annual_reports

USHA INTERNATIONAL LTD.(Formerly known as The Jay Engineering Works Ltd.)

71st Annual Report 2008

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connectivity and cheerful interiors make working here a real pleasure.

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DeterminationInnovationExcellence

Empowerment

We know where we want to go and together we will get there

We will encourage people to open their minds, explore new ideas and think creatively

We will excel in all our business processes and will leverage experts wherever required

We will develop a culture that will allow each one of us to have the authority and be

accountable for his/her actions

DirectorsA.K. ChowdhuryA.K. JainChhaya Shriram – Whole Time DirectorKrishna ShriramN.K. GoilaP.K. BhallaS.C. JainSiddharth Shriram – ChairmanSunil Wadhwa – Managing DirectorVinod K. Wazir

Principal Executives

Executive DirectorsAlok GoelRavi RajuS.S. Singhal (Senior Advisor)

Vice-PresidentsAnju MunjalD.S. Narang (Senior Advisor)P.C. BhandariP. Narayan

Company SecretaryPratibha Aggarwal

BankersBank of BarodaPunjab National Bank

AuditorsThakur, Vaidyanath Aiyar & Co.Chartered Accountants

Equity Shares Listed atDelhi Stock Exchange & Calcutta Stock Exchange(Annual Listing Fee paid for the year 2008-2009)

Registered Office19, Kasturba Gandhi MargNew Delhi – 110 001

Corporate OfficePlote No. 3, Institutional AreaSector-32, Gurgaon – 122 001Haryana

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Dear Shareholder,

Last year saw our international consultant’s report being submitted and broadlyaccepted by the Management of the Company. This acceptance mandates, amongother things, significant organizational changes and H.R. growth, introduction of newproducts and concentration on linking manufacturing to sales and design in a waywhich will prepare us well for the succeeding decade.

We must operate our business in the context of some significant events in the worldwhich also impact us in our societies. Some of these events are that much of theworld, including India, remains mired in poverty; the estimated future prices of fossilfuels for energy are going to be so high that the way we live will be comprehensivelyaltered, bringing a host of new opportunities which will change our lives in presentlyunknown ways. Many forces including the impact of rapid industrialization ofdeveloping countries, is causing the world’s natural ecological balance to shift withcompletely unpredictable consequences.

Therefore we must commit to run our business to fit into the particular scenarios ofhow life and business will be in the future.

Accordingly, all of our products must provide a healthful, cheerful and sustainableway of life. This requires significant application of mind and then great courage tostay the course. It is in this way that we can help make a better life for many. This is theset of values we must live by. All of our products must necessarily get Energy Starratings so that the customer may know that we, with them, are active subscribersand participants in programmes to conserve energy. The consequential initial higherprice to the consumer will give a long term return to the society, and thereforethemselves. We must propagate that reducing each person’s carbon foot printthrough lower energy consumption will make for a better life for all of us. Thereforewe must look for materials that are recyclable, most convenient to be accessed, easyto use, so that our customers may say that they are participating in the world campaignfor lower energy consumption and reducing global warming.

We cannot do this alone. While we will of course use many design firms and R&Destablishments, including our own, we must enlist the assistance of all stakeholderssuch as our customers/ shareholders/employees/dealers. They can and must tell usand give us ideas how we may proceed on our mission. We live in this world togetherand therefore must be partners in making a better life for all of us.

CHAIRMAN’S MESSAGE

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The previously announced merger of Usha International Limited into The JayEngineering Works Ltd is now complete; we have changed the name of the mergedentity (i.e. The Jay Engineering Works Ltd) into Usha International Ltd to better expressour brand. Thus now, for the first time, Usha International is a composite of our ownmanufacturing, our own selling and distribution, our own brands and our own sourcingand distributing. Now that this is achieved there are many plans to improve ourbusiness over the next 3-4 years.

We are exploring new businesses that we may enter into including the establishmentof additional brands and distribution of other brands and products through oursuperior distribution system. You will see evidence of this in the coming months.

We have targeted that UIL will grow at a rapid but measured pace. For this howeverthere has to be a complete overhaul and re-envisioning of our human resourcesstructures. Consequently a comprehensive overhaul of all policies are beingundertaken and streamlining and modernizing a bottom-up top-down approach toevolving an H R Vision is under way. We believe that this will significantly enhancethe attractiveness of our Company for encouraging bright new talent to join us andfor retaining existing skills. We have already embarked on expansion of top andsenior management at different levels to fill out our growing needs, investingsignificantly higher amounts on executive education at all levels and involving eachemployee in representing the Company and our corporate brand to the externalworld.

At present the Company shares post merger are not traded. Procedural matters withthe exchanges where your Company was originally listed (Delhi and Calcutta StockExchanges) have been completed and subsequent applications on the BSE and NSE,where they were never listed, will be made. Please bear with us on this.

With warm regards,

Siddharth Shriram

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■ Honda Siel Power Products, Japan

■ Hunter Fan Comapany, USA

■ Janome Sewing Machine Company,Japan

■ G.D. Midea Environment AppliancesManufacturing Company Ltd., China

■ NGK, Japan

JOINT VENTURES / ASSOCIATES

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DIRECTORS’ REPORT

USHA INTERNATIONAL LIMITED(Formerly known as The Jay Engineering Works Limited)

Your Directors are pleased to present the 71st Annual Report alongwith Audited Accounts of theCompany for the year ended March 31, 2008.

SCHEME OF ARRANGEMENT

The merger of Usha International Limited and Shriram Fuel Injection Industries Limited into The JayEngineering Works Limited and reduction of equity share capital of the merged company w.e.f.1.4.2007 has been accomplished. Further more, the name of The Jay Engineering Works Limitedstands legally changed to Usha International Limited.

Accordingly, 1,10,74,319 new Equity Shares have been allotted to the eligible Shareholders of all theconcerned Companies.

FINANCIAL RESULTS

The Annual Report of the Company for the year 2007-2008 has been prepared after considering theeffect of the Merger.

The merged Company made a gross profit of Rs. 2853.46 lacs for the year ended 31.3.2008. Theprevious year stand alone profit of the company was Rs. 291.24 lacs but this is not at all comparable.

DIVIDEND

Your Directors have considered the payment of dividend and feel it appropriate to observe theeffects of the merger and have liquidity available for any urgent need. Therefore they are unable torecommend a dividend.

FIXED DEPOSITS

Fixed Deposits amounting to Rs. 28.07 lacs pertaining to 89 depositors remained unclaimed at theclose of the year.

SUBSIDIARY COMPANY

AVRO SALES PRIVATE LIMITED

Owing to the merger, M/s Avro Sales Private Ltd. a wholly owned subsidiary of erstwhile UshaInternational Limited has become a subsidiary of the company.

A statement of Holding Company’s interest pursuant to Section 212 of the Companies Act, 1956 andthe Audited Annual Accounts along with Report of Board of Directors and Auditors of the subsidiaryCompany are attached to the Accounts.

In accordance with the Accounting Standard (AS-21), consolidated financial statements are alsoattached which form part of the Annual Accounts of the Company.

DIRECTORS

Mr. N.K. Goila, Director will retire by rotation at the forthcoming Annual General Meeting of theCompany and being eligible, offer himself for reappointment.

Mr. P.K. Bhalla has been appointed as Additional Director w.e.f. 30.10.2007.

Mr. S.S.L. Gupta, Mr. A.K. Chowdhury and Mr. Vinay Kumar resigned from the Directorship of theCompany w.e.f. 30.5.2008, 2.6.2008 and 1.7.2008 respectively. The board places on record its sincereappreciation of the valuable services rendered by them during their tenure as directors of theCompany.

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After merger, the Board of Directors was reconstituted at the Board meeting held on 23.6.2008 andthe following Directors have been appointed as Additional Directors:

1. Mr. Sunil Wadhwa

2. Ms. Chhaya Shriram

3. Mr. A.K. Jain

4. Mr. A.K. Chowdhury

5. Mr. Vinod K. Wazir

Mr. Sunil Wadhwa has been appointed as Managing Director of the Company w.e.f. 2.6.2008 till31.3.2012. Ms. Chhaya Shriram has been appointed as Whole- time Director of the Company w.e.f.2.6.2008 till 31.3.2010.

Mr. Krishna Shriram has been appointed as Additional Director w.e.f. 30.7.2008.

Pursuant to provisions of Section 260 of the Companies Act, 1956, Mr. P.K. Bhalla, Mr. Sunil Wadhwa,Ms. Chhaya Shriram, Mr. A.K. Jain, Mr. A.K. Chowdhury, Mr. Vinod K. Wazir and Mr. Krishna Shriram areliable to retire at this Annual General Meeting. The Company has received notices from theShareholders under section 257 of the Companies Act, 1956 proposing their candidature for theoffice of the Director.

In order to enable the Company to have a larger and stronger board to meet the new challenges inthe business environment and growing competition and international operations, the Board ofDirectors had increased the maximum permissible limit of directors from 12 to 20. This has beenrecommended to the Shareholders for their approval at the forthcoming annual general meetingand thereafter an application will be made to the Central Government for its approval.

AUDITORS

M/s Thakur, Vaidyanath Aiyar & Co., Chartered Accountants, Statutory Auditors of the Company holdsoffice until the conclusion of the forthcoming Annual General Meeting and is recommended forreappointment. The Company has received a certificate from them to the effect that theirreappointment, if made, would be within the prescribed limits under section 224(1B) of the CompaniesAct, 1956.

AUDITORS REPORT

The observations of the auditors are self explanatory and/or suitably explained in the various notesto the accounts.

CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION/FOREIGN EXCHANGE EARNINGS ANDOUTGO

As the Company’s operations are not energy intensive, no special measures have been taken forenergy conservation and no proposals are under consideration for the same. Particulars of energyconsumption in Form ‘A’ are not required to be provided since the Company is not covered byindustries specified in the relevant schedule.

Data of technology absorption in Form ‘B’ is annexed as per Annexure I.

The information relating to Exports has been given in the Corporate Governance Report and theamount of total foreign exchange earned/ utilised during year ended March 31, 2008 has been givenin Notes to the Accounts which are attached herewith and form an integral part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with Companies(Particulars of Employees) Rules, 1975, the particulars of employees are required to be furnished in

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the statement to be annexed to this Report. However, as per the provisions of section 219(1)(b)(iv) ofthe said Act, the report and accounts are being sent to all the Shareholders excluding the aforesaidannexure.

The complete annual report including this statement shall be made available for inspection by anyShareholder during working hours for a period of 21 days before the date of the Annual GeneralMeeting. Any member interested in obtaining the copy of the statement may write to the CompanySecretary at registered office of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required under section 217 (2AA) of the Companies Act, 1956, your Directors state that:

(i) the applicable accounting standards have been followed in the preparation of the annualaccounts;

(ii) the accounting policies incorporated in Notes to the Accounts are consistent and the judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit or loss of theCompany for that period;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act, 1956 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities;

(iv) the Annual Accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

The Compliance Report on Corporate Governance forms part of the Annual Report and annexedhereto as Annexure II along with the Auditors’ Certificate on its compliance.

GROUP COMPANIES FOR INTERSE TRANSFER OF SHARES

Perennial Investments Private Limited, M.S.R. Enterprises Private Limited, Greenfields CommercialPrivate Ltd., Siel Holdings Limited and Mawana Sugars Limited are group Companies as defined inthe Monopolies and Restrictive Trade Practices Act, 1969.

DEMATERIALISATION OF SHARES

The Equity Shares of the Company have been notified for compulsory trading in demat form. TheCompany has entered into agreements with both National Securities Depository Limited (NSDL) andCentral Depository Services (India) Limited (CDSL) and the shares of the Company have been activatedfor dematerialization with NSDL and CDSL.

LISTING OF SECURITIES OF THE COMPANY

The listing fee for the year 2008-2009 has been paid to the Stock Exchanges where the Shares of theCompany are listed (Delhi and Calcutta).

ACKNOWLEDGEMENTS

The Directors wish to thank the Company’s Bankers, Dealers, the Shareholders and Business Associatesfor their continued support and record their appreciation of devoted services rendered by all ranksof the Company’s personnel during the year.

On behalf of the Board

New Delhi SIDDHARTH SHRIRAMAugust 19, 2008 CHAIRMAN

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FORM – BFORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO

TECHNOLOGY ABSORPTION

RESEARCH & DEVELOPMENT (R&D)

1. Specific Areas in which R&D carried : - New Models/design developmentout by the company - Technology/processes upgradation

- Products quality/efficiency- Standardisation

2. Benefits derived as a result of above : - Reduction in manufacturing costsR&D - Improved consumer appeal

- Process simplification

3. Future plan of action : - R&D efforts to continue all round for better productquality, optimising raw material utilization anddevelopment of new models / designs to achievebetter productivity / better consumer satisfaction.

4. Expenditure on R&D : a) Capital - Nilb) Recurring - Rs. 40.73 Lacsc) Total - Rs. 40.73Lacsd) Total R&D exp. as a % of

total turnover - 0.06 %

TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION

1. Efforts made : Interaction both nationally and internationally ismaintained to introduce modern technology in plantsby changes in operation processes / toolings etc.besides in-house R&D developments.

2. Benefits derived : - Cost Reduction- Quality Improvement- Improved Capacity Utilisation

3. Information Technology : Not Applicable(imported during the last five years)

Annexure-I

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CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDEDMARCH 31, 20081. Company’s Philosophy on Code of Corporate Governance

Usha International’s philosophy of Corporate Governance foster a culture for promoting goodgovernance and voluntary compliance which facilitate effective participation of all concernedand at the same time maximize Shareholders value on a sustained basis. Usha’s Board of Directorsaims at framing best practices, structures, processes and ethics to attain high levels of transparency,integrity and equity in all the facets of operations of the Company, and in interactions with itsstakeholders.

2. Board of Directors(I) Composition

At the year end, the Company’s Board consists of seven Directors headed by a Non-Executive Chairman. The Composition of the Board is in conformity with Clause 49 of theListing Agreement.

During the year, eight Board meetings were held on 25.5.2007, 8.6.2007, 25.7.2007, 4.10.2007,30.10.2007, 21.12.2007, 22.12.2007 and 25.1.2008.

The particulars of the Directors during the year ended March 31, 2008 are as under:

DirectorDirectorDirectorDirectorDirector CategoryCategoryCategoryCategoryCategory Atte Atte Atte Atte Attendancendancendancendancendance No. ofNo. ofNo. ofNo. ofNo. of CommitteeCommitteeCommitteeCommitteeCommitteeParticularsParticularsParticularsParticularsParticulars outsideoutsideoutsideoutsideoutside Membership*Membership*Membership*Membership*Membership*

DirectorshipDirectorshipDirectorshipDirectorshipDirectorshipBoardBoardBoardBoardBoard LastLastLastLastLast held held held held held MemberMemberMemberMemberMember ChairmanChairmanChairmanChairmanChairman

MeetingsMeetingsMeetingsMeetingsMeetings AGMAGMAGMAGMAGM (excluding (excluding (excluding (excluding (excludingPrivate &Private &Private &Private &Private &ForeignForeignForeignForeignForeign

CoCoCoCoCompanies)mpanies)mpanies)mpanies)mpanies)

Mr. A.K. Chowdhury Independent/ 8 Yes 1 1 1Non-Executive

Mr. Arun Datta1 Independent/ 1 N.A - - -(BIFR Nominee) Non-Executive

Mr. N.K. Goila Non-Executive 2 Yes 3 5 2

Mr. P.K. Bhalla2 Independent/ 3 N.A. 1 Nil NilNon–Executive

Mr. Rajendra Khanna3 Independent/ 1 N.A. Nil Nil NilNon–Executive

Mr. S.S.L. Gupta Independent/ 8 Yes 1 2 2Non-Executive

Mr. S.C. Jain Independent/ 4 No 2 3 Nil(Nominee of Life Non-ExecutiveInsurance Corporation)

Mr. Vinay Kumar Independent/ 5 No Nil Nil Nil(Nominee of Punjab Non-ExecutiveNational Bank)

Mr. Siddharth Shriram Non-Executive 8 Yes 6 5 3(Chairman)

*Consisting of Audit Committee and Shareholders Relations Committee.1Resigned vide letter dated 25.5.2007.2Co-opted as an additional director w.e.f. 30.10.2007.3Resigned w.e.f. 22.9.2007.

CORPORATE GOVERNANCE REPORT

Annexure-II

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The Company, placed before the Board all statutory and other important items

recommended under the Corporate Governance guidelines.

(II) Code of Conduct & Ethics

The Board of Directors of the Company has prescribed a Code of Conduct for all the

Board Members and the Core Management Team of the Company which is available on

the website of the Company “www.ushainternational.com”. The Board Members and the

Core Management Team have affirmed compliance of the Code of Conduct. A declaration

to this effect signed by the Managing Director is appended at the end of this report.

3. Audit Committee

The Company has an Audit Committee dealing with the matters assigned by the Board of

Directors. The power, role and terms of reference of the Audit Committee constituted under

Clause 49 of the Listing Agreement with the Stock Exchange are as prescribed under section

292 A of the Companies Act, 1956.

During the year, four Audit Committee Meetings were held on 25.5.2007, 25.7.2007, 30.10.2007

and 25.1.2008.

The Chairman of the Committee was present at the last Annual General Meeting to answer

the shareholders queries. The Company Secretary acts as the Secretary of the Committee.

The composition of the Committee and the meetings attended by its members during the

year ended March 31, 2008 are as under:

Member Director Executive/ Independent/ No. of MeetingsNon-Executive Non- Independent Attended (Total

meetings held 4)

Mr. S.S. L. Gupta (Chairman) Non-Executive Independent 4

Mr. A.K. Chowdhury Non-Executive Independent 4

Mr. N.K. Goila1 Non-Executive Independent 1

Mr. Rajendra Khanna2 Non-Executive Independent 1

1Appointed as Advisor of the Company w.e.f. 1.6.2008 and hence became non independent.2Resigned w.e.f. 22.9.2007.

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4. Remuneration Committee

(I) Remuneration Committee has been constituted by the Board of Directors of the Companyon 23.6.2008.

(II) The details of the remuneration paid to the Non-Executive Directors for attending Board/Committee meetings during the year ended March 31, 2008 are given below:

Sl. No. Name Sitting Fee

(Rs.)

