1.  We have audited the attached Balance Sheet of Usha Martin Limited
 (the Company) as at 31st March, 2011, and the related Profit and
 Loss Account and Cash Flow Statement for the year ended on that date
 annexed thereto, which we have signed under reference to this report.
 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 by the Companies (Auditors Report) (Amendment) Order, 2004
 (together the Order) issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1956
 of India (the Act) and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we further report that :
 
 i) a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 b) The fixed assets are physically verified by the Management according
 to a phased programme designed to cover all the items over a period of
 three years which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. Pursuant to the
 programme, a portion of the fixed assets has been physically verified
 by the Management during the year and no material discrepancies between
 the book records and the physical inventory have been noticed.
 
 c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 ii) a) The inventory (excluding stocks lying in customs bonded
 warehouse and with third parties) of the Company has been physically
 verified by the Management during the year. In respect of inventory
 lying with third parties, these have substantially been confirmed by
 them. In our opinion, the frequency of verification is reasonable.
 
 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) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory other
 than, in respect of partly finished products (year end balance
 Rs.414,818 thousand) of three Divisions which have been determined by
 the Management based on physical verification as at the year end. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 iii) a) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 b) The Company has not taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed assets and for the sale of goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weakness in the
 aforesaid internal control system.
 
 v) a) In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in Section 301 of the Act 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 such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are reasonable
 having regard to the prevailing market price 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 or any other relevant provisions of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. According to the information and
 explanations given to us, 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 on the Company in respect of the aforesaid
 deposits.
 
 vii) In our opinion, the Companys internal audit system (designed to
 cover all significant areas over a period of two years) is commensurate
 with the size of the Company and nature of its business.
 
 viii) We have broadly reviewed the books of account maintained by the
 Company in respect of certain products where, pursuant to the Rules
 made by the Central Government of India, the maintenance of cost
 records has been prescribed under clause (d) of sub-section (1) of
 Section 209 of the Act, 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 or complete.
 
 ix) a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 has generally been regular in depositing during the year the undisputed
 statutory dues including provident fund, investor education and
 protection fund, employees state insurance, income-tax, sales-tax,
 wealth-tax, service tax, customs duty, excise duty, cess and other
 material statutory dues as applicable with the appropriate authorities.
 
 b) According to the information and explanations given to us and the
 records of the Company examined by us, there were no dues in respect of
 wealth-tax and cess as at 31st March, 2011 which have not been
 deposited on account of a dispute other than certain disputed
 income-tax, sales-tax, service tax, customs duty, and excise duty dues,
 in respect of which amounts involved and forum at which dispute is
 pending have been indicated in Note 23 on Schedule 18 to the Accounts.
 
 x) The Company has no accumulated losses as at 31st March, 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 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 any financial institution or bank or debenture
 holders as at the balance sheet date.
 
 xii) The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii) The provisions of any special statute applicable to chit fund/
 nidhi/ mutual benefit fund/ societies are not applicable to the
 Company.
 
 xiv) In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company, for loans taken by others from banks or financial institutions
 during the year, are not prejudicial to the interest of the Company.
 
 xvi) In our opinion and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained other than Rs. 8,90,000
 thousand being part of a term loan, disbursed towards the year end and
 was pending utilisation.
 
 xvii) On the basis of an overall examination of the Balance Sheet of
 the Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 xviii) 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 during the year.
 
 xix) The Company has neither issued during the year any secured
 debentures nor has any outstanding debentures at the year end.
 
 xx) The Company has not raised any money by public issues during the
 year.
 
 xxi) During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the Management.
 
 
 4. Further to our comments 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 ;
 
 c) 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 ;
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub-section (3C) of Section 211 of
 the Act ;
 
 e) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, none of the directors is
 disqualified as on 31st March, 2011 from being appointed as a director
 in terms of clause (g) of sub-section (1) of Section 274 of the Act ;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give, in the prescribed
 manner, the information required by the Act, 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 31st March, 2011 ;
 
 ii) In the case of the Profit and Loss Account, of the profit for the
 year ended on that date ; and
 
 iii) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
                                                For PRICE WATERHOUSE
 
                                   Firm Registration Number: 301112E
 
                                               Chartered Accountants
 
                                                            (P. Law) 
 
 Kolkata                                                    Partner
 
 11th May, 2011                                Membership No. 51790