of detailed records and complete physical verification, quantity of raw materials, work in progress and finished goods including those lying with third parties have been taken as per management’s estimate.

2. Pending review at the year end, amount of provisions / adjustments, if any required against debtors, capital work in progress and other Inventories have not been ascertained.

3. Attention is invited to Note 2 of the statement regarding non compliance of Accounting Standard 22 “Accounting for Taxes on Income” with regard to recognition of deferred tax and current tax and Accounting Standard 15 revised by the Institute of Chartered Accountants of India regarding “Employee Benefit” respectively. The Auditors are unable to ascertain and state the impact of the same on the various figures and the amount of profit given in the statement”.