1. Mr. A.K. Chowdhury 11500

2. Mr. N.K. Goila 5000

3. Mr. P.K. Bhalla 1500

4. Mr. S.S.L. Gupta 11500

5. Mr. S.C. Jain 1000

6. Mr. Vinay Kumar 2500

7. Mr. Siddharth Shriram 4000

TOTAL 37000

The Non-Executive Directors did not have any pecuniary relationship or transactions withthe Company (except to the extent of receipt of sitting fees).

(III) Mr. N.K. Goila has been appointed as Advisor w.e.f. 1st June, 2008 to 31st May, 2010 on amonthly all inclusive remuneration of Rs. 200000 (Rs. Two lacs only).

5. Shareholders Relations Committee

(I) Terms of Reference

The Shareholders Relations Committee approves and monitors transfers of Shares andalso the complaints of Shareholders relating to transfer of Shares, non receipt of BalanceSheet etc., transmission, transposition, deletion, split, consolidation of Share Certificatesand to give authorization to Directors/ officers of the Company to sign Share Certificatesfor the said purposes.

(II) Composition

The composition of the Committee and their attendance at the Committee meetings heldon 7.5.2007, 8.6.2007, 19.7.2007, 17.9.2007, 22.10.2007, 27.11.2007. 12.12.2007, 20.12.2007,21.12.2007, 20.2.2008 and 1.3.2008, during the year ended March 31, 2008 are as under:

Member Director Executive/ Independent/ No. of MeetingsNon- Executive Non- Independent Attended

(Total meetings held 11)

Mr. A.K. Chowdhury Non- Executive Independent 11(Chairman)

Mr. S.S.L. Gupta Non- Executive Independent 11

Mr. N.K. Goila1 Non- Executive Independent 7

Mr. Rajendra Khanna2 Non- Executive Independent 2

1Co-opted as Committee member w.e.f. 4.10.2007. 2Resigned w.e.f. 22.9.2007.

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Ms. Pratibha Aggarwal, Company Secretary is the Compliance Officer of the Committee.

No Share transfer was pending as on March 31, 2008.

The Company has not received any complaint of any Shareholders during the year ended

March 31, 2008.

In accordance with SEBI’s regulations on prevention of insider trading, a Code of Conduct

for Directors, Officers and Designated Employees is in place.

6. General Body Meetings

(I) The last three Annual General Meetings were held as under:

Financial Location Date Time Special Resolution

Year Passed

2006-2007 Kamani Auditorium, 21.9.2007 10.00 A.M. No special resolution

1, Copernicus Marg,

New Delhi – 110001.

2005-2006 Kamani Auditorium, 21.8.2006 10.30 A.M. - Appointment of

1, Copernicus Marg, Director as ‘Advisor’

New Delhi – 110001. u/s 314 of the

Companies Act, 1956

- Amendment in

Articles of Association

2004-2005 Kamani Auditorium, 29.8.2005 10.30 A.M. Shifting of Registers of

1, Copernicus Marg, Members to the office

New Delhi – 110001. of Registrar & Transfer

Agent

(II) No Special resolution was put through a Postal Ballot during the year.

(III) During the year 2008-09, the Company had obtained Shareholders approval by way of

Special Resolution through Postal Ballot to amend the Object Clause of the Memorandum

of Association of the Company. The result of the Postal Ballot was declared on 26.6.2008 by

the Chairman of the Company at the Registered Office based on the Report submitted by

the Scrutinizer viz. Ms. Mamta Jain, a practising Company Secretary, appointed for conducting

the Postal Ballot process in a fair and transparent manner.

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The voting pattern in the above Item was as under:

Sl. No. Particulars No. of Shareholders No. of Votes (Shares)

1. Total votes polled 128 19618605

2. Valid votes 119 19611392

3. Invalid votes 9 7213

4. Votes cast in favour of the Resolution 117 19611191

5. Votes cast against the Resolution 2 201

Result of Postal Ballot : Passed with overwhelming majority on 26.6.2008.

7. Disclosures

(I) Related party transactions have been disclosed in Point no. 5 A & B of Schedule 10 (Part B)of the Balance Sheet.

(II) There were no instances of non-compliance by the Company and no penalties, strictureswere imposed on the Company by stock exchanges or SEBI or any statutory authority onany matter related to the capital markets, during the last three years.

(III) Risk Management

The Company has constituted a Risk Management Committee for reviewing the riskassessment and minimization procedure and for submitting their recommendations tothe Board.

(IV) The Shareholding of the Non-Executive Directors of the Company as on 31.3.2008 is asunder:

Sl. No. Name of the Director No. of Shares

1. Mr. A.K. Chowdhury 1

2. Mr. N.K. Goila 1

3. Mr. P.K. Bhalla 1

4. Mr. S.S.L. Gupta Nil

5. Mr. S.C. Jain Nil

6. Mr. Vinay Kumar Nil

7. Mr. Siddharth Shriram Nil

8. Means of Communication

(I) Quarterly results were published in ‘The Financial Express’ and `Veer Arjun’ forthe information of Shareholders/Investors. Though these results were not sentto the Shareholders individually, these are available at Company’s websitewww.ushainternational.com.

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9. Management Discussions and Analysis Report

A. Product Categories

� Fans

Production of fans by the organised sector in India crossed the 20 million mark during2007-08, a growth of 18% over the previous year. Usha retained the No. 2 position in theorganised sector and grew volumes by 12.5% during the year.

In the financial year 2007-08, Usha International, responding to the growth in demandfrom the construction sector, reinforced its distribution across the country with over 600redistributors and direct dealers added to the sales network. Deeper penetration in themarket has been achieved due to an increased presence in small towns. The Company hasa dedicated team promoting the brand in large format retail outlets in urban and semi-urban commercial centres.

Last year 20 new models with distinctive styles and features had been introduced in themarket. Presently, the brand offers the widest portfolio of products across categories inthe fan industry.

Segmentation has played an important role in defining the marketing strategy. Ushaentered the air circulator segment, a niche that has evolved owing to the rapidindustrialisation taking place in the country. Similarly, in the lifestyle segment, the Companyhas bolstered the existing portfolio by adding four new decorative models in the ceilingfan category.

The industry is expected to achieve good growth in the coming years. The pace of growthhowever will witness a decline as it will be impacted by macro trends in the Indianeconomy with real estate adversely affected and increasing interest rates reducingdisposable incomes.

� Sewing Machines

During the past year Usha International sold 500,000 straight stitch sewing machines.Usha is the market leader in this segment with a market share of 75% of the organisedsector

For Usha, the automatic zig-zag sewing machine segment is growing rapidly with agrowth of 21% over last year. The Company has recently introduced a new model ‘ALLURE’from it’s long time partner Janome of Japan, in the automatic zig-zag category at anattractive price point, which should boost sales even further. Plans are being developed toextend the distribution reach of the automatic zigzag sewing machines to smaller townsacross India.

Usha has introduced a range of automatic computerised embroidery machines targetedat boutique owners and job workers. In 2007-08, the MC-200E from Janome was launchedin the Memory Craft series.

In addition to this, seven new sewing machine models were introduced in the high-speedindustrial category.

CEILING FAN

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Sales and service standards have been upped to further establish the brand within theseveral sewing and embroidery machine segments. Product training, including servicetraining by qualified engineers from Janome of Japan has been organised for sales staffduring the past year. Apart from increasing promotional efforts through exhibitions,improved logistics and service support has given a boost to sales

The Company has an established presence of 1,500 dealers spread up to small towns.Focussed initiatives in the past year have resulted in expanding the customer base.

In the coming year, plans have been firmed up to enhance initiatives both in the zig-zagand highspeed industrial segments. The high-speed industrial machine range as well asits marketing network is being expanded to offer more options to target garment exporters.For the zig zag range, hobby centres are being opened to serve as interactive touch-points with customers.

� Sewing Schools

The Usha sewing and design school network has grown to a strength of 325 with a viewto doubling this number in the next two years. The curriculum has been revamped andimplemented. These schools now offer a viable vocational option and are professionallymanaged.

� Home Appliances

During 2007-08, the industry grew at 18%. Growth of the organised sector was morerobust at 24%-25%. The industry is highly fragmented, which indicates opportunities inthe distant future.

Usha’s presence in the home appliances market is extensive. In the financial year 2007-08,the Appliances division registered a topline growth of 19% over the previous year. Factorsinducing growth were better visibility by way of promotions, a wider distribution network,and an expanded product range.

Mixer-grinder is an important product category and its contribution in the Company’sappliances portfolio has been considerable. In the past year, Usha introduced:

� A new Mixer-Grinder model catering to the economy segment.

� A new Room Cooler model featuring an all-new design with a larger tank capacity.

� New products in categories including juicer-mixer-grinders, steam irons, toasters,halogen heaters and instant water heaters.

Brand visibility is being built up through the introduction of Usha Lexus home appliancesacross a number of large format retail chains. The dealer network has been strengthenedboth in terms of numbers and through service and training inputs.

Plans for the coming year include new model introductions in key categories, as well asthe development of niche segments. The strategy includes aggressive pricing, introductionof economy models and an expansion of the distribution network.

AUTOMATIC ZIG-ZAG SEWING MACHINE

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� Engines and Pumpsets

Market conditions in this product category were depressed during 2007-08 owing to thesteep hike in the cost of pig iron, steel and other inputs. Aggregate sales includingimports of small horsepower diesel engines stood at 500,000 units for the year for theorganised sector industry. Slow-speed and standard segments witnessed a decline, whilethe light-weight and imported engine segments saw a growth in sales.

Despite the adverse conditions, Usha achieved 20% growth in the sales of engines andpumpsets over the previous year, improving its position in the imported, light-weightand standard segments. Usha is now the largest selling small engines based pumpsetbrand across the country.

Recent product introductions by the Company are in keeping with changing customerpreferences. The newly introduced light-weight engines and the Honda-powered kerosenepumpsets have contributed substantially to Usha’s growth in the category. In the agro-industrial segment, sales of aircooled engines picked up owing to various governmentschemes.

Marketing activities proposed for the coming season include dealer network upgradationand extension of service facilities in the rural markets. The Company proposes to introduceimported engines for applications other than for pumpsets.

� Electrical Motors and Pumps

While the industry grew at around 7% during the financial year 2007-08, the Companyregistered a growth of 30% in this category.

The submersible pumpset range launched two years back has clocked the fastest rate ofgrowth within the category at 49%. Designed to operate under low voltage conditions,the Usha range is competitively priced. In addition, sales in the mini- monoblock segmentgrew by 20%.

The Company has launched a full range of compressor pumps in the Eastern India. Theseare specially suited to the high depth water table conditions prevalent in the region.

Also introduced during 2007-08 is a sleek new 0.5 HP Mini Monobloc model in the economysegment.

The submersible pumps segment is a high growth area, and the Company plans to focuson dealer network upgradation during the coming year to improve its sales anddistribution platform. New introductions are also scheduled in the Electric Monobloc,Mini Monobloc and slow-speed Mini Monobloc categories.

� Water Coolers & Dispensers

The refrigeration business consists of two product categories – water coolers and waterdispensers. The market for the former product line has been sluggish at 7% growth forthe past couple of years. Water dispensers, on the other hand, have demonstrated goodindustry growth, at around 30%.

In the financial year 2007-08, sales of Usha water coolers grew by about 7%, whichparallels the industry trend. Business for Usha water dispensers has grown by 43% overthe previous year.

Quality was enhanced through the introduction of PUF-injected insulation of water coolertanks in the last year. The Company shored up its service and distribution through a focuson network expansion, dealer productivity and training inputs during the year.

JUICER MIXER GRINDER

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1 7

For the coming year, the Company has chalked out a sales plan targeting growth rates of25% and 75% in the water cooler and dispenser categories respectively. The Company isexpected to tap the potential of the export market as well in this product category.

� Auto components

Following the tie-up for the marketing and distribution of the NGK brand spark plugs,Usha’s auto component division has moved forward. The distribution network has beenrevamped and extended across the country.

Aggressive promotions through display stalls and van campaigns elicited good customerpull.

Emphasis has been on field level marketing in tier II and III towns, where the growth indemand has been the strongest.

B. ExportsExports for the Company comprise of four product categories:

� Electric fans : Exports in this category grew by 5%.

� Chemicals : Export of chemicals by the Company has declined owing to better realizationsin the domestic market.

� Diesel engines : The Company increased exports of diesel engines by 10%.

� Auto Components : Export of fuel injection equipment and auto components increasedby 12% during 2007-08.

Strengthening of the rupee and the rise in input costs has had an adverse impact on growingthe export business. The resultant increase in selling prices has affected sales across allcategories.

Participation in trade fairs has helped grow the brand in international markets. There hasbeen a favourable growth in the export of electric fans, and the Company maintains itsposition as the No.2 exporter of fans from the country. Overall exports by the Company aretargeted to grow by 25% during the coming year.

C. Modern RetailThe Company’s business with Modern Retail has grown substantially in the year. The Companycurrently does business with 18 Modern Retail format chains across the country. Marketleadership for Usha fans has been clearly established across all large format stores, and thebrand has over 50% market share in the three top chains.

Recruitment of dedicated sales teams and close interaction with major retail chains hasserved to establish the brand in this area. Store-level promotions and deployment of theappropriate product mix is regularly reviewed. A monthly training calendar has been chalkedup, both for the Company’s sales team and for channel promoters. New products have beendeveloped specifically for this channel. Products introduced last year include water dispensersand automatic zig-zag sewing machines.

This sector is growing rapidly and the Company has set a target of 100% growth for thecoming year if not more.

PORTABLE PUMPSET

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D. Distribution Network

To support its sales force, the organization has an infrastructure backbone of 16 locationaloffices, 57 Company showrooms and 33 warehouses. At the retail level, the Company isrepresented through an extensive dealer network and a presence in all urban centres witha population over 20,000. The Usha brand is well recognised even in the hinterland; salesfrom semi-rural areas contribute to approximately 20% of the Company’s revenues.

The Company showcases its product range through its network of Company showroomsacross India, which will soon be expanded. New locations in upcoming retail districts arebeing considered.

E. Information Technology

The Company wishes to greatly strengthen its IT operations backbone. The ERP system isbeing upgraded to the latest version and HR and Payroll operations will be mapped duringthe year. The Business Intelligence Warehousing component is being implemented forbetter business analysis through strategic and operational MIS reporting processes. Networkinfrastructure has been improved by upgrading to higher capacity links with improvedreliability.

In the coming year, provision has been made to upgrade the IT infrastructure at all Companyshowrooms. Modern retail requirements are being mapped to configure hardware andsoftware requirements, which will be networked to a central SAP system.

An online business information access platform is scheduled for implementation throughSRM (Supplier Relationship Management) and CRM (Customer Relationship Management)solutions. This is expected to deliver greater transparency and strengthen the informationflow with stakeholders, including suppliers and key customers. All factories will be connectedthrough ERP and the next stage will be to integrate key suppliers.

As per the Company’s comprehensive IT security policy, internal and external audits areregularly conducted.

F. Human Resources

The Company is revamping its complete HR structure to better address the needs of thefuture. This will include the following, among other initiative areas:

I. Training and Development

II. Organisational Restructuring

III. Performance Management Systems

The restructured environment will be more transparent and offer all employees greateropportunity for happiness and success. This is integral to the Company’s vision to bring inand retain talent and effectively meet the demands of business in the future.

G. After Sales Service

The Company is committed to providing a high standard of customer satisfaction. A service-centric approach has been formulated to deliver on this commitment.

MINI MONOBLOCK

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The network of Authorized Service Centres has been expanded to 79, which is in additionto a large network of service dealers across the country. To effectively monitor theperformance of these service centres, online monitoring systems have been implementedat 45 major locations, with plans to expand to all service points.

During the year, a number of customer-friendly service practices have been put in place. Foradded convenience, Usha Service Centres are now open seven days of the week; Satisfactionsurveys conducted by independent auditors on defined performance parameters are aregular feature; A faster response on spare parts supply is now possible, thanks to anupgraded logistic management system; Service engineers have been trained to attend tothe concerns of customers and to deal satisfactorily with customer complaints.

H. ISO CertificationThe organization has documented and implemented a Quality Management System for it’smarketing side, and this will be expanded to include the manufacturing side given therecent merger. This will be continuously reviewed, and we plan to further strengthen theeffectiveness and reach of this system in accordance with international benchmarks.

At both the operational and functional levels, Usha’s Quality Management Systememphasises continual improvement and customer satisfaction. The Company made anearly move to the new ISO9001: 2000 standards in 2002. To facilitate implementation of theupgraded standards, more than 50 internal auditors from within the organisation haveundergone quality certification courses conducted by recognised bodies.

Quarterly audits across locations help in gap-identification, process definitions and remedialmeasures. In the past, the Company has earned all compliance credit in the surveillanceaudits conducted by M/s DNV.

I. Corporate CommunicationsThe department is largely responsible for helping to build the Company’s brands andimage and to communicate relevant information to all stakeholders. CorporateCommunications has been an active participant in marketing initiatives of the Company,some of these areas are:

● To extend the brand’s perceptual advantage across categories, an exercise tostandardise communication activities was undertaken during 2007-08. Design templateshave been created across all products to cover all aspects of communication - packaging,advertising, in-store and external signages and all product collaterals. Emphasis hasbeen on creating simple communication with a clear brand association. The Company’swebsite has also been revamped to make for easy navigation and quick access. Sectionshave been added to make the site relevant to all stakeholders.

● To make for more focussed interaction with the dealer fraternity, the format of dealermeets is being revamped to make them more product centric, on a region-wise basis.This will aid in more meaningful and relevant dialogue with this audience.

● Usha is the sponsor of the Ladies All India Amateur and the Northern India AmateurGolf Championships. In fact the Group has been associated with the Northern Indiaevent for the last 20 years. These annual events are keenly contested and serve as astepping stone for greater achievements in the international arena. To promote younggolfing talent, the Company has been sponsoring Junior Training Programmes andJunior Tournaments in Delhi since 2006. This year, the Company plans to extend itssupport and sponsorship to Junior Tournaments held in other parts of the country aswell.

WATER COOLER AND DISPENSER

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J. Manufacturing Facilities

1. Hyderabad Engineering Industries (HEI)

This year, HEI, the fan manufacturing unit has focussed on meeting various certificationnorms :

● The Company executed its first order of ceiling fans to the European marketcomplying with ROHS and EMC specifications. During the year, HEI was also certifiedfor CE & S marking, which is another standard for the European market.

● The Sri Lanka Standards Institution granted registration to HEI and now recognisesquality self-certification for HEI products exported to Sri Lanka.

● Pedestal fans complying with SASO standards were exported to Saudi Arabia forthe first time, for which HEI has received a repeat order.

● Fans complying with Australian Standards specifications have been developed tosuit the Australian market, and samples have been submitted for certification.

● S-marked samples have been submitted to IKEA, Sweden by HEI.

HEI has also undertaken various cost reduction projects to enhance the competitivenessof its product range. A new lifestyle segment range of ceiling fans is also expected tobe introduced shortly.

The production target for 2008-09 marks a growth of 14% over the previous year.

2. Usha Fan Industries (UFI)

The facility, which is located at Kolkata, currently manufacturers around 30 variants ofceiling fans in a range of models, sweeps, sizes and colours.

The Company has targeted to achieve total customer satisfaction in product quality.

Controlling manufacturing costs has been the route to positioning the Company’sproducts more competitively.

The production target for 2008-2009 marks a growth of 13% over the previous year.

3. Shriram Fuel Injection Industries (SFII)

Shriram Fuel Injection Industries manufactures diesel fuel injection equipment forstationary diesel engines, automotive and agricultural applications and the defencesector. SFII is also in the business of manufacturing precision automotive componentsfor some of the most exacting customers.

The domestic market for diesel fuel injection equipment is estimated at 25 millionunits. Key components include nozzles, elements, delivery valves, pumps and injectors.The industry caters to a global market and there are distinct segments for its products– OEM trade, the export market and the replacement market.

SFII has diversified into the production of two and three-cylinder fuel injection pumpswhich cater to European markets. A new venture with a leading American fuel injectionsystem manufacturer is expected to be announced shortly. SFII has also entered theprecision component business and is now the vendor of choice for both domestic andinternational manufacturers. As a result of these moves, SFII’s export segment grew by6% during 2007-08; and sales to the replacement market rose by 10%.

FUEL INJECTION EQUIPMENT

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SFII is committed to matching customer expectations in terms of quality, cost andservice standards. A dedicated Customer Exclusive Location (CEL) has been establishedto serve as an extension of the client’s manufacturing facility. As a result of thesecustomer-oriented initiatives, SFII has regularly been rated as a reliable and quality-conscious supplier by its customers.

Productivity has also been scaled up through several process innovations. Sensibleinvestments through the implementation of in-house technologies and cost-effectiveequipment have been put in place. The Company has introduced modernelectrochemical processes, abrasive flow machining and the newer honing technologyto raise production quality standards. During 2007-08, the Company has also embarkedon an ERP platform to scale up on efficiency and to reduce wastage.

SFII has demonstrated its commitment to implement world-class quality standards.The facility was awarded ISO/TS 16949 certification in 2004. In the coming year, theCompany aims to go green and implement environment-friendly practices by applyingfor ISO 14001 and OSHAS 18001 certifications.

On the global front, the Company is also partnering with customers to introduceproducts that adhere to stringent EPA and other international emission norms.

4. Water Cooler facility

● To grow the business in the financial year 2007-08, the water cooler facility embarkedon a number of technological enhancements:

The introduction of PUF-insulated water tanks. This feature significantly improvescooling efficiency, and also provides for a sleeker look.

● Fitment of Seginomia thermostats for greater reliability and a longer life.

● Self-lubricating fan motor technology from GE for the high-capacity 150150 model.

K. Internal Control Systems and their AdequacyThe Company has defined internal controls and review systems which are closely monitoredby a team of internal auditors under the supervision of the Audit Committee of the Boardof Directors. As a result, efficiency of operations, reliability of financial reports in line withprescribed policies, and compliance with applicable laws and regulations are reasonablyassured.

Audits are conducted at regular intervals by the Company’s Internal Audit team of qualifiedpersonnel, and also by external firms of Chartered Accountants. Corrective actions arisingout of the observations of the Auditors are taken to plug inefficiencies and to eliminatechance of recurrence.

In light of Company reorganisation and merger and some problems that have been facedrecently, the entire Audit system will be upgraded significantly.

A Risk Assessment Committee has been constituted to identify probable risks.

A new comprehensive end-to-end MIS gathering and reporting system will also be put inplace.

HYDERABAD ENGINEERING INDUSTRIES

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L. Swot Analysis for the Company

STRENGTHS

1. Strong distribution network : Usha International Ltd. has a strong distribution network,with a presence across all metros, class I and II towns, as well as potential class III, IV andV towns. Apart from the trade segment, UIL has a good presence in modern retail, CSDand channels selling to institutions. Separate sales teams handle each of these segmentsand distribution upgradation is one of their Key Result Areas.

2. Strong brand : Usha has a high brand recall in most of its product categories. Thebrand is associated with quality, trust and reliability.

WEAKNESSES

1. As we are targeting aggressive growth, we will be short on highly skilled HR resourcesacross the board in the near future.

OPPORTUNITIES

1. Multi-brand Marketing : With a strong distribution base, SAP, systems, infrastructureand good knowledge of the consumer durable industry, Usha International is in astrong position to enter the Multi-brand distribution and marketing business forbrands that might want to enter the Indian market.

2. Good macro economic performance : A GDP growth rate of 8% - 9% and rising incomelevels are expected to result in greater demand for consumer durables despite temporaryproblems.

3. Potential for home appliances : The present level of penetration of home appliances inIndia is very low. As incomes rise and the standard of living goes up, this category hasa good potential for growth.

4. Potential of reaching rural India : Given the Company’s extensive product range, andgiven good income generation in rural areas, the Company is in a strong position tocapture emerging demand from small towns and rural areas for new and innovativeproducts.

5. Favourable government policies : The government’s emphasis on rural developmentand support for under-privileged sections of society provides good opportunities forpromoting the sale of products like pump sets and sewing machines.

THREATS

1. Threat to the straight stitch sewing machine business : Due to a steep increase in pigiron, steel and other raw material rates, product prices have had to be increased bynearly 20% in the last one year. The price increase could be even higher this year. Thiswill adversely affect demand and growth.

2. Competition from Small Scale Sector players : In most product categories, there isintense competition from the large small-scale industry. This restricts the Company’smargins.

SHRIRAM FUEL INJECTION INDUSTRIES

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3. Talent Acquisition and retention : Attracting and retaining talent is a potential threatfor future growth.

4. Impact of macro factors on exports : Government policies with respect to exportincentives and exchange rates will have an adverse effect on the Company’s exports,which accounts for 9% of the turnover.

5. Low price imports from China and elsewhere : The low price of imports from China andelse where is a threat to the Company. The government’s policies on regional and freetrade agreements could result in opening the door to more imports at far lower prices,resulting in unequal competition.

6. Inflation and feel good factor : In the short run, consumer durable sales get affected bythe ‘feel good’ factor. The present inflation and other economic indicators are notfavourable for consumer durable sale.

7. Chinese and other foreign companies entering India as stand alone companies.

10. General Shareholders Information

(I) Annual General Meeting is proposed to be held on 29.9.2008 at Kamani Auditorium, 1,Copernicus Marg, New Delhi – 110001.

(II) Financial year : 1st April 2007 to 31st March 2008

(III) Date of Book Closure : 26.9.2008 to 29.9.2008 (Both days inclusive).

(IV) Listing on Stock Exchanges

The Delhi Stock Exchange Association Limited. - Code 10008

The Calcutta Stock Exchange Association Limited. - Code 20109

Listing fees for the year 2008-2009 have been paid to the Stock Exchanges.

1,10,74,319 equity shares alloted on 25.6.2008 in terms of Scheme of Arrangement foramalgamation of Usha International Limited and Shriram Fuel Injection Industries Limitedwith the Company and reduction of Equity Share Capital of the merged company assanctioned by the Hon’ble Delhi High Court vide order dated 26.5.2008 which becameeffective on 2.6.2008 were applied for listing at Delhi and Calcutta Stock Exchanges. Delhiand Calcutta Stock Exchange have granted their Listing permission vide their letters datedJuly 18, 2008 and July 30, 2008 respectively.

(V) There have been no transactions of the Shares of the Company during the year at Delhi andCalcutta Stock Exchanges.

USHA FAN INDUSTRIES

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(VI) Registrar and Transfer Agent

All work relating to Shares, both in physical and electronic form, is handled by the Company’sRegistrar and Transfer Agents at the following address:

M/s Mas Services Ltd.AB-4, Safdarjung Enclave,New Delhi – 110029.Phone No. : 26104142, 26104326Fax No. : 26181081E- mail : [email protected]

(VII) Share Transfer System

Valid share transfers are registered and duly transferred Share Certificates are dispatchedwithin a period of 30 days from the date of receipt.

(VIII) Distribution of shareholding of the Company as on 30.6.2008 is as under:

Shareholding of Nominal F o l i o s SharesValue of Rs.

Numbers % Numbers %

Upto 5000 5156 77.19 376255 3.40

5001-10000 1251 18.73 1079804 9.75

10001-20000 105 1.57 153021 1.38

20001-30000 41 0.61 98681 0.89

30001-40000 13 0.19 46176 0.42

40001-50000 24 0.36 106737 0.96

50001-100000 30 0.45 224474 2.03

100001 and above 60 0.90 8989171 81.17

Total 6680 100.00 11074319 100.00

(IX) Categories of shareholders of the Company as on June 30, 2008 is as under:

Category No. of % ofshares held shareholding

A. Promoters - Indian 5985352 54.05

B. Non – Promoters

Banks, Financial Institutions, Insurance Companies, 120103 1.08Central / State Government Institution andNon - Government Institution

Corporate Bodies 1520765 13.73

Individuals - Indian 3252109 29.37

Non Resident Indians(NRIs) / Overseas 195990 1.77Corporate Bodies (OCBs)

Grand Total 1,10,74,319 100.00

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(X) Dematerialisation of shares

The Equity Shares of the Company have been notified for compulsory trading in dematform. The Company has entered into agreements with both National Securities DepositoryLimited (NSDL) and Central Depository Services (India) Limited (CDSL) and the shares ofthe Company have been activated for dematerialization with NSDL and CDSL.

(XI) Redeemable Cumulative Optionally Convertible Preference Shares:

7,00,000 Nos. of 10%Redeemable Cumulative Optionally Convertible Preference Shares ofRs. 100 each are redeemable at par at any time after completion of 5 years but beforefifteen years from the date of allotment i.e. January 14, 1998. The Shareholders have anoption to apply and seek conversion of these Shares including arrears of dividend, if any,into Equity Shares at any time on or before redemption. Such conversion shall take placeat a price of Rs. 10 per Equity Share.

(XII) Plant locations

Usha Fan Industries (UFI)Roynagar, Bansdroni,Kolkata – 700 070

Hyderabad Engineering Industries (HEI)P.O. Balanagar Town Ship,Hyderabad - 500037

Shriram Fuel Injection Industries (SFII)P.O. Balanagar Town Ship,Hyderabad – 500037

Water Cooler FactoryPlot No. 14,Sector – 4,Faridabad – 121004

(XIII) Company’s Registered and Corporate office addresses are as follows:

Registered Office : 19, Kasturba Gandhi Marg, New Delhi – 110 001.

Corporate Office : Plot No. 3, Sector 32, Institutional Area, Gurgaon – 122001 (Haryana)

(XIV) Investors’ correspondence may be addressed to:

M/s Mas Services Ltd.AB-4, Safdarjung Enclave,New Delhi – 110029.Phone No. : 26104142, 26104326Fax No. : 26181081E- mail : [email protected]

OR

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Ms. Pratibha AggarwalCompany SecretaryUsha International Limited19, Kasturba Gandhi MargNew Delhi – 110 001.Ph. 25862988, 23322530 Fax. 25743659, 23318118E- mail : [email protected]

(XV) Transfer of Unclaimed Dividend to Investor Education & Protection Fund (Fund)

The Shareholders of erstwhile Usha International Limited which has since merged with theCompany are advised to claim the un- encashed Dividends lying in the Unpaid DividendAccounts of the Company before they fall due for crediting to the Fund as per the followingparticulars:

Financial Year Due Date for transfer to the Fund Amount - As on 31.03.2008

2000-01 15.09.2008 13.74

2001-02 08.10.2009 6.84

2002-03 16.09.2010 7.62

2003-04 06.08.2011 37.22

2004-05 05.10.2012 12.41

2005-06 27.09.2013 12.39

2006-07(Interim Dividend) 14.12.2013 30.98

2006-07 (Final Dividend) 20.09.2014 25.53

Total 146.73

On behalf of Board of Directors

New Delhi (SIDDHARTH SHRIRAM)August 19, 2008 Chairman

Declaration with respect to Code of Conduct

I, Sunil Wadhwa do hereby declare that all the Board Members and Core Management Team have

affirmed compliance with Code of Conduct for the year ended 31.03.2008.

For Usha International Limited

New Delhi (SUNIL WADHWA)

August 11, 2008 MANAGING DIRECTOR

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To the members of Usha International Limited

We have examined the compliance of conditions of Corporate Governance by Usha International

Limited (Formerly known as The Jay Engineering Works Limited), for the year ended March 31, 2008, as

stipulated in Clause 49 of the Listing Agreement of said Company with the Stock Exchange(s).

The Compliance of conditions of Corporate Governance is the responsibility of the management. Our

examination was limited to procedures and implementation thereof, adopted by the Company for

ensuring the compliance of conditions of Corporate Governance. It is neither an audit nor an expression

of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we

certify that the Company (being a Board Managed Company) has complied with the conditions of

Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that no investor grievances are pending as per the records maintained by the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company

nor the efficiency or effectiveness with which the management has conducted the affairs of the

Company.

For Thakur, Vaidyanath Aiyar & Co.

Chartered Accountants

(V. Rajaraman)

New Delhi Partner

August 19, 2008 M.No. 2705

FinancialsUSHA INTERNATIONAL LTD.Annual Report 2007 - 2008

28

AUDITORS’ REPORTTo the Members of Usha International Limited1. 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 CashFlow Statement for the year ended on that date annexed thereto prepared incorporating the effectof the Scheme of Arrangement sanctioned by the Honorable High Court of Delhi vide its orderdated 26th May 2008 to be effective retrospectively from 1st April 2007, for the amalgamation ofUsha International Ltd. and Shriram Fuel Injection Industries Ltd. with The Jay Engineering WorksLtd. These financial statements are the responsibility of the Company’s management. Ourresponsibility 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 aboutwhether 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. Anaudit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government ofIndia in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto astatement 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 thepurpose 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 reportare 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 withby this report comply with the Accounting Standards referred to in sub-section (3C) of Section211 of the Companies Act, 1956;

e) On the basis of written representations received from the directors and taken on record by theBoard of Directors, we report that none of the directors is disqualified as on March 31, 2008from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of theCompanies Act, 1956;In our opinion and to the best of our information and according to the explanations given tous, the said accounts give the information required by the Companies Act, 1956 in the mannerso required and give a true and fair view in conformity with the accounting principles generallyaccepted 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.



V. RajaramanNew Delhi Partner

August 14, 2008 M. No. 2705

29

Note: The word Company has been used in the report as referring to the three Companies whichhave been amalgamated.

(i) (a) The Company is maintaining proper records showing full particulars, includingquantitative details and situation of its fixed assets.

(b) As explained to us, the Company has a system of physical verification of fixed assetswhich is designed to cover all assets over a period of three years and, in accordancetherewith, physical verification of major portion of the fixed assets of the Company wascarried out during the year. In our opinion, the frequency of verification is reasonablehaving regard to the size of the Company and the nature of its fixed assets. In respect ofthe assets physically verified in the current year, reconciliation with the book records is inprogress.

(c) In our opinion and according to the information and explanations given to us, nosubstantial 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 ouropinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(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 onphysical verification of inventories as compared to book records were not material andhave either been properly dealt with in the books of account or as per policy beingrecovered 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 partiescovered 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 areadequate internal control systems commensurate with the size of the Company and the natureof its business with regard to purchases of inventories and fixed assets and with regard to thesale of goods and services during the year. Further, on the basis of our examination andaccording to the information and explanations given to us, we have neither come across norhave been informed of any instances of major weaknesses in the aforesaid internal controlsystems.

(v) As explained to us and according to the information and explanation given to us, there are notransactions that need to be entered in the register maintained in pursuance of Section 301 ofthe Companies Act, 1956 and exceeding the value of five lakh rupees in respect of each partyduring the financial year.

(vi) In our opinion and according to the information and explanations provided to us, the Companyhas complied with the directives issued by the Reserve Bank of India and provisions of Section58A and 58AA of the Act and the rules framed there under where applicable. No order has beenpassed by the Company Law Board on the Company. Hence question of compliance does notarise.

(vii) The Company’s internal audit is carried out by a firm of Chartered Accountants. In our opinion,the Company’s 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 ofproducts where pursuant to the Rules made by the Central Government, the maintenance ofcost records has been prescribed under section 209(1)(d) of the Companies Act, 1956 and are ofthe opinion that, prima facie, the prescribed accounts and records have been made andmaintained. We have not, however, made a detailed examination of the records with a view todetermine whether they are accurate and complete.

THE ANNEXURE REFERRED TO IN THE MAIN AUDITOR’S REPORT OF EVEN DATE


30

(ix) (a) According to the information and explanations given to us and the records of the Companyexamined by us, the Company has generally been regular in depositing undisputedstatutory dues including Provident Fund, Employees State Insurance, Income Tax, VAT,Service Tax, Wealth Tax, Customs Duty, Excise Duty , Cess and other material statutorydues applicable to it with the appropriate authorities and there were no arrears outstandingas at the year end for a period of more than six months from the date they becamepayable.

(b) The details of dues of Income-Tax, Sales Tax and Excise Duty as at March 31, 2008 whichhave not been deposited on account of disputes are as follows :

Sl.No. Name of the Nature of Amount* Earliest Forum whereStatute dues Rs(In.Lacs) Case Since dispute is pending

1 Income Tax Act 1961 Income Tax 920.03 2005-06 CIT(Appeals)

2 Central Sales Tax Act/

State Sales

Tax Acts. LST 1.17 1995-96 High Court

CST 3.27 1991-92 High Court

LST 33.56 1992-93 Tribunal

CST 3.21 1994-95 Tribunal

LST 56.99 1980-81 Appellate Revision Board

CST 20.60 1974-75 Appellate Revision Board

LST 107.32 1977-78 Appellate authority up toCommissioner

CST 13.85 1998-99 Appellate authority up toCommissioner

LST-interest 0.56 1977-78 Appellate authority uptoCommissioner

Penalty-LST 5.23 1977-78 Appellate authority uptoCommissioner

Penalty-CST 0.69 1998-99 Appellate authority up toCommissioner

3 Central Excise Excise duty 50.62 1999-00 Appellate authority upto Act 1944 Commissioner

Penalty 51.05 1999-00 Appellate authority uptoCommissioner

1268.15

In respect of disputed Income Tax dues, demands raised by the authorities are set-off againstbrought 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.

31

The following matters, which have been excluded from the table above, have been decided infavour of the Company but the concerned authorities have preferred appeals at higher level:

S.No. Name of the Nature of Amount* Earliest Case Forum whereStatute dues (Rs.Lacs) Since dispute is

pending

1. Income Tax Act 1961 Income Tax 5.44 1972-73 High Court

*Amount as per demand orders, including interest and penalty, wherever indicated in theorder.

(x) According to the records of the Company and in our opinion, the Company does not haveaccumulated losses at the end of the financial year. Further, the Company has not incurred cashlosses during the financial year ended March 31, 2008, also had not incurred cash losses in theimmediately preceding financial period ended March 31, 2007.

(xi) According to the records of the Company examined by us and the information and explanationsgiven 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 pledgeof 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 notapplicable 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 hasnot 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 anyterm loan during the year.

(xvii) According to the information and explanations given to us, and on an overall examination ofthe Balance Sheet of the Company, we report that during the year short term funds have notbeen used to finance long term investments.

(xviii) During the year, since the Company has not made any preferential allotment of shares, paragraph4(xviii) of the Order is not applicable.

(xix) During the year, since the Company has not issued any debentures, paragraph 4(xix) of theOrder is not applicable.

(xx) During the year, since the Company has not raised any money by way of public issue, paragraph4(xx) of the Order is not applicable.

(xxi) One instance of misappropriation of funds received from debtors amounting to Rs. 7.85 lacs byan employee was noticed and the said sum has been recovered from the employee.



V. RajaramanNew Delhi Partner

August 14, 2008 M.No. 2705


32

As at 31st March, 2008

Schedule As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

SOURCES OF FUNDSShareholders’ Funds– Share Capital 1 1807.43 2856.39– Reserves and Surplus 2 7095.58 339.06Loan Funds 3– Secured 2507.17 383.28– Unsecured 1263.07 88.48Current Liabilities and Provisions 4 14367.90 3780.62

27041.15 7447.83

APPLICATION OF FUNDSFixed Assets (Net of Depreciation) 5 3865.94 670.10Capital Work in Progress 5 2.15 -Investments 6 26.65 475.00Deferred Tax Asset(Net) 7 452.44 -Current Assets, Loans and Advances 7A 22693.97 3820.51Miscellaneous Expenditure(to the extent not written off or adjusted) - 68.91Profit & Loss Account - 2413.31

27041.15 7447.83

Accounting Policies and Notes to the Accounts 10

BALANCE SHEET

As per our report of even date attached. A.K. Chowdhury Siddharth ShriramFor THAKUR, VAIDYANATH AIYAR & CO. A.K. Jain ChairmanChartered Accountants N.K. GoilaV. Rajaraman P.K. BhallaPartner Vinod K. Wazir Chhaya ShriramM.No.2705 Directors Whole Time Director

New Delhi Pratibha Aggarwal Vinod Mahajan Sunil WadhwaAugust 14, 2008 Company Secretary Chief Financial Officer Managing Director

33

PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2008

Schedule Current Year Previous YearLac/Rs. Lac/Rs.

INCOMESales & Services* 8A 72183.76 12709.48Less: Excise Duty (1,636.99) (1,133.24)

Net Sales & Services 70546.77 11576.24Agency Commission 176.73 -Other Income 8B 493.87 808.97

71217.37 12385.21

EXPENDITURECost of Goods Sold 9A 39847.15 3953.23Manufacturing & Other Expenses 9B 18307.55 6911.05Commission and Discount on Sales 6577.77 602.01Advertisement & Sales Promotion 1658.39 75.36Other Selling Expenses 1689.56 278.64Interest (Net) 9C 167.21 240.51Provision for Doubtful Debts & Advances 116.28 33.17Depreciation 9D 624.76 91.18Compensation paid for Voluntary Retirement 162.13 -Miscellaneous Expenditure- Written Off - 76.81

69150.80 12261.96

Profit before Tax 2066.57 123.25Provision for Taxation 9E (130.95) 6.72Profit After Tax 2197.52 116.53

Earnings Per Share (See Note 6 - Part B)(Face value of Rs. 10 each) - Basic (Rs.) 19.10 0.23 - Diluted (Rs.) 8.96 0.28

Accounting Policies and Notes to the Accounts 10*Exclude Sales by the Principals against Orders booked by the Company Rs. 3157 Lacs. (PY Nil)




34

APPROPRIATION ACCOUNTFor the year ended 31st March, 2008

Current Year Previous Year

Lac/Rs. Lac/Rs.

AMOUNT AVAILABLE

Balance brought forward from previous year (refer sch 2) 885.43 –Profit for the year brought down 2197.52 –

3082.95 –

APPROPRIATION

Balance carried forward to Balance Sheet 3082.95 –

3082.95 –



35

SCHEDULE - 1

SHARE CAPITAL

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

AUTHORISED 1

4,00,00,000 (PY 2,50,00,000) Equity Shares of Rs. 10/- each 4000.00 2500.00

1,00,000 10 % Redeemable Cumulative PreferenceShares of Rs. 100 Each 100.00 100.00

9,00,000 10 % Redeemable Cumulative OptionallyConvertible Preference Shares of Rs. 100 each 900.00 900.00

5000.00 3500.00

ISSUED, SUBSCRIBED AND PAID UP1,10,74,319 (PY 2,10,63,875) Equity Shares ofRs. 10/- each fully paid up 2 1107.43 2106.39

7,00,000 10 % Redeemable Cumulative PreferenceShares of Rs. 100 each Optionally Convertible toEquity and fully paid up 3 700.00 700.00

Promoters Contribution for Redemptionof 50,000 10% Redeemable Cumulative - 50.00Preference Shares of Rs. 100 each 4

1807.43 2856.39

Notes.1 Authorised Share Capital is the sum total of the Authorised Share Capital of the amalgamating and amalgamatedCompanies.2 Represents Equity Shares allotted to the Shareholders of the Transferor and Transferee Companies on the basisgiven in the Scheme of Arrangement approved by the Hon’ble High Court of Delhi. (Refer Note 2.4 - Part B).3 10% Redeemable Cumulative Optionally Convertible Preference Shares , redeemable at par are due forredemption on or before the extended date i.e. 13.01.2013. The Shareholders have the option to seek conversionof these Shares including arrears of dividend, if any , into Equity Shares at any time on or before redemption. Suchconversion shall be @ Rs.10/- per Equity Share.4 The amount brought in by the promoters viz erstwhile Usha International Limited (Transferor Company) pursuantto BIFR order dated 30th May 2005 for the redemption of the Redeemable Cumulative Preference Shares appearingin the books of The Jay Engineering Works Limited (Transferee Company) has been paired off on amalgamationagainst the contribution towards Investment in the books of erstwhile Usha International Limited.


36

SCHEDULE - 2

RESERVES AND SURPLUS

Particulars As at 01.04.2007 During the Year As at

31.03.2008

Opening Arising out of Amalgamation Net Opening Addition DeductionBalance

Addition DeductionBalance

Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs.

Capital Receipts/Reserve - 173.00 - 173.00 - - 173.00

Capital Redemption Reserve - 110.201 - 110.20 - - 110.20

Share Premium Account - 524.00 - 524.00 - - 524.00

Revaluation Reserve 339.06 138.54 - 477.60 - 10.40 467.20

General Reserve - 13212.472 10,474.24 3 2738.23 - - 2738.23

Surplus in Profit & Loss (2,413.31)5 3298.744 - 885.43 2,197.52 - 3082.95

(2074.25) 17456.95 10474.24 4908.46 2197.52 10.40 7095.58

1 Represents the reserve created pursuant to section 77AA of Companies Act, 1956 consequent to buyback ofEquity Shares by Shriram Fuel Injection Industries Limited (Transferor Company).

2 Includes Rs. 9966.89 Lacs relating to reduction in Equity Share Capital (Refer Note 2.4 - Part B).

3 Represents the difference of Rs. 10353.44 Lacs ( Refer Note 3.2 -Part B) between the Equity Share Capital allotedto Shareholders of both the Transferor Companies and their Equity Share Capital prior to Amalgamation adjustedas per Accounting Standard 14 and Rs. 120.80 Lacs adjusted for adopting uniform accounting policy relating toDepreciation,Deferred Revenue Expenditure & Goodwill.

4 The amount is net of Premium of Rs. 297.54 Lacs paid by Shriram Fuel Injection Industries Ltd. (Transferor Company)on the Equity Shares bought back during the year and adjusted against the surplus as on 01.04.2007 since theseShare were not available for consideration under the Scheme of Amalgamation.

5 The debit balance,as above, has been shown on the asset side of the previous year in the Balance Sheet.

37

SCHEDULE - 3

LOANS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

SECURED

From Bank - Working Capital Loan - Cash Credit /Bill 2360.45 383.28Discounting1

- Long Term Loan - Building 2 125.00 -

- Vehicle 3 21.72 -

Sub Total 2507.17 383.28

UNSECURED

Fixed Deposits 534.04 -

Other Loans & Advances :- Security Deposit from Dealers & Others 720.72 76.10

- Interest Accrued and due thereon 8.31 12.38

Sub Total 1263.07 88.48

Total 3770.24 471.76

1 Secured by way of first charge on Stocks & all book debts and equitable mortgage of specified properties havingWDV of Rs. 2593.43 Lacs.

2 Secured by equitable mortgage of the Corporate office Building at Gurgaon.

3 Secured by way of hypothecation of vehicles having WDV of Rs 36.96 Lacs.


38

SCHEDULE - 4

CURRENT LIABILITIES & PROVISIONS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

CURRENT LIABILITIESAcceptances 1 2,303.50 367.95Sundry Creditors - Micro & Small Enterprises 489.81 -

- Others 10,377.31 2,178.85Unpaid Dividend2 146.73 -Unpaid Matured Deposits2 28.07 -Interest accrued on Matured Deposits2 4.65 -Sales Advances 164.49 979.39Hire Purchase Sales : - Commission accrued but not due 1.28 -

- Unearned Profit 2.10 -Interest accrued but not due on unsecured loans 46.19 -

Sub Total 13,564.13 3,526.19

PROVISIONSGratuity 456.21 129.32Leave Encashment 135.79 26.48Warranties 211.77 98.63

Sub Total 803.77 254.43

Total 14,367.90 3,780.62

1 Include Rs. 1772.18 lacs payable to Small Industries Development Bank of India towards Hundies accepted by theCompany, secured by way of second charge on all Current assets and on specified properties having written downvalue of Rs. 531.89 Lacs.

2 Will be credited to Investor Education & Protection Fund if not claimed within 7 years of declaration / maturity/due date.

39

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40

SCHEDULE - 6

INVESTMENTS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

LONG TERM - TRADEUnquoted

A. SUBSIDIARIES9667 Nos. Fully Paid-up Equity Shares(Previous year- NIL) of Rs. 100/- each ofAvro Sales Private Ltd. 26.65 -

47,50,000 Fully paid Equity Shares of Rs. 10/- each in Shriram - 475.00Fuel Injection Industries Ltd(Transferor Co.) 1

B. OTHERS2 Class ‘B’ Shares of Rs. 100 /- each of Tamil Nadu Agro # -Engineering & Service Co-operative Federation Ltd.

Total 26.65 475.00

1 Cancelled on amalgamation of Shriram Fuel Injection Industries Ltd, as cross holding.

# Rs. 200

41

SCHEDULE - 7

DEFERED TAX ASSETS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.DEFERRED TAX ASETSDeferred Tax - Assets 646.31 -

- Liability (193.87) -

Net 452.44 -

SCHEDULE - 7ACURRENT ASSETS, LOANS & ADVANCES

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

CURRENT ASSETSStock in Trade(At Cost/Net Realisable Value whichever is lower)Stores and Spare Parts 56.45 37.05Loose Tools 27.75 0.60Process Stock 452.09 270.55Finished Goods - Manufactured 1704.57 782.84

- Purchased 5360.13 207.50Raw Material & Components 341.74 139.47

Sub Total 7942.73 1438.01

Sundry Debtors - Unsecured(Including Hire Purchase Debtors)

Over Six months - Good 301.95 124.82- Doubtful 222.40 56.91- Less Provision (222.40) (56.91)

Others - Good 9103.40 896.67

Sub Total 9405.35 1021.49


42

SCHEDULE - 7A (Contd.)CURRENT ASSETS, LOANS & ADVANCES

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.Cash & Bank BalancesCash in hand 16.35 7.62Cheques - In hand 1170.73 11.98

- In Transit 9.48 26.68With Scheduled Banks - Current Account 1641.86 109.89

Includes Rs. 146.73 Lacs pertainingto Unclaimed Dividends

- Fixed Deposit1 607.21 428.59

With other than Scheduled Banks2

- Current Account 1.66 -- Fixed Deposit 0.25 -

Sub Total 3447.54 584.76

OTHER CURRENT ASSETS(At lower of book value and estimated realisable value)Fixed Assets retired from active use held for disposal 3 3.02 3.02

Sub Total 3.02 3.02

LOANS & ADVANCES(Unsecured, considered good unless otherwise stated)Interest accrued but not due 22.40 -Advances recoverable in cash or in kindor for value to be received - Good 1135.80 584.59

- Doubtful 117.27 0.49- Less Provision (117.27) (0.49)

Others Deposits - Good 381.90 74.48- Doubtful 12.99 -- Less Provision (12.99) -

Advance Tax (Net of Provision includingProvision for MAT u/s 115JB) 232.98 49.17

Cenvat Credit Receivable 113.61 61.48

Balances with Customs/ Excise Authorities 8.64 3.51

Sub Total 1895.33 773.23

Total 22693.97 3820.51

1 Includes Rs. 59.35 Lacs as liquid deposit under Rule-3A of The Companies (Acceptance of Deposits) rules, 1975and Rs. 125.06 Lacs towards Margin Money and Rs. 400 lacs (Previous year Rs. 400 lacs) under ‘Lien’ being securityfor bank overdraft facility.2 Balance with Municipal Co-operative Bank Ltd., Mulund. Mumbai. Maximum Balance during the year Rs. 4.77 Lacs.3 Fixed Assets retired from active use and awaiting disposal. The Management is of view that the estimatedrealisation would be higher than the above amount.

43

SCHEDULE - 8INCOME


Lac/Rs. Lac/Rs.

A. SALES AND SERVICESSales1 71723.88 12639.46Hire Purchase 38.01 -Job Work Charges 192.06 25.19Duty Draw Back /DEPB 180.73 44.83Income - Schools 26.22 -

- After Sales & Services 22.86 -

72183.76 12709.48

B. OTHER INCOMEDividend on Long Term Trade Investment 2 - 95.00 Income from use of Trade Marks 2 - 584.27 Excess Provisions/Credits written back 311.41 109.86Miscellaneous 182.46 19.84

493.87 808.97

1Excludes Sales of Rs. 3157 Lacs (PY Nil) by the Principals against Orders booked by the Company.2 Income from use of Trade Marks and Dividend on Investment in the current year is nil due to elimination of crosstransaction between the amalgamating and amalgamated Companies.


44

SCHEDULE - 9EXPENDITURE

Current Year Previous YearLac/Rs. Lac/Rs.

A. COST OF TRADED GOODS SOLDOpening Stock 5078.38 305.99Add : Purchases 40128.90 3854.74 Less : Closing Stock (5360.13) (207.50)

Net Cost 39847.15 3953.23

B. MANUFACTURING AND OTHER EXPENSESRaw Materials & Components Consumed :

CY PYOpening Stock 314.08 203.90Add : Purchases 6634.47 4862.29Less : Closing Stock 341.74 139.47 6606.81 4926.72( Increase) / Decrease in Process & Finished Stocks CY PYOpening Stock 2784.88 1253.40Less : Closing Stock 2156.66 1053.38 628.22 200.02Stores & Spares & Loose Tools 893.06 376.18Excise Duty on (Decrease) / Increase Stock (10.58) (19.49) Job Work Charges 560.63 316.84Power & Fuel 216.36 78.54PersonnelSalaries, Wages & Bonus 4239.75 346.15Contribution to Provident & other Funds 474.36 48.95Welfare Expenses 230.81 39.05AdministrationRent (Net) 446.82 59.30Rates & Taxes 87.37 42.78Insurance 67.24 7.37Repairs & Renewals - Buildings 35.33 7.26

- Machinery 74.32 19.07- Others 168.04 6.72

Travelling 672.67 34.74 Bad Debts/Advances Written Off 22.58 Less: Provision for Doubtful Debts 18.54 4.04 -Directors Fee 3.69 0.29Commission to Directors (Refer Note No. 14) 22.73 -Auditors’ Remuneration - As Auditors 13.75 4.00

- As Tax Auditors 2.80 0.75- Others Certification 1.42 1.13

Loss on Sale of Fixed Assets 10.01 (11.17)Loss on Exchange Fluctuation 20.51 4.82Others 2837.391 421.03

18307.55 6911.051 Includes expenses of Rs. 1019.55 Lacs of Management Consultants.

45

SCHEDULE - 9 (Contd.)EXPENDITURE


Lac/Rs. Lac/Rs.

C. INTEREST (Net) Interest paid on - Fixed Loans 74.20 -

- Banks 213.47 24.83- Others 76.50 238.88

Discounting Charges 149.00 34.96

Total (X) 513.17 298.67

Interest income from customers etc. 288.57 -(Income Tax Deducted at Source Rs. 49.83 LacsPrevious year Rs. Nil )Interest income on Deposits with Bank 57.39 58.16(Income Tax Deducted at Source Rs. 11.54 LacsPrevious year Rs. 11.34 Lacs)

Total (Y) 345.96 58.16

Interest-Net: (X-Y) 167.21 240.51

D. DEPRECIATIONGross 635.16 96.37Less : Transferred from Revaluation Reserve (10.40) (5.19)

624.76 91.18

E. PROVISION FOR TAXATION Income Tax - Current year (Section 115JB of I.T.Act) 241.41 -

- Previous year (Net) 64.11 - Deferred Tax (Net) (541.64) - Fringe Benefit Tax - Current Year 89.92 6.72

- Previous Year 15.25 -

(130.95) 6.72


46

SCHEDULE - 10

Accounting Policies and Notes to the Accounts

PART - A SIGNIFICANT ACCOUNTING POLICIES

1) REVENUE RECOGNITION

a) Sales inclusive of Excise Duty but exclusive of VAT and Discounts are accounted for at the

time of handing over the goods to the customers /carting agents/transporters.

b) Purchases (net of Discounts) are booked on the receipt of the goods by the Company.

c) Other Revenues are recognized on accrual basis in accordance with AS-9.

2) FIXED ASSETS

Fixed Assets are stated at cost, except Land and Buildings which were revalued and are, therefore,

stated at the revalued book values. Cost includes interest on borrowing for creation of specific

assets, freight, duties, taxes and other incidental expenses up to the date of the commissioning

of the assets.

3) DEPRECIATION

a) Depreciation on Fixed Assets is provided on the original cost/revalued cost of the Asset at

written down value except Plant & Machinery on which depreciation is provided on Straight

Line Method, at the rates and in the manner prescribed in Schedule XIV of the Companies

Act, 1956.

b) Items of assets costing Rs. 5,000 or less are fully depreciated in the year of acquisition.

c) Revalued Fan Factory Buildings - WDV Rates computed by taking the residual revalue

and estimated residual life as certified by valuers.

d) Tools and Dies (Included - Costing upto Rs. 2 Lacs - 100% in the year of acquisition.

in Plant & Machinery) - Costing above Rs.2 Lacs - 1/3rd of the cost per annum

e) Difference between depreciation provided on the revalued Assets and depreciation on the

historical value thereof is transferred to revaluation reserve and is shown as reduction

from the calculated depreciation.

4) INTANGIBLE ASSETS

Intellectual Property Rights have been depreciated @25% p.a. and cost of EDP Software Licences

@ 40% p.a. on WDV method.

5) INVENTORY VALUATION

The inventory of Finished Goods, Raw Materials & Components and Loose Tools are valued at

lower of cost or estimated realisable value. The basis of determining cost of various categories of

stocks are as follows :-

- Raw Materials and Components - Moving Weighted Average Rate (net of CENVAT & VAT)

- Processed Stocks - Direct material costs, direct wages and appropriate

overheads

- Finished Goods – Manufactured - Direct material costs, wages, appropriate overheads

and Excise Duty.

– Purchased - Weighted Moving Average Price (net of VAT)

47

6) FOREIGN EXCHANGE TRANSACTIONS

Transactions in foreign currency are accounted at the rate prevalent on the date of transactions.

Foreign Currency Current Assets / Current Liabilities are translated at the year end rates. The

amount of fluctuations whether gain or loss is disclosed in the Profit & Loss Account .

7) EMPLOYEE LONG TERM BENEFITS

Liability towards gratuity and leave encashment is determined based on the actuarial valuation

as on Balance Sheet date.

Gratuity, Provident Fund, Superannuation Fund & Employee State Insurance are accounted for

on the basis of the contribution made to the respective funds.

8) EXPORT BENEFITS

The value of the DEPB licenses against export entitlement are accounted for on accrual basis.

9) BORROWING COSTS

Cost of borrowing is charged to revenue except the borrowings used for creation of Fixed

Assets prior to capitalisation.

10) PROVISION FOR TAXATION

Provision for Current Tax and Fringe Benefit Tax have been made as per the provisions of

Income Tax Act 1961 and adjustment for Deferred Tax is made in accordance with Accounting

Standard-22.

11) WARRANTY PROVISIONS

Provisions for Warranty Costs have been made on estimated basis.

12) CONTINGENT LIABILITIES

Liabilities, though contingent, are provided for if there are reasonable prospects of such liabilities

maturing. Other contingent liabilities, barring frivolous claims, not acknowledged as debt, are

disclosed by way of note.

PART - B NOTES TO THE ACCOUNTSB - 1 NOTES CONCERNING AMALGAMATION

1.0 Scheme of Arrangement (“Scheme”) – The “Scheme” sanctioned by Hon’ble High Court of Delhi

is for the amalgamation of the Usha International Ltd. (UIL – Transferor Company No. 1) and

Shriram Fuel Injection Industries Ltd. (SFIIL– Transferor Company No. 2) with the Jay Engineering

Works Ltd. (JEW – Transferee Company)

The products manufactured by JEW as well as SFIIL are marketed mainly through UIL and thus

there is synergy of business interest between the three Companies. Accordingly, their businesses

are combined conveniently/ advantageously and would enure for the benefit of the

Shareholders, the employees and all the stakeholders of all the three Companies.

SCHEDULE - 10 (Contd.)


48

2.0 Salient features of the “Scheme” are :

2.1 The name of the Transferee Company “The Jay Engineering Works Limited” shall stand changedto “Usha International Ltd.”

2.2 The Scheme would be operative from the Appointed Date, i.e. 01.04.07 and would be effectivefrom the date on which copies of the order of Hon’ble High Court of Delhi sanctioning theScheme has been filed with the Registrar of Companies, NCT of Delhi and Haryana.

2.3 Authorised Share Capital of the Transferee Company would be sum total of the AuthorisedShare Capital of all the three Companies.

2.4 Based on the business valuation of JEW, UIL and SFIIL, Equity Shareholder’s of UIL would get 44Equity Shares for every 1 Equity Share held in UIL and Equity Shareholder’s of SFIIL would get31 Equity Shares for every 10 Equity Shares held in SFIIL of the Transferee Company aftercanceling the crossholdings.

Accordingly, Equity Share Capital of the Transferee Company would become Rs. 110,74,31,930comprising of 11,07,43,193 Equity Shares.

The “Scheme” provides for the reduction in the issued and paid up Equity Share Capital bycanceling of 9,96,68,873 Equity Shares of Rs. 10/- each and the amount of Rs. 99,66,88,730 wouldbe credited to General Reserves and will not be paid to the Shareholders. Accordingly, EquityShares would be allotted to the Shareholders of all the three Companies as on the Record Dateas under:-

- 44 New Equity Shares of Rs 10/- each fully paid –up of Transferee Company for every 10Equity Shares of Rs 10/- each fully paid-up held in Transferor Company No.1, i.e. UIL.

- 31 New Equity Shares of Rs 10/- each fully paid –up of Transferee Company for every 100Equity Shares of Rs 10/- each fully paid-up held in Transferor Company No.2, i.e SFIIL.

- 1 New Equity Share of Rs 10/- fully paid –up of Transferee Company for every 10 EquityShares of Rs 10/- each fully paid-up held in Transferee Company, i.e. JEW.

New Equity Shares allotted after cancellation of cross holdings of each Company are as under:-

- Erstwhile Usha International Limited (Transferor Company No 1) : 100%

- Erstwhile Shriram Fuel Injection Industries Limited (Transferor Company No 2) : 34.16%

- Erstwhile The Jay Engineering Works Limited (Transferee Company) : 10.61%

2.5 The incidence of adopting uniform Accounting Policies, if any, would be quantified and adjustedin the Revenue Reserves.

2.6 All Assets, Liabilities, Rights and Obligations of Transferor Companies No. 1 and 2 would vestwith the Transferee Company at Book Value as on the Appointed Date, i.e. 1.4.2007.

3.0 The Scheme of amalgamation has been sanctioned by Hon’ able High Court of Delhi vide itsOrder dated 26.5.2008.The scheme became effective on 2.6.2008, the Appointed Date of theScheme being 1st April 2007.

The Name of The Jay Engineering Works Ltd. has been changed to Usha International Ltd andNew Equity Shares have been allotted to the Shareholders on 25.06.2008.

3.1 The accounts of the Company have been prepared following the principles and procedures ofthe “Pooling of Interest Method of Accounting for Amalgamation” as per AccountingStandard - 14.

3.2 The difference of Rs. 10353.44 lacs between the Equity Share Capital allotted to the Shareholdersof both the Transferor Companies after cancellation of cross holdings and their Equity ShareCapital prior to Amalgamation has been adjusted in General Reserve.

B-2 OTHER NOTES

4.0 As per Accounting Standard 15 ‘Employee Benefits’, the disclosures of Employee benefits asdefined in the Accounting Standard are as below :-


49

DEFINED CONTRIBUTION PLAN

Contributions to Defined Contribution Plan, recognized as expense under the head Contributionto Provident & other funds for the year are as under:-

Employers Contribution (Lac/Rs.)

- Provident Fund 206.34

- Superannuation Fund 60.69

- E.S.I 47.17

The Company’s Provident Fund Trusts, namely Usha Sales Provident Fund Trust, The JayEngineering Officers Provident Fund Trust & Hyderabad Engineering Industries Provident FundTrust are exempted under Section 17 of Employee’s Provident Fund Act 1952. Conditions togrant exemptions stipulates that the employer shall make good deficiency, if any, in the interestrate declared by the trust vis-a-vis statutory rate.

DEFINED BENEFIT PLAN

The Employee’s Gratuity Fund Scheme partly managed by a Trust is a Defined Benefit Plan. Thepresent value of obligation is determined based on actuarial valuation using the projected unitcredit method (P.U.C.) as defined in the Accounting Standard – 15.

Leave encashment is also a Defined Benefit Plan but it is not funded. Provision of the liabilityhas been made on actuarial valuation using the P.U.C method.

I. Reconciliation of Opening & Closing Balances of Defined Benefit Obligation

Particulars Gratuity LeaveEncashment

Funded Unfunded Total Unfunded(Lac/Rs.) (Lac/Rs.) (Lac/Rs.) (Lac/Rs.)

- Defined Benefit Obligation at beginningof the year Nil 129.32 129.32 26.47

- On Amalgamation 462.64 314.16 776.80 62.25

- Current Service Cost 48.79 22.86 71.65 24.98

- Interest Cost 34.70 35.48 70.18 7.10

- Actuarial Gain/(Loss) (57.47) (27.73) (85.20) (20.52)

- Benefits Paid 51.45 93.96 145.41 22.25

- Settlement Cost Nil Nil Nil Nil

- Defined Benefit Obligation at the year end(Present value of obligation) 552.14 *468.81 1020.95 135.79

* Provision made in the Balanace Sheet is Rs. 456.21 Lacs against the actuarial valuation of Rs. 468.81 Lacs.Reconciliation of the differential amount is as under:-



50

(Lac/Rs.)

Unfunded Liability as per valuation report - 468.81

Add: Employee retired and additional Gratuity Liability over & aboveRs. 3.50 Lacs paid by the Company. 7.18

Total 475.99

Less: Fair Value of Planned Assets with LIC 19.78

Net Unfunded Liability provided in Balance Sheet 456.21

II. Reconciliation of Opening & Closing Balances of fair value of Plan Assets.

Part iculars Gratuity

Funded Unfunded Total

(Lac/Rs.) (Lac/Rs.) (Lac/Rs.)

As at As at As at

31.03.08 31.03.08 31.03.08

Fair value of Plan Assets at beginning of the year Nil Nil Nil

On Amalgamation 519.76 14.79 534.55

Expected return on Plan Assets 46.59 Nil 46.59

Actuarial Gain/(Loss) Nil (1.18) (1.18)

Employer’s Contribution 105.79 62.65 168.44

Benefits Paid 51.45 57.66 109.11

Settlement Cost Nil Nil Nil

Fair value of Plan Assets at the year end 620.68 19.78 640.46

Actual return on plan assets 46.59 Nil 46.59

III. Reconciliation of fair value of assets and obligation

Particulars Gratuity Leave

Encashment

Funded Unfunded Total Unfunded

(Lac/Rs.) (Lac/Rs.) (Lac/Rs.) (Lac/Rs.)

Fair value of Plan Assets 620.68 Nil 620.68 Nil

Present value of obligation 552.14 468.81 1020.95 135.79

Amount recognized in the Balance Sheet Nil 456.21 456.21 135.79


51

IV. Expenses recognized during the year under the head Contribution to Provident & other funds



Current Service Cost 48.79 22.86 71.65 24.98

Interest Cost 34.70 35.48 70.18 7.10

Expected return on Plan Assets 46.59 Nil 46.59 Nil

Actuarial Gain/(Loss) (57.47) (27.73) (85.20) (20.52)

Net Cost 94.37 86.37 180.74 52.61

V. Investment Details

Particulars Gratuity (Funded)

Insurance policies 100% with LIC

VI. Actuarial assumptions


Funded Unfunded Unfunded

As at As at As at31.03.08 31.03.08 31.03.08

Mortality Table (L.I.C.) 1994-96 1994-96 1994-96(duly modified) (duly modified) (duly modified)

Discount rate 8% 8% 8%

Future salary increase 10% 5.50% 5.50%

5.0 Related Party Disclosures

Information relating to related party transactions as per Accounting Standard 18 issued by TheInstitute of Chartered Accountants of India is given below: -

A. List of the related parties Relationship

MSR Enterprises Pvt. Ltd. PromotersPerennial Investment Pvt. Ltd PromotersGreen Field Commercial Pvt Ltd PromotersSiel Holding Ltd PromotersMr Sunil Wadhwa Key Management Personnel of erstwhileMs Chhaya Shriram Usha International Ltd.Mr Ravi Raju Key Management Personnel of erstwhile

Shriram Fuel Injection Industries Ltd.Ms Sonali Wadhwa Relative of Key Management PersonnelAvro Sales Pvt Ltd Subsidiary Company


}


52

B. Details of Related Party Transactions

Current Year Previous YearLac/Rs Lac/Rs

Remuneration to Key Management Personnel 234.08 -

Rent paid to Relative of Key Management Personnel 4.20 -

Sale of Investment to M/s Perennial Investment Pvt. Ltdand M/s Green Field Commercial Pvt Ltd 700.00 -

Avro Sales Pvt. Limited

- Reimbursement / Recovery of Expenses (Net) 0.09 -

- Net Outstanding Payable/ (Receivable) (0.16) -

6.0 Earnings Per Share

Particulars Units Current Year Previous Year

a) Profit/(Loss) after Tax Lac/Rs. 2197.52 116.53

b) Less : Preference Dividend (inclusive of tax thereon) “ 81.90 81.90

c) Profit/(Loss) attributable to Equity Shareholders “ 2115.62 34.63

d) Weighted average number of Equity Shares of Rs. 10each outstanding during the year used in computingbasic earnings per Equity Share Nos 1,10,74,319 1,51,45,902

e) Effect of potential Equity Shares for RedeemableCumulative Preference Shares of Rs. 100 eachoptionally convertible to Equity Shares includingarrears of dividend. “ 1,34,45,800 2,60,45,800

f) Weighted average number of Equity Shares of Rs. 10each used in computing diluted earnings perequity share “ 2,45,20,119 4,11,91,702

g) Earning per share

- Basic [( c ) / (d)] Rs. 19.10 0.23

- Diluted [ ( a ) / (f )] Rs. 8.96 0.28

7.0 Provision for Income Tax

The amalgamated company Usha International Limited (Formerly known as The Jay EngineeringWorks Limited) intends to file its Income Tax Return based on amalgamated accounts. Accordinglyin view of the carry forward losses (including unabsorbed depreciation) the Company is liableto tax under section 115JB of the Income Tax Act, 1961.

8.0 Deferred Tax Assets/Liabilities

Deferred Tax Assets (net) amounting to Rs. 452.44 Lacs has been computed on the date ofBalance Sheet subsequent to amalgamation and includes Rs. 241.41 Lacs (MAT) as per Section115 JB of the Income Tax Act 1961.


53

9.0 The management is of the opinion that there is no impairment of Assets as contemplated inAccounting Standard-28. Fixed Assets retired from active use and awaiting disposal – Rs. 3.02lacs (PY Rs. 3.02 lacs). The Company is of the view that the realization against these Assets wouldbe higher than the above amount.

10.0 Disclosure under the Micro, Small and Medium Enterprises Development Act 2006 for the

Suppliers who have filed a memorandum with the appropriate authority is as under:-

Lac/Rs.

I. (a) Principal amount remaining unpaid to any supplier as at 31.03.2008 487.80

(b) Interest due on the above as at 31.03.2008 0.18

II. (a) Amount paid to the supplier beyond the due date 1657.25u/s 15 of MSMED Act during the year 2007-2008

(b) Amount of interest paid to the supplier on the above 2.80during the year 2007-08 u/s 16 of MSMED Act

(c) Amount of interest due & payable on the above (i.e. 8.61on delayed payment made during the year but interestthereon not paid till at the end of accounting year)

III . Amount of interest accrued & remaining unpaid as at 31.03.2008 7.67

IV. Amount of further interest remaining due and payable even in the 10.46succeeding years, until such date when the interest due as above is actuallypaid to the small enterprise, for the purpose of disallowance as a deductibleexpenditure under Section 23 of MSMED Act, 2006.

11.0 Warranty Provisions

Warranty Provisions have been made on estimated basis considering the defect rate andreplacements made during the year. Summary Position is as under:

Year ended March’08 Year ended March’07

Lac/Rs. Lac/Rs.

Opening Balance 155.80 90.12

Add : Provisions for the year 104.87 55.27

Less: Amounts used during the year 48.90 46.76

Provisions at the end of the year 211.77 98.63



54

12.0 Contingent Liabilities – not provided for :Year ended Year endedMarch’08 March’07

Lac/Rs. Lac/Rs.

a) Claims not acknowledged as debts

- Sales Tax/Entry Tax demands under appeal 261.77 292.87

- Income Tax demand under appeal 925.47 7.93

- Excise Duty demand under appeal(excluding 101.67 188.39amounts involved in show cause notices and thosematters in respect of which favourable decisions areavailable at other units.)

- Awards in labour cases under appeal 7.79 -

- V.R.S. Compensation* 16.55 20.52

- Others 64.53 15.04

*11 workers at Calcutta unit are yet to take their voluntary retirement compensation

All the above matters are subject to legal proceedings in the ordinary course ofbusiness.

The legal proceedings, when ultimately concluded, will, in the opinion of management,not have material effect on the results of operation or financial position of theCompany.

b) Bill of Exchange / Cheques Discounted 325.01 334.37

c) Arrears of Dividend on 700000 10% Redeemable 714.58 644.58Cumulative Optionally Convertible Preference Sharesof Rs.100 each for the Financial years1997-98 to 2007-08

13.0 Capital Commitment (Not Provided for) 53.33 20.30

14.0 Managerial Remuneration

a. Computation of net profit as per Sec. 349 of the Current Year Previous YearCompanies Act, 1956 : Lac/Rs. Lac/Rs.

Net Profit before Tax as per Profit & Loss Account 2066.57 -

Add : - Managerial Remuneration 256.81 -

- Prov. For Doubtful Debts/Advances 97.74 -

- Extraordinary Item 162.13 -

Less : - Capital Profit on Sale of Fixed Assets etc. 168.78 -

Net Profit 2414.47 -

Managerial Remuneration - 11% 265.59 -


55

b. Managerial Remuneration – paid / payable Current Year Previous Year

Lac/Rs. Lac/Rs.

- Salary 74.96 -

- Special Allowance 69.44 -

- Performance Incentive 25.00 -

- House Rent Allowance 33.67 -

- Contribution to Funds1 20.49 -

- Value of Perquisites 10.52 -

TOTAL2 234.08 -

Commission to Non Executive Director – 1%3 22.73 -

TOTAL 256.81 -

1 Contribution to Funds does not include contribution to Gratuity Fund since the same is made on

global basis.

2 Represents Rs. 214.53 Lacs paid to Managing Director & Whole Time Director of the Transferor

Company No. 1 i.e. erstwhile Usha International Limited as per approval of Central Government

and Rs. 19.55 Lacs paid to Whole Time Director of Transferor Company No. 2 i.e. Shriram Fuel

Injection Industries Limited as per the terms of appointment and in terms of Clause 7 of the

Scheme.

3 Represents commission payable on net profits of Transferor Company 1 and 2 computed as per

Sec.349 of the Companies Act.,1956 and in terms of clause 8 of the Scheme.

15.0 Manufacturing & Other Expenses (Schedule 9 B) includes Research and Development

expenses as under :


Lac/Rs. Lac/Rs

Stores and Spares 0.82 0.99

Salaries and Wages, etc. 17.70 19.98

Other Expenses 22.21 41.99

40.73 62.96



56

16. SEGMENT REPORTING

A. Business Segment

Particulars Current Year Previous Year

Lac/Rs. Lac/Rs.

I. Revenue (Net Sales/Agency Commission)Segment - Consumer Durables 55,111.40 11,576.24

- Engines, Pumpsets & Motors 9,570.84 -- Auto Products 5,974.76 -- Others 66.50 -

Total 70,723.50 11,576.24

II. Results (Profit(+) / Loss(-) before UnallocableExpenditure/ Depreciation,Interest & TaxSegment - Consumer Durables 4,957.26 363.76

- Engines, Pumpsets & Motors 671.34 -- Auto Products 691.87 -- Others (10.72) -

Total 6,309.75 363.76

III. Less : - Unallocable - Interest 167.21 240.51- Expenditure/Depreciation 4,075.97 -

(net of unallocable income)

IV. Profit Before Tax 2,066.57 123.25

V. Capital EmployedSegment - Consumer Durables 8,073.03 283.54

- Engines, Pumpsets & Motors 118.10 -- Auto Products 1,804.18 -- Others 75.03 -

Total 10,070.34 283.54

Depreciation*Segment - Consumer Durables 173.71 91.18

- Engines, Pumpsets & Motors 17.20 -- Auto Products 137.78 -- Others 3.32 -

Total 332.01 91.18

Non Cash Expenses other than Depreciation*Segment - Consumer Durables 73.10 76.81

- Engines, Pumpsets & Motors (2.34) -- Auto Products 6.72 -- Others (0.06) -

Total 77.42 76.81

* Included in Segmentwise results.

B. Geographical SegmentCompany has no operation outside India and hence secondary segment namely GeographicalSegment is not applicable.


57


17. Statement of Additional Information

(A) Products Manufactured

Item Unit Installed Capacity Per Annum* Production

Current Year Previous Year Current Year Previous Year

Fans Lac/Nos 17.40 17.40 9.89 9.85

Water Cooler “ 0.10 - 0.07 -

Elements “ 9.00 - 7.48 -

Nozzles “ 9.60 - 9.42 -

Delivery valves “ 7.50 - 8.57 -

S.C.pumps “ 2.70 - 2.77 -

Nozzle holders “ 2.70 - 1.97 -

Notes :

Licensed capacity - No licence is required for the products of the Company.

* On single shift basis as certified by the officials of the Company and accepted by the auditors without verification,being a technical matter.


58


B. CONSUMPTION OF RAW MATERIAL & COMPONENTS

Item Unit Current Year Previous Year

Qty. Value(L/R) Qty. Value(L/R)

Aluminium Tonnes 406.77 570.09 577.00 861.81

Copper wire “ 239.88 922.03 235.00 935.08

Silicon sheet/lamination “ 2282.00 1036.94 2026.00 867.05

Casting “ 754.00 150.51 664.00 371.88

CRCA Th/Nos. 138.88 42.49 - -

Ball bearings Th/Nos. 1959.36 220.85 1777.00 205.55

Condensers “ 984.31 105.21 877.00 101.54

Paints Th/Ltrs. 66.18 64.26 50.00 72.89

Guards Th/Nos. 78.97 24.92 115.00 95.81

Steel M.Tonnes 453.45 389.54 - -

M.S.pipes Th/Mtrs. 480.13 176.93 434.00 156.05

Storage/Chiller Tank Assembly Th/Nos. 7.04 214.19 - -

Compressors “ 7.04 173.87 - -

Fan Motor Assembly “ 7.04 54.88 - -

Condenser Cell Assembly “ 7.04 29.11 - -

Other Raw Material & Components - 2430.99 - 1259.06

TOTAL 6606.81 4926.72

59


C. PURCHASES/SALES/STOCK IN TRADE

PARTICULARS Unit PRODUCT GROUP (Including related accessories)

Electric Home Sewing Diesel Piston MiscFan Appliances Machine Engine/ & Ring,

Motor/ Fuel Pump/ InjectionGen set & Other

Auto Parts

PREVIOUS YEAR

QUANTITY

- Purchases Lac/Nos 6.22 - 0.01 - - -

- Sales Lac/Nos 16.53 - 0.01 - - -

- Closing Stock Lac/Nos 1.33 - 0.00 - - -

VALUE

- Purchases Lac/Rs. 3807.73 - 39.64 - - 7.37

- Sales Lac/Rs. 12253.32 - 42.49 - - 343.65

- Closing Stock Lac/Rs. 876.68 - 11.43 - - 102.23

CURRENT YEAR

QUANTITY

- Purchases Lac/Nos 37.34 6.05 11.97 1.40 15.23 -

- Sales - Direct Lac/Nos 47.68 5.94 12.36 1.43 38.41 -

- By Pricipals Lac/Nos 2.21

- Closing Stock Lac/Nos 6.44 1.10 1.52 0.18 4.70 -

VALUE

- Purchases Lac/Rs. 14606.77 7107.28 9184.40 7469.02 1654.63 106.80

- Sales * Lac/Rs. 31545.81 10638.38 13559.12 9555.42 6001.60 461.56

- Closing Stock Lac/Rs. 3628.09 1327.73 1009.98 588.45 374.69 135.76

* Exclude the value of Sales of Rs. 3157 Lacs by Principals against Orders booked by the Company.


60


18. Foreign Currency

Particulars Current Year Previous YearLac/Rs. Lac/Rs.

Expenditure

Purchase (Imports) - RM/Component/FG 3867.07 808.75

- Capital Goods 46.56 -

Travelling/Others 215.41 25.62

Income

Exports (FOB Value) 4369.35 1155.48

Reimbursement towards freight & Insurance 61.92 -

19. Balance with certain suppliers await reconciliation and confirmation.

20. Previous Year Figures are on stand alone basis of the Transferee Company and are, therefore,not comparable with the figures of Current Year and have been reworked, regrouped, rearrangedand reclassified wherever necessary.

Signature to Schedules 1 to 10 forming part of the Balance Sheet and Profit & Loss Account.



61

Balance Sheet Abstract and Company’s General Business Profile

1. Registration No. L74210DL1935PLC007123, Balance Sheet Date : 31.03.2008,State Code 55

2. Capital raised during the year (Amounts in Rs. Thousands) :Public Issue NIL Right Issue NILBonus Issue NIL Private Placement NIL

3. Position of mobilisation and deployment of funds (Amounts in Rs. Thousands)Total Liabilities 2704115 Total Assets 2704115Sources of Funds Application of FundsPaid-up capital 180743 Net Fixed Assets 386809Reserves and Surplus 709558 Investments 2665Secured Loans 250717 Net Current Assets 832607Unsecured Loans 126307 Deferred Tax Assets(Net) 45244

4. Performance of the Company (Amounts in Rs. Thousands)Total Income 7121737 Total Expenditure 6915080Profit/(Loss) Before Tax 206657 Profit/(Loss) after Tax 219752Earning per Share (Rs.) 19.10 Dividend Rate % NIL

5. Generic Names of three principal products/services of the Company (As per monetary terms)Procuct Description Item Code No. (ITC Code)- Electric Fan 8414- Sewing Machine 8452- Home Appliances 8415,8418,8421,

8504,8509,8513,8516

ADDITIONAL INFORMATION PURSUANT TO PART IV OF SCHEDULE VI OFTHE COMPANIES ACT, 1956




62

Name of the Subsidiary M/s. Avro Sales Private Limited

1. Financial year of the subsidiary March 31, 2008

2. Extent of holding company’s interest in theSubsidiary 100% Equity Share Capital of Rs.9.67 lacs- Number of Shares 9667 Equity Shares of Rs. 100/- each- % holding (equity) 100.00%- % holding (preference)

3. Net aggregate amount of subsidiary’s -profits/(losses) so far as they concernmembers of holding company and notdealt with in the holding company’s account:

I) For subsidiary’s financial year } Rs. (4.00) LacsII) For subsidiary’s previous financial } Rs. (1.54) Lacsyears since it became subsidiary. }

4. Net aggregate amount of subsidiary’s -profits/losses so far as they concernmembers of holding company’s and dealtwith in the holding company’s accounts:

I) For subsidiary’s financial year }II) For subsidiary’s previous financial } -

years since it became subsidiary. }

5. Change in the interest of holding company -between the end of subsidiary’s financialyear and the end of holding company’sfinancial year.

6. Material changes between the end ofsubsidiary’s financial year and the end ofholding company’s financial year.

i) Fixed Assets -ii) Investments -iii) Moneys lent by the subsidiary -iv) Moneys borrowed by the subsidiary -

other than for meeting current liabilities

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956RELATING TO SUBSIDIARY COMPANIES



63

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

Particulars 2007-2008 2006-2007Lac/ Rs. Lac/Rs.

A. CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX & EXTRAORDINARY ITEMS 2,066.57 123.25Adjustments for :Depreciation (Schedule 9D) 624.76 91.18Deferred Revenue Expenditure written off - 76.81Profit/Loss on sale of Fixed Assets 10.01 (11.17)Interest Expenses 167.21 240.51Dividend on Investment - 801.98 (95.00) 302.33

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 2,868.55 425.58

Adjustments for :Trade and other Receivables (9,322.15) (318.71)Inventories (Schedule 7A) (6,504.72) 354.81Trade Payables 10,587.28 (524.84)

CASH GENERATED FROM OPERATIONS (2,371.04) (63.16)

Direct Taxes Paid (400.13) (56.90)Fringe Benefit Tax Paid (105.17) (6.72)

CASH IN FLOW BEFORE EXTRAORDINARY ITEMS (2,876.34) (126.78)

NET CASH GENERATED FROM OPERATING ACTIVITIES (2,876.34) (126.78)

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (Schedule 5) (713.80) (154.14)Sale of Fixed Assets (Schedule 5) 94.59 22.04Loan to Subsidiary Company received back - 460.00Deferred Revenue Expenditure incurred - (12.32)Dividend on Investment - 95.00

NET CASH GENERATED IN INVESTING ACTIVITIES (619.21) 410.58

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from Borrowings (Schedule 3) 3,298.48 (70.51)Interest Paid (167.21) (240.51)Promoters contribution for Redemption of RCPS - 7.13

NET CASH USED IN FINANCING ACTIVITIES 3,131.27 (303.89)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (364.28) (20.09)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 584.76 604.85Less: On Amalgamation (3,227.06)

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 3,447.54 584.76

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (364.28) (20.09)

A.K. Chowdhury Siddharth ShriramA.K. Jain ChairmanN.K. GoilaP.K. BhallaVinod K. Wazir Chhaya ShriramDirectors Whole Time Director


AUDITORS’ CERTIFICATEWe have examined the attached Cash Flow Statement of M/s. Usha International Limited for the year ended 31stMarch,2008. The Statement has been prepared by the Company in accordance with the requirements of Clause32 of listing agreement with the Stock Exchange and is based on and in agreement with the corresponding BalanceSheet of the Company.

For Thakur, Vaidyanath Aiyar & Co. Chartered Accountants

V. RajaramanNew Delhi PartnerAugust 14, 2008 M. No. 2705

USHA INTERNATIONAL LTD.Annual Report 2007 - 2008

ConsolidatedFinancials

64

TO THE BOARD OF DIRECTORS OF USHA INTERNATIONAL LIMITED

1. We have audited the attached Consolidated Balance Sheet of Usha International Limited (formerlyknown as The Jay Engineering Works Limited) prepared incorporating the effect of the Scheme ofArrangement sanctioned by the Honorable High Court of Delhi vide its order dated 26th May 2008to be effective retrospectively from 1st April 2007,for the amalgamation of the Usha InternationalLtd and Shriram Fuel Injection Industries Limited with The Jay Engineering Works Limited and itssubsidiary, as at March 31, 2008, Consolidated Profit and Loss Account and the Consolidated Cashflow Statement for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company’s Management and have been prepared by the Managementon the basis of separate financial statements and other financial information regarding components.Our responsibility is to express an opinion on these consolidated financial statements based onour 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 aboutwhether the financial statements are prepared, in all material respects, in accordance with anidentified financial reporting framework and are free of material misstatement. An audit includes,examining on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimatesmade by Management, as well as evaluating the overall financial statements presentation. Webelieve that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statement of the subsidiary, whose financial statements reflect totalassets of Rs.21.96 Lacs as at March 31, 2008, total revenues of Rs.3.22 Lacs and net cash outflow fromoperating activities amounting to Rs.3.75 Lacs for the year that ended. The opinion expressed bythe other auditor has been considered.

4. We report that the consolidated financial statements have been prepared by the Company’sManagement in accordance with the requirements of Accounting Standard 21 ‘ConsolidatedFinancial Statements’ issued by the Institute of Chartered Accountants of India.

In our opinion and to the best of our information and according to explanation given to us thesaid accounts read together with the Accounting policies and Notes thereon give a true and fairview;

a) In the case of the Consolidated Balance Sheet, of the state of affairs of Usha InternationalLimited and its subsidiary as at 31st March, 2008

b) In the case of the Consolidated Profit and Loss Account, of the profit of Usha InternationalLimited and its subsidiary for the year ended on that date; and

c) In the case of the Consolidated Cash Flow Statement, of the cash flows of Usha InternationalLimited and its subsidiary for the year ended on that date.

For THAKUR, VAIDYANATH AIYAR & CO. CHARTERED ACCOUNTANTS

V. RAJARAMANNew Delhi PARTNERAugust 14, 2008 M.NO: 2705

AUDITORS’ REPORT

65

As at 31st March, 2008

Schedule As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

SOURCES OF FUNDSShareholders’ Funds– Share Capital 1 1807.43 2856.39– Reserves and Surplus 2 7088.18 339.06Loan Funds 3– Secured 2507.17 383.28– Unsecured 1263.07 88.48Current Liabilities and Provisions 4 14370.42 3780.62

27036.27 7447.83

APPLICATION OF FUNDSFixed Assets (Net of Depreciation) 5 3866.38 670.10Capital Work in Progress 5 2.15 -Investments 6 0.61 475.00Deferred Tax Asset(Net) 7 452.44 -Current Assets, Loans and Advances 7A 22714.69 3820.51Miscellaneous Expenditure(to the extent not written off or adjusted) - 68.91Profit & Loss Account - 2413.31

27036.27 7447.83

Accounting Policies and Notes to the Accounts 10

CONSOLIDATED BALANCE SHEET





66

CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31st March, 2008

Schedule Current Year Previous YearLac/Rs. Lac/Rs.

INCOMESales & Services* 8A 72185.51 12709.48Less: Excise Duty (1,636.99) (1,133.24)

Net Sales & Services 70548.52 11576.24Agency Commission 176.80 -Other Income 8B 494.14 808.97

71219.46 12385.21

EXPENDITURECost of Goods Sold 9A 39849.12 3953.23Manufacturing & Other Expenses 9B 18310.86 6911.05Commission and Discount on Sales 6577.77 602.01Advertisement & Sales Promotion 1658.39 75.36Other Selling Expenses 1690.07 278.64Interest (Net) 9C 167.23 240.51Provision for Doubtful Debts & Advances 116.28 33.17Depreciation 9D 625.01 91.18Compensation paid for Voluntary Retirement 162.13 -Miscellaneous Expenditure- Written Off - 76.81

69156.86 12261.96

Profit before Tax 2062.60 123.25Provision for Taxation 9E (130.92) 6.72Profit After Tax 2193.52 116.53

Earnings Per Share (See Note 6 - Part B)(Face value of Rs. 10 each)

- Basic (Rs.) 19.07 0.23 - Diluted (Rs.) 8.95 0.28Accounting Policies and Notes to the Accounts 10

*Exclude Sales by the Principals against Orders booked by the Company Rs. 3157 Lacs. (PY Nil)



67

APPROPRIATION ACCOUNT


Lac/Rs. Lac/Rs.

AMOUNT AVAILABLE

Balance brought forward from previous year (refer sch 2) 885.43 –Profit for the year brought down 2193.52 –

3078.95 –

APPROPRIATION

Balance carried forward to Balance Sheet 3078.95 –

3078.95 –





68

SCHEDULE - 1

SHARE CAPITAL

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

AUTHORISED 1

4,00,00,000 (PY 2,50,00,000) Equity Shares of Rs. 10/- each 4000.00 2500.00

1,00,000 10 % Redeemable Cumulative PreferenceShares of Rs. 100 Each 100.00 100.00

9,00,000 10 % Redeemable Cumulative OptionallyConvertible Preference Shares of Rs. 100 each 900.00 900.00

5000.00 3500.00

ISSUED, SUBSCRIBED AND PAID UP1,10,74,319 (PY 2,10,63,875) Equity Shares ofRs. 10/- each fully paid up 2 1107.43 2106.39

7,00,000 10 % Redeemable Cumulative PreferenceShares of Rs. 100 each Optionally Convertible toEquity and fully paid up 3 700.00 700.00

Promoters Contribution for Redemptionof 50,000 10% Redeemable Cumulative - 50.00Preference Shares of Rs. 100 each 4

1807.43 2856.39

Notes.1 Authorised Share Capital is the sum total of the Authorised Share Capital of the amalgamating and amalgamatedCompanies.2 Represents Equity Shares allotted to the Shareholders of the Transferor and Transferee Companies on the basisgiven in the Scheme of Arrangement approved by the Hon’ble High Court of Delhi. ( Refer Note 2.4 - Part B ).3 10% Redeemable Cumulative Optionally Convertible Preference Shares , redeemable at par are due forredemption on or before the extended date i.e. 13.01.2013. The Shareholders have the option to seek conversionof these Shares including arrears of dividend, if any , into Equity Shares at any time on or before redemption. Suchconversion shall be @ Rs.10/- per Equity Share.4 The amount brought in by the promoters viz erstwhile Usha International Limited (Transferor Company) pursuantto BIFR order dated 30th May 2005 for the redemption of the Redeemable Cumulative Preference Shares appearingin the books of The Jay Engineering Works Limited (Transferee Company) has been paired off on amalgamationagainst the contribution towards Investment in the books of erstwhile Usha International Limited.

69

SCHEDULE - 2

RESERVES AND SURPLUS

Particulars As at 01.04.2007 During the Year As at31.03.2008

Opening Arising out of Amalgamation Net Opening Addition DeductionBalance

Addition DeductionBalance

Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs. Lac/Rs.

Capital Receipts/Reserve - 173.00 - 173.00 - - 173.00

Capital Redemption Reserve - 110.201 110.20 - 110.20

Share Premium Account - 524.00 - 524.00 - - 524.00

Revaluation Reserve 339.06 138.54 - 477.60 - 10.40 467.20

General Reserve - 13212.472 10,474.24 3 2738.23 - 3.40 6 2734.83

Surplus in Profit & Loss (2,413.31)5 3298.744 - 885.43 2,193.52 - 3078.95

(2074.25) 17456.95 10474.24 4908.46 2193.52 13.80 7088.18

1 Represents the reserve created pursuant to section 77AA of Companies Act, 1956 consequent to buyback ofEquity Shares by Shriram Fuel Injection Industries Limited (Transferor Company).

2 Includes Rs. 9966.89 Lacs relating to reduction in Equity Share Capital (Refer Note 2.4 - Part B).

3 Represents the difference of Rs. 10353.44 Lacs ( Refer Note 3.2 -Part B) between the Equity Share Capital allotedto Shareholders of both the Transferor Companies and their Equity Share Capital prior to Amalgamation adjustedas per Accounting Standard 14 and Rs. 120.80 Lacs adjusted for adopting uniform accounting policy relating toDepreciation,Deferred Revenue Expenditure & Goodwill.

4 The amount is net of Premium of Rs. 297.54 Lacs paid by Shriram Fuel Injection Industries Ltd. (Transferor Company)on the Equity Shares bought back during the year and adjusted against the surplus as on 01.04.2007 since theseShare were not available for consideration under the Scheme of Amalgamation.

5 The debit balance,as above, has been shown on the asset side of the previous year in the Balance Sheet.

6 Represents excess of the cost to the parent Company of its Investment in the subsidiary Compnay over networthof the subsidiary.



70

SCHEDULE - 3

LOANS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

SECUREDFrom Bank - Working Capital Loan - Cash Credit /Bill 2360.45 383.28 Discounting1

- Long Term Loan - Building 2 125.00 -

- Vehicle 3 21.72 -

Sub Total 2507.17 383.28

UNSECURED

Fixed Deposits 534.04 -

Other Loans & Advances :- Security Deposit from Dealers & Others 720.72 76.10

- Interest Accrued and due thereon 8.31 12.38

Sub Total 1263.07 88.48

Total 3770.24 471.76

1 Secured by way of first charge on Stocks & all book debts and equitable mortgage of specified properties havingWDV of Rs. 2593.43 Lacs of Usha International Limited.

2 Secured by equitable mortgage of the Corporate office Building at Gurgaon of Usha International Limited

3 Secured by way of hypothecation of vehicles having WDV of Rs 36.96 Lacs of Usha International Limited.

71

SCHEDULE - 4

CURRENT LIABILITIES & PROVISIONS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

CURRENT LIABILITIESAcceptances 1 2,303.50 367.95Sundry Creditors - Micro & Small Enterprises 489.81 -

- Others 10,378.45 2,178.85Unpaid Dividend2 146.73 -Unpaid Matured Deposits2 28.07 -Interest accrued on Matured Deposits2 4.65 -Sales Advances 164.49 979.39Hire Purchase Sales : - Commission accrued but not due 1.28 -

- Unearned Profit 2.10 -Interest accrued but not due on unsecured loans 46.19 -

Sub Total 13,565.27 3,526.19

PROVISIONSGratuity 457.14 129.32Leave Encashment 136.24 26.48Warranties 211.77 98.63

Sub Total 805.15 254.43

Total 14,370.42 3,780.62

1 Include Rs. 1772.18 lacs payable to Small Industries Development Bank of India towards Hundies accepted by theHolding Company, secured by way of second charge on all Current assets and on specified properties having writtendown value of Rs. 531.89 Lacs.

2 Will be credited to Investor Education & Protection Fund if not claimed within 7 years of declaration / maturity/due date.



72

SCHEDULE - 5

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73

SCHEDULE - 6

INVESTMENTS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.

LONG TERM - TRADEQuoted

1192 Fully paid-up Equity Shares of Rs.10/- each of 0.61 -Mawana Sugar Siel Ltd. (Market value Rs.0.37 lac)

UnquotedA. SUBSIDIARIES47,50,000 Fully paid Equity Shares of Rs. 10/- each in Shriram - 475.00Fuel Injection Industries Ltd(Transferor Co.) 1

B. OTHERS2 Class ‘B’ Shares of Rs. 100 /- each of Tamil Nadu Agro # -Engineering & Service Co-operative Federation Ltd.

Total 0.61 475.00

1 Cancelled on amalgamation of Shriram Fuel Injection Industries Ltd, as cross holding.

# Rs.200



74

SCHEDULE - 7

DEFERED TAX ASSETS

As at 31.03.08 As at 31.03.07

Lac/Rs. Lac/Rs.DEFERRED TAX ASETSDeferred Tax - Assets 646.31 -

- Liability (193.87) -

Net 452.44 -

SCHEDULE - 7ACURRENT ASSETS, LOANS & ADVANCES

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

CURRENT ASSETSStock in Trade(At Cost/Net Realisable Value whichever is lower)Stores and Spare Parts 56.45 37.05Loose Tools 27.75 0.60Process Stock 452.09 270.55Finished Stock - Manufactured 1704.57 782.84

- Purchased 5361.26 207.50Raw Material & Components 341.74 139.47

Sub Total 7943.86 1438.01

Sundry Debtors - Unsecured(Including Hire Purchase Debtors)

Over Six months - Good 312.72 124.82- Doubtful 222.40 56.91- Less Provision (222.40) (56.91)

Others - Good 9103.40 896.67

Sub Total 9416.12 1021.49

75

SCHEDULE - 7A (Contd.)CURRENT ASSETS, LOANS & ADVANCES

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.Cash & Bank BalancesCash in hand 16.38 7.62Cheques - in hand 1170.73 11.98 - In Transit 9.48 26.68With Scheduled Banks - Current Account 1644.81 109.89

Includes Rs. 146.73 Lacs pertaining toUnclaimed Dividends

- Fixed Deposit1 607.21 428.59

With other than Scheduled Banks2

- Current Account 1.66 -- Fixed Deposit 0.25 -

Sub Total 3450.52 584.76

OTHER CURRENT ASSETS(At lower of book value and estimated realisable value)Fixed Assets retired from active use held for disposal 3 3.02 3.02

Sub Total 3.02 3.02

LOANS & ADVANCES(Unsecured, considered good unless otherwise stated)Interest accrued but not due 22.40 -Advances recoverable in cash or in kindor for value to be received - Good 1139.68 584.59

- Doubtful 117.27 0.49- Less Provision (117.27) (0.49)

Others Deposits - Good 383.89 74.48- Doubtful 12.99 -- Less Provision (12.99) -

Advance Tax (Net of Provision including

Provision for MAT u/s 115JB) 232.95 49.17

Cenvat Credit Receivable 113.61 61.48

Balances with Customs/ Excise Authorities 8.64 3.51Sub Total 1901.17 773.23Total 22714.69 3820.51

1 Includes Rs. 59.35 Lacs as liquid deposit under Rule-3A of The Companies (Acceptance of Deposits) rules, 1975and Rs. 125.06 Lacs towards Margin Money and Rs. 400 lacs (Previous year Rs. 400 lacs) under ‘Lien’ being securityfor bank overdraft facility.2 Balance with Municipal Co-operative Bank Ltd., Mulund. Mumbai. Maximum Balance during the year Rs. 4.77 Lacs.3 Fixed Assets retired from active use and awaiting disposal. The Management is of view that the estimatedrealisation would be higher than the above amount.



76

SCHEDULE - 8INCOME


A. SALES AND SERVICESSales1 71725.63 12639.46Hire Purchase 38.01 -Job Work Charges 192.06 25.19Duty Draw Back /DEPB 180.73 44.83Income - Schools 26.22 -

- After Sales & Services 22.86 -

72185.51 12709.48

B. OTHER INCOMEDividend on Long Term Trade Investment 2 - 95.00 Income from use of Trade Marks2 - 584.27 Excess Provisions/Credits written back 311.58 109.86Miscellaneous 182.56 19.84

494.14 808.97

1Excludes Sales of Rs. 3157 Lacs (PY Nil) by the Principals against Orders booked by the Company.2 Income from use of Trade Marks and Dividend on Investment in the current year is nil due to elimination of crosstransaction between the amalgamating and amalgamated Companies.

77

SCHEDULE - 9EXPENDITURE


A. COST OF TRADED GOODS SOLDOpening Stock 5080.03 305.99Add : Purchases 40130.35 3854.74 Less : Closing Stock (5361.26) (207.50)

Net Cost 39849.12 3953.23B. MANUFACTURING AND OTHER EXPENSES

Raw Materials & Components Consumed :CY PY

Opening Stock 314.08 203.90Add : Purchases 6634.47 4862.29Less : Closing Stock 341.74 139.47 6606.81 4926.72( Increase) / Decrease in Process & Finished Stocks CY PYOpening Stock 2784.88 1253.40Less : Closing Stock 2156.66 1053.38 628.22 200.02Stores & Spares & Loose Tools 893.06 376.18Excise Duty on (Decrease) / Increase Stock (10.58) (19.49)Job Work Charges 560.63 316.84Power & Fuel 216.36 78.54PersonnelSalaries, Wages & Bonus 4240.71 346.15Contribution to Provident & other Funds 474.46 48.95Welfare Expenses 230.83 39.05AdministrationRent (Net) 447.07 59.30Rates & Taxes 87.37 42.78Insurance 67.24 7.37Repairs & Renewals - Buildings 35.33 7.26

- Machinery 74.32 19.07- Others 168.04 6.72

Travelling 672.67 34.74Bad Debts/Advances Written Off 22.58Less: Provision for Doubtful Debts 18.54 4.04 -Directors Fee 3.69 0.29Commission to Directors 22.73 -Auditors’ Remuneration - As Auditors 13.82 4.00

- As Tax Auditors 2.80 0.75 - Others Certification 1.42 1.13

(Profit)/Loss on Sale of Fixed Assets 10.01 (11.17)(Profit)/Loss on Exchange Fluctuation 20.51 4.82Others 2839.301 421.03

18310.86 6911.051 Includes expenses of Rs. 1019.55 Lacs of Management Consultants.



78

SCHEDULE - 9 (Contd.)EXPENDITURE

Current Year Previous year

Lac/Rs. Lac/Rs.

C. INTEREST (Net) Interest paid on - Fixed Loans 74.22 -

- Banks 213.47 24.83- Others 76.50 238.88

Discounting Charges 149.00 34.96

Total (X) 513.19 298.67

Interest income from customers etc. 288.57 -(Income Tax Deducted at Source Rs. 49.83 LacsPrevious year Rs. Nil)Interest income on Deposits with Bank 57.39 58.16(Income Tax Deducted at Source Rs. 11.54 LacsPrevious year Rs. 11.34 Lacs)

Total (Y) 345.96 58.16

Interest-Net: (X-Y) 167.23 240.51

D. DEPRECIATIONGross 635.41 96.37Less : Transferred from Revaluation Reserve (10.40) (5.19)

625.01 91.18

E. PROVISION FOR TAXATION

Income Tax - Current year (Section 115JB of I.T.Act) 241.41 -- Previous year (Net) 64.11 -

Deferred Tax (Net) (541.64) - Fringe Benefit Tax - Current Year 89.95 6.72

- Previous Year 15.25 -

(130.92) 6.72

79

SCHEDULE - 10

ACCOUNTING POLICIES AND NOTES ON THE CONSOLIDATED ACCOUNTS(i) BASIS OF CONSOLIDATION

a) The consolidated financial statements have been prepared in accordance with the

Accounting Standard – 21(AS-21) “Consolidated Financial Statements” issued by the Institute

of Chartered Accountants of India.

b) The subsidiary considered in the preparation of the consolidated financial statements is:

Name Percentage of voting power as

at March 31,2008

Avro Sales Pvt. Ltd. 100%

c) Last year figures are of The Jay Engineering Works Limited on standalone basis as

permitted under transitional provisions of AS 21 and therefore are not comparable.

(ii) PART - A SIGNIFICANT ACCOUNTING POLICIES

1) REVENUE RECOGNITION

a) Sales inclusive of Excise Duty but exclusive of VAT and Discounts are accounted for at the

time of handing over the goods to the customers /carting agents/transporters.

b) Purchases (net of Discounts) are booked on the receipt of the goods by the Company.

c) Other Revenues are recognized on accrual basis in accordance with AS-9.

2) FIXED ASSETS

Fixed Assets are stated at cost, except Land and Buildings which were revalued and are, therefore,

stated at the revalued book values. Cost includes interest on borrowing for creation of specific

assets, freight, duties, taxes and other incidental expenses up to the date of the commissioning

of the assets.

3) DEPRECIATION

a) Depreciation on Fixed Assets is provided on the original cost/revalued cost of the Asset at

written down value except Plant & Machinery on which depreciation is provided on Straight

Line Method, at the rates and in the manner prescribed in Schedule XIV of the Companies

Act, 1956.

b) Items of assets costing Rs. 5,000 or less are fully depreciated in the year of acquisition.

c) Revalued Fan Factory Buildings - WDV Rates computed by taking the residual revalue

and estimated residual life as certified by valuers.

d) Tools and Dies (Included - Costing upto Rs. 2 Lacs - 100% in the year of acquisition.

in Plant & Machinery) - Costing above Rs.2 Lacs - 1/3rd of the cost per annum

e) Difference between depreciation provided on the revalued Assets and depreciation on the

historical value thereof is transferred to revaluation reserve and is shown as reduction

from the calculated depreciation.



80

4) INTANGIBLE ASSETSIntellectual Property Rights have been depreciated @25% p.a. and cost of EDP Software Licences@ 40% p.a. on WDV method.

5) INVENTORY VALUATIONThe inventory of Finished Goods, Raw Materials & Components and Loose Tools are valued atlower of cost or estimated realisable value. The basis of determining cost of various categories ofstocks are as follows :-- Raw Materials and Components - Moving Weighted Average Rate (net of CENVAT & VAT)- Processed Stocks - Direct material costs, direct wages and appropriate

overheads- Finished Goods – Manufactured - Direct material costs, wages, appropriate overheads

and Excise Duty. – Purchased - Weighted Moving Average Price (net of VAT)

6) FOREIGN EXCHANGE TRANSACTIONSTransactions in foreign currency are accounted at the rate prevalent on the date of transactions.Foreign Currency Current Assets / Current Liabilities are translated at the year end rates. Theamount of fluctuations whether gain or loss is disclosed in the Profit & Loss Account .

7) EMPLOYEE LONG TERM BENEFITSLiability towards gratuity and leave encashment is determined based on the actuarial valuationas on Balance Sheet date.Gratuity, Provident Fund, Superannuation Fund & Employee State Insurance are accounted foron the basis of the contribution made to the respective funds.In case of subsidiary Company the provision for gratuity have been made on the assumptionthat all employees will retire at the end of the financial year.

8) EXPORT BENEFITSThe value of the DEPB licenses against export entitlement are accounted for on accrual basis.

9) BORROWING COSTSCost of borrowing is charged to revenue except the borrowings used for creation of FixedAssets prior to capitalisation.

10) PROVISION FOR TAXATIONProvision for Current Tax and Fringe Benefit Tax have been made as per the provisions ofIncome Tax Act 1961 and adjustment for Deferred Tax is made in accordance with AccountingStandard-22.

11) WARRANTY PROVISIONSProvisions for Warranty Costs have been made on estimated basis.

12) CONTINGENT LIABILITIESLiabilities, though contingent, are provided for if there are reasonable prospects of such liabilitiesmaturing. Other contingent liabilities, barring frivolous claims, not acknowledged as debt, aredisclosed by way of note.

(ii) PART-B NOTES TO THE ACCOUNTSB-1 NOTES CONCERNING AMALGAMATION

1.0 Scheme of Arrangement (“Scheme”) – The “Scheme” sanctioned by Hon’ble High Court of Delhiis for the amalgamation of the Usha International Ltd. (UIL – Transferor Company No. 1) andShriram Fuel Injection Industries Ltd. (SFIIL– Transferor Company No. 2) with the Jay EngineeringWorks Ltd. (JEW – Transferee Company)


81

The products manufactured by JEW as well as SFIIL are marketed mainly through UIL and thusthere is synergy of business interest between the three Companies. Accordingly, their businessesare combined conveniently/ advantageously and would ensure for the benefit of the Shareholders, the employees and all the stakeholders of all the three Companies.

