1. We have audited the attached Balance Sheet of Usha International
 Limited (formerly known as The Jay Engineering Works Ltd.) as at March
 31, 2008 and also the Profit and Loss Account and Cash Flow Statement
 for the year ended on that date annexed thereto prepared incorporating
 the effect of the Scheme of Arrangement sanctioned by the Honorable
 High Court of Delhi vide its order dated 26th May 2008 to be effective
 retrospectively from 1st April 2007, for the amalgamation of Usha
 International Ltd. and Shriram Fuel Injection Industries Ltd. with The
 Jay Engineering Works Ltd. 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, issued
 by the Central Government of India in terms of sub-section (4A) of
 section 227 of the Companies Act, 1956, we annex hereto 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 in paragraph 3
 above, we report that-
 
 a) 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;
 
 b) 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 and proper returns adequate for the purpose of our audit have
 been received from the branches;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account
 and with the audited returns from the units-
 
 d) 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;
 
 e) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, we report that none of
 the directors is disqualified as on March 31 2008 from being appointed
 as a director in terms of clause (g) of sub-section (1) of section 274
 of the Companies Act, 1956;
 
 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:
 
 (i) In the case of the Balance Sheet, of the state of affairs of the
 company as at March 31 2008-
 
 (ii) In the case of the Profit and Loss Account, of the profit of the
 company for the year ended on that date; and
 
 (iii) In the case of the Cash Flow Statement, of the cash flows of the
 company for the year ended on that date.
 
 THE ANNEXURE REFERRED TO IN THE MAIN AUDITORS REPORT OF EVEN DATE
 
 Note: The word Company has been used in the report as referring to the
 three Companies which have been amalgamated.
 
 (i) (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets.
 
 (b) As explained to us, the Company has a system of physical
 verification of fixed assets which is designed to cover all assets over
 a period of three years and, in accordance therewith, physical
 verification of major portion of the fixed assets of the Company was
 carried out during the year. In our opinion, the frequency of
 verification is reasonable having regard to the size of the Company and
 the nature of its fixed assets. In respect of the assets physically
 verified in the current year, reconciliation with the book records is
 in progress.
 
 (c) In our opinion and according to the information and explanations
 given to us, no substantial part of fixed assets has been disposed off
 by the Company during the year.
 
 (ii) (a) During the year, the inventories have been physically verified
 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 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 of the records of inventories, we
 are of the opinion that, the Company is maintaining proper records of
 inventories. The discrepancies noticed on physical verification of
 inventories as compared to book records were not material and have
 either been properly dealt with in the books of account or as per
 policy being recovered from the person incharge of stock if there are
 material shortages.
 
 (iii) According to the information and explanations given to us, the
 Company has, during the year, not granted or taken any loan, secured or
 unsecured to companies, firms and other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.  Accordingly,
 the provisions of clause 4(iii)(b),(c)&(d) are not applicable.
 
 (iv) 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 the nature of its business with regard
 to purchases of inventories and fixed assets and with regard to the
 sale of goods and services during the year. Further, on the basis of
 our examination and according to the information and explanations given
 to us, we have neither come across nor have been informed of any
 instances of major weaknesses in the aforesaid internal control
 systems.
 
 (v) As explained to us and according to the information and explanation
 given to us, there are no transactions that need to be entered in the
 register maintained in pursuance of Section 301 of the Companies Act,
 1956 and exceeding the value of five lakh rupees in respect of each
 party during the financial year.
 
 (vi) In our opinion and according to the information and explanations
 provided to us, the Company has complied with the directives issued by
 the Reserve Bank of India and provisions of Section 58A and 58AA of the
 Act and the rules framed there under where applicable. No order has
 been passed by the Company Law Board on the Company. Hence question of
 compliance does not arise.
 
 (vii) The Companys internal audit is carried out by a firm of
 Chartered Accountants. In our opinion, the Companys internal audit
 system is commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company in respect of products where pursuant to the Rules made by the
 Central Government, the maintenance of cost records has been prescribed
 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 not, however, made a detailed
 examination of the records with a view to determine whether they are
 accurate and complete.
 
 (ix) (a) According to the information and explanations given to us and
 the records of the Company examined by us, the Company has generally
 been regular in depositing undisputed statutory dues including
 Provident Fund, Employees State Insurance, Income Tax, VAT, Service
 Tax, Wealth Tax, Customs Duty, Excise Duty , Cess and other material
 statutory dues applicable to it with the appropriate authorities and
 there were no arrears outstanding as at the year end for a period of
 more than six months from the date they became payable.
 