2.0 Salient features of the “Scheme” are :

2.1 The name of the Transferee Company “The Jay Engineering Works Limited” shall stand changedto “Usha International Ltd.”

2.2 The Scheme would be operative from the Appointed Date, i.e. 01.04.07 and would be effectivefrom the date on which copies of the order of Hon’ble High Court of Delhi sanctioning theScheme has been filed with the Registrar of Companies, NCT of Delhi and Haryana.

2.3 Authorised Share Capital of the Transferee Company would be sum total of the AuthorisedShare Capital of all the three Companies.

2.4 Based on the business valuation of JEW, UIL and SFIIL, Equity Shareholder’s of UIL would get 44Equity Shares for every 1 Equity Share held in UIL and Equity Shareholder’s of SFIIL would get31 Equity Shares for every 10 Equity Shares held in SFIIL of the Transferee Company aftercanceling the crossholdings.

Accordingly, Equity Share Capital of the Transferee Company would become Rs. 110,74,31,930comprising of 11,07,43,193 Equity Shares.

The “Scheme” provides for the reduction in the issued and paid up Equity Share Capital bycanceling of 9,96,68,873 Equity Shares of Rs. 10/- each and the amount of Rs. 99,66,88,730 wouldbe credited to General Reserves and will not be paid to the Shareholders. Accordingly, EquityShares would be allotted to the Shareholders of all the three Companies as on the Record Dateas under:-

- 44 New Equity Shares of Rs 10/- each fully paid –up of Transferee Company for every 10Equity Shares of Rs 10/- each fully paid-up held in Transferor Company No.1, i.e. UIL.

- 31 New Equity Shares of Rs 10/- each fully paid –up of Transferee Company for every 100Equity Shares of Rs 10/- each fully paid-up held in Transferor Company No.2, i.e SFIIL.

- 1 New Equity Share of Rs 10/- fully paid –up of Transferee Company for every 10 EquityShares of Rs 10/- each fully paid-up held in Transferee Company, i.e. JEW.

New Equity Shares allotted after cancellation of cross holdings of each Company are as under:-

- Erstwhile Usha International Limited (Transferor Company No 1) : 100%

- Erstwhile Shriram Fuel Injection Industries Limited (Transferor Company No 2) : 34.16%

- Erstwhile The Jay Engineering Works Limited (Transferee Company) : 10.61%

2.5 The incidence of adopting uniform Accounting Policies, if any, would be quantified and adjustedin the Revenue Reserves.

2.6 All Assets, Liabilities, Rights and Obligations of Transferor Companies No. 1 and 2 would vestwith the Transferee Company at Book Value as on the Appointed Date, i.e. 1.4.2007.

3.0 The Scheme of amalgamation has been sanctioned by Hon’ able High Court of Delhi vide itsOrder dated 26.5.2008.The scheme became effective on 2.6.2008, the Appointed Date of theScheme being 1st April 2007.

The Name of The Jay Engineering Works Ltd. has been changed to Usha International Ltd andNew Equity Shares have been allotted to the Shareholders on 25.06.2008.

3.1 The accounts of the Company have been prepared following the principles and procedures ofthe “Pooling of Interest Method of Accounting for Amalgamation” as per AccountingStandard - 14.




82

3.2 The difference of Rs. 10353.44 lacs between the Equity Share Capital allotted to the Shareholdersof both the Transferor Companies after cancellation of cross holdings and their Equity ShareCapital prior to Amalgamation has been adjusted in General Reserve.

B-2 OTHER NOTES

4.0 Disclosures regarding ‘Employee Benefits’, has given below relates to Usha International Limitedonly. As Accounting Standard 15 is not applicable to subsidiary Company hence no disclosurehas been made.DEFINED CONTRIBUTION PLAN

Contributions to Defined Contribution Plan, recognized as expense under the head Contributionto Provident & other funds for the year are as under:-

Employers Contribution (Lac/Rs.)

- Provident Fund 206.34

- Superannuation Fund 60.69

- E.S.I 47.17

The Company’s Provident Fund Trusts, namely Usha Sales Provident Fund Trust, The JayEngineering Officers Provident Fund Trust & Hyderabad Engineering Industries Provident FundTrust are exempted under Section 17 of Employee’s Provident Fund Act 1952. Conditions togrant exemptions stipulates that the employer shall make good deficiency, if any, in the interestrate declared by the trust vis-a-vis statutory rate.

DEFINED BENEFIT PLAN

The Employee’s Gratuity Fund Scheme partly managed by a Trust is a Defined Benefit Plan. Thepresent value of obligation is determined based on actuarial valuation using the projected unitcredit method (P.U.C.) as defined in the Accounting Standard – 15.

Leave encashment is also a Defined Benefit Plan but it is not funded. Provision of the liabilityhas been made on actuarial valuation using the P.U.C method .

I. Reconciliation of Opening & Closing Balances of Defined Benefit Obligation



- Defined Benefit Obligation at beginningof the year - 129.32 129.32 26.47

- On Amalgamation 462.64 314.16 776.80 62.25

- Current Service Cost 48.79 22.86 71.65 24.98

- Interest Cost 34.70 35.48 70.18 7.10

- Actuarial Gain/(Loss) (57.47) (27.73) (85.20) (20.52)

- Benefits Paid 51.45 93.96 145.41 22.25

- Settlement Cost Nil Nil Nil Nil

- Defined Benefit Obligation at the year end(Present value of obligation) 552.14 * 468.81 1020.95 135.79

* Provision made in the Balanace Sheet is Rs. 456.21 Lacs against the actuarial valuation ofRs. 468.81 Lacs. Reconciliation of the differential amount is as under:-


83

(Lac/Rs.)

Unfunded Liability as per valuation report - 468.81

Add: Employee retired and additional Gratuity Liability over & above 7.18Rs. 3.50 Lacs paid by the Company.

Total 475.99

Less: Fair Value of Planned Assets with LIC 19.78

Net Unfunded Liability provided in Balance Sheet 456.21

II. Reconciliation of Opening & Closing Balances of fair value of Plan Assets.

Particulars Gratuity

Funded Unfunded Total

(Lac/Rs.) (Lac/Rs.) (Lac/Rs.)

As at As at As at

31.03.08 31.03.08 31.03.08

Fair value of Plan Assets at beginning of the year Nil Nil Nil

On Amalgamation 519.76 14.79 534.55

Expected return on Plan Assets 46.59 Nil 46.59

Actuarial Gain/(Loss) Nil (1.18) (1.18)

Employer’s Contribution 105.79 62.65 168.44

Benefits Paid 51.45 57.66 109.11

Settlement Cost Nil Nil Nil

Fair value of Plan Assets at the year end 620.68 19.78 640.46

Actual return on plan assets 46.59 Nil 46.59

III. Reconciliation of fair value of assets and obligation

Particulars Gratuity Leave

Encashment

Funded Unfunded Total Unfunded

(Lac/Rs.) (Lac/Rs.) (Lac/Rs.) (Lac/Rs.)

Fair value of Plan Assets 620.68 Nil 620.68 Nil

Present value of obligation 552.14 468.81 1020.95 135.79

Amount recognized in the Balance Sheet Nil 456.21 456.21 135.79




84

IV. Expenses recognized during the year under the head Contribution to Provident & other funds



Current Service Cost 48.79 22.86 71.65 24.98

Interest Cost 34.70 35.48 70.18 7.10

Expected return on Plan Assets 46.59 Nil 46.59 Nil

Actuarial Gain/(Loss) (57.47) (27.73) (85.20) (20.52)

Net Cost 94.37 86.37 180.74 52.61

V. Investment Details

Particulars Gratuity (Funded)

Insurance policies 100% with LIC

VI. Actuarial assumptions


Funded Unfunded Unfunded

As at As at As at31.03.08 31.03.08 31.03.08

Mortality Table (L.I.C.) 1994-96 1994-96 1994-96(duly modified) (duly modified) (duly modified)

Discount rate 8% 8% 8%

Future salary increase 10% 5.50% 5.50%

5.0 Related Party Disclosures

Information relating to related party transactions as per Accounting Standard 18 issued by TheInstitute of Chartered Accountants of India is given below: -

A. List of the related parties Relationship

MSR Enterprises Pvt. Ltd. PromotersPerennial Investment Pvt. Ltd. PromotersGreen Field Commercial Pvt Ltd. PromotersSiel Holding Ltd. PromotersMr Sunil Wadhwa Key Management Personnel of erstwhile UshaMs Chhaya Shriram International Ltd.Mr Ravi Raju Key Management Personnel of erstwhile

Shriram Fuel Injection Industries Ltd.Ms Sonali Wadhwa Relative of Key Management Personnel


}

85

B. Details of Related Party Transactions

Current Year Previous YearLac/Rs Lac/Rs

Remuneration to Key Management personnel 234.08 -

Rent paid to Relative of Key Management Personnel 4.20 -

Sale of Investment to M/s Perennial Investment Pvt. Ltdand M/s Green Field Commercial Pvt Ltd 700.00 -

6.0 Earnings Per Share

Particulars Units Current Year Previous Year

a) Profit/(Loss) after Tax Lac/Rs. 2193.52 116.53

b) Less : Preference Dividend (inclusive of tax thereon) “ 81.90 81.90

c) Profit/(Loss) attributable to Equity Shareholders “ 2111.62 34.63

d) Weighted average number of Equity Shares of Rs. 10

each outstanding during the year used in computing

basic earnings per Equity Share Nos 1,10,74,319 1,51,45,902

e) Effect of potential Equity Shares for Redeemable

Cumulative Preference Shares of Rs. 100 each

optionally convertible to Equity Shares including

arrears of dividend. “ 1,34,45,800 2,60,45,800

f) Weighted average number of Equity Shares of Rs. 10

each used in computing diluted earnings per

equity share “ 2,45,20,119 4,11,91,702

g) Earning per share

- Basic [( c ) / (d)] Rs 19.07 0.23

- Diluted [ ( a ) / (f )] Rs 8.95 0.28

7.0 Provision for Income Tax

The amalgamated company Usha International Limited (Formerly known as The Jay EngineeringWorks Limited) intends to file its Income Tax Return based on amalgamated accounts. Accordinglyin view of the carry forward losses (including unabsorbed depreciation) the Company is liableto tax under section 115JB of the Income Tax Act, 1961.

8.0 Deferred Tax Assets/Liabilities

Deferred Tax Assets (net) amounting to Rs. 452.44 Lacs has been computed on the date ofBalance Sheet subsequent to amalgamation and includes Rs. 241.41 Lacs (MAT) as per Section115 JB of the Income Tax Act 1961.




86

9.0 The management is of the opinion that there is no impairment of Assets as contemplated inAccounting Standard-28. Fixed Assets retired from active use and awaiting disposal – Rs. 3.02lacs (PY Rs. 3.02 lacs). The Company is of the view that the realization against these Assets wouldbe higher than the above amount.

10.0 Warranty Provisions

Warranty Provisions have been made on estimated basis considering the defect rate andreplacements made during the year. Summary Position is as under:

Year ended Year endedMarch’08 March’07

Lac/Rs. Lac/Rs.

Opening Balance 155.80 90.12

Add : Provisions for the year 104.87 55.27

Less: Amounts used during the year 48.90 46.76

Provisions at the end of the year 211.77 98.63

11.0 Contingent Liabilities – not provided for :


Lac/Rs. Lac/Rs.

a) Claims not acknowledged as debts

- Sales Tax/Entry Tax demands under appeal 261.77 292.87

- Income Tax demand under appeal 925.47 7.93

- Excise Duty demand under appeal(excluding 101.67 188.39amounts involved in show cause notices and thosematters in respect of which favourable decisions areavailable at other units.)

- Awards in labour cases under appeal 8.29 -

- V.R.S. Compensation* 16.55 20.52

- Others 64.53 15.04

*11 workers at Calcutta unit are yet to take their voluntary retirement compensation

All the above matters are subject to legal proceedings in the ordinary course ofbusiness.

The legal proceedings, when ultimately concluded, will, in the opinion of management,not have material effect on the results of operation or financial position of theCompany.

b) Bill of Exchange / Cheques Discounted 325.01 334.37

c) Arrears of Dividend on 700000 10% Redeemable 714.58 644.58Cumulative Optionally Convertible Preference Sharesof Rs.100 each for the Financial years1997-98 to 2007-08


87


Lac/Rs. Lac/Rs.

12.0 Capital Commitment (Not Provided for) 53.33 20.30

13.0 Manufacturing & Other Expenses (Schedule 9 B) includes Research and Developmentexpenses as under :

Current Year Previous YearLacs/Rs. Lacs/Rs

Stores and Spares 0.82 0.99

Salaries and Wages, etc. 17.70 19.98

Other Expenses 22.21 41.99

40.73 62.96

14.0 Segment Reporting

A. Business Segment


I. Revenue (Net Sales/Agency Commission)Segment - Consumer Durables 55,111.47 11,576.24

- Engines, Pumpsets & Motors 9,570.84 -- Auto Products 5,974.76 -- Others 68.25 -

Total 70,725.32 11,576.24

II. Results (Profit(+) / Loss(-) before UnallocableExpenditure/ Depreciation,Interest & TaxSegment - Consumer Durables 4,957.26 363.76

- Engines, Pumpsets & Motors 671.34 -- Auto Products 691.87 -- Others (14.67) -

Total 6,305.80 363.76

III. Less : - Unallocable - Interest 167.23 240.51- Expenditure/Depreciation 4,075.97 -

(net of unallocable income)

IV. Profit Before Tax 2,062.60 123.25

V. Capital EmployedSegment - Consumer Durables 8,073.03 283.54

- Engines, Pumpsets & Motors 118.10 -- Auto Products 1,804.18 -- Others 93.67 -

Total 10,088.98 283.54




88


Segment Reporting (Contd.)


Depreciation*Segment - Consumer Durables 173.71 91.18

- Engines, Pumpsets & Motors 17.20 -- Auto Products 137.78 -- Others 3.57 -

Total 332.26 91.18

Non Cash Expenses other than Depreciation*Segment - Consumer Durables 73.10 76.81

- Engines, Pumpsets & Motors (2.34) -- Auto Products 6.72 -- Others (0.06) -

Total 77.42 76.81

* Included in Segmentwise results.

B. Geographical SegmentCompany has no operation outside India and hence secondary segment namely GeographicalSegment is not applicable.

15.0 Balance with certain suppliers await reconciliation and confirmation.

16.0 Previous Year Figures have been reworked,regrouped,rearranged and reclassified whereevernecessary.

Signature to Schedules 1 to 10 forming part of the Balance Sheet and Profit & Loss Account.



89

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED31ST MARCH, 2008

Particulars 2007-2008 2006-2007Lac/ Rs. Lac/Rs.

A. CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX & EXTRAORDINARY ITEMS 2,062.60 123.25Adjustments for :Depreciation (Schedule 9D) 625.01 91.18Deferred Revenue Expenditure written off - 76.81Profit/Loss on sale of Fixed Assets 10.01 (11.17)Interest Expenses 167.23 240.51Dividend on Investment - 802.25 (95.00) 302.33

OPERATING PROFIT BEFORE WORKING 2,864.85 425.58CAPITAL CHANGESAdjustments for :Trade and other Receivables (9,338.79) (318.71)Inventories (Schedule 7A) (6,505.85) 354.81Trade Payables 10,589.80 (524.84)CASH GENERATED FROM OPERATIONS (2,389.99) (63.16)Direct Taxes Paid (400.10) (56.90)Fringe Benefit Tax Paid (105.20) (6.72)

CASH IN FLOW BEFORE EXTRAORDINARY ITEMS (2,895.29) (126.78)

NET CASH GENERATED FROM OPERATING ACTIVITIES (2,895.29) (126.78)

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (Schedule 5) (713.80) (154.14)Sale of Fixed Assets (Schedule 5) 95.82 22.04Loan to Subsidiary Company received back - 460.00Deferred Revenue Expenditure incurred - (12.32)Dividend on Investment - 95.00NET CASH GENERATED IN INVESTING ACTIVITIES (617.98) 410.58

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from Borrowings (Schedule 3) 3,298.48 (70.51)Interest Paid (167.23) (240.51)Promoters contribution for Redemption of RCPS - 7.13NET CASH USED IN FINANCING ACTIVITIES 3,131.25 (303.89)NET INCREASE/(DECREASE) IN CASH AND CASHEQUIVALENTS (A+B+C) (382.02) (20.09)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 584.76 604.85Less: On Amalgamation (3,247.78)CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 3,450.52 584.76

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (382.02) (20.09)

A.K. Chowdhury Siddharth ShriramA.K. Jain ChairmanN.K. GoilaP.K. Bhalla Chhaya ShriramVinod K. Wazir Whole Time DirectorDirectors


AUDITORS’ CERTIFICATE We have examined the attached consolidated Cash Flow Statement of M/s. Usha International Limited for the year ended 31st March,2008.The Statement has been prepared by the Company in accordance with the requirements of Clause 32 of listing agreement with theStock Exchange and is based on and in agreement with the corresponding Balance Sheet of the Company.

For Thakur, Vaidyanath Aiyar & Co. Chartered Accountants

V. RajaramanNew Delhi PartnerAugust 14, 2008 M. No. 2705

9 0

FinancialsAVRO SALES PRIVATE LTD.Annual Report 2007 - 2008

The Directors present their 23rd Annual Report along with audited accounts of the Company for theyear ended on March 31, 2008.

The Turnover of the Company was Rs. 1.75 Lacs.

The Directors place on record the loss for the year Rs. 3.99 Lacs (last year loss Rs. 2.58 Lacs)

Provisions relating to the particulars of personnel required to be furnished under Section 217(2A)of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, and 1975are not applicable.

The Annual Accounts and the related details will be made available on request. The Annual Accountsare also available for inspection at the Registered / Head Office of the Company.

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, your Directorsstate that:

(i) in the preparation of the annual accounts, the applicable Accounting Standards have beenfollowed;

(ii) the accounting policies selected and applied are consistent and the judgments and estimatesmade are reasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit of the Company for that period;

(iii) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding theAssets of the Company and for preventing & detecting frauds and other irregularities;

(iv) The annual accounts have been prepared on a going concern basis.

The observations of the Auditors are