 (b) The details of dues of Income-Tax, Sales Tax and Excise Duty as at
 March 31, 2008 which have not been deposited on account of disputes are
 as follows :
 
 Name of the                 Nature of         Amount
 Statute                     dues             Rs(ln.Lacs)
 
 Income Tax  Act 1961       Income Tax          920.03
 Central Sales Tax Act/
 State Sales
 Tax Acts.                  LST                   1.17
                            CST                   3.27
                            LST                  33.56
                            CST                   3.21
                            LST                  56.99
                            CST                  20.60
                            LST                 107.32
                            CST                  13.85
                            LST-interest          0.56
                            Penalty-LST           5.23
                            Penalty-CST           0.69
 Central Excise             Excise duty          50.62
 Act 1944
                            Penalty              51.05
                                               1268.15
 
 Earliest                Forum where
 Case Since              dispute is pending
 
 2005-06                  CIT(Appeals)
 1995-96                  High Court
 1991-92                  High Court
 1992-93                  Tribunal
 1994-95                  Tribunal
 1980-81                  Appellate Revision Board
 1974-75                  Appellate Revision Board
 1977-78                  Appellate authority up to
                          Commissioner
 1998-99                  Appellate authority up to
                          Commissioner
 1977-78                  Appellate authority upto
                          Commissioner
 1977-78                  Appellate authority upto
                          Commissioner
 1998-99                  Appellate authority up to
                          Commissioner
 1999-00                  Appellate authority upto
                          Commissioner
 1999-00                  Appellate authority upto
                          Commissioner
 
 In respect of disputed Income Tax dues, demands raised by the
 authorities are set-off against brought forward losses, and as such
 there are no amounts to be deposited with the authorities.  Such
 demands are not included above.
 
 Amount as per demand orders, including interest and penalty, wherever
 indicated in the order.
 
 The following matters, which have been excluded from the table above,
 have been decided in favour of the Company but the concerned
 authorities have preferred appeals at higher level:
 
 Name of the                  Nature of       Amount
 Statute                      dues           (Rs.Lacs)
 
 Income Tax Act 1961       Income Tax          5.44
 
 
 Earliest Case      Forum where
 Since              dispute is
 pending
 
 1972-73            High Court
 
 Amount as per demand orders, including interest and penalty, wherever
 indicated in the order.
 
 (x) According to the records of the Company and in our opinion, the
 Company does not have accumulated losses at the end of the financial
 year. Further, the Company has not incurred cash losses during the
 financial year ended March 31, 2008, also had not incurred cash losses
 in the immediately preceding financial period ended March 31, 2007.
 
 (xi) According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to banks during the year.  The Company has not
 taken any loans from financial institutions and has not issued
 debentures.
 
 (xii) As the Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities,
 paragraphs 4(xii) of the Order is not applicable.
 
 (xiii) The provisions of any special statute as specified under
 paragraph 4(xiii) of the Order are not applicable to the Company.
 
 (xiv) As the Company is not dealing or trading in shares, securities,
 debentures and other investments, paragraph 4(xiv) of the Order is not
 applicable.
 
 (xv) According to the information and explanations given to us, in our
 opinion the company has not given any guarantee for loans taken by
 others from banks or financial institutions.
 
 (xvi) According to the information and explanations given to us, the
 Company has not raised any term loan during the year.
 
 (xvii) According to the information and explanations given to us, and
 on an overall examination of the Balance Sheet of the Company, we
 report that during the year short term funds have not been used to
 finance long term investments.
 
 (xviii) During the year, since the Company has not made any
 preferential allotment of shares, paragraph 4(xviii) of the Order is
 not applicable.
 
 (xix) During the year, since the Company has not issued any debentures,
 paragraph 4(xix) of the Order is not applicable.
 
 (xx) During the year, since the Company has not raised any money by way
 of public issue, paragraph 4(xx) of the Order is not applicable.
 
 (xxi) One instance of misappropriation of funds received from debtors
 amounting to Rs. 7.85 lacs by an employee was noticed and the said sum
 has been recovered from the employee.
 
                                      For Thakur, Vaidyanath Aiyar & Co.
                                                   Chartered Accountants
 
                                                            V. Rajaraman
 New Delhi                                                       Partner
 August 14, 2008                                              M.No. 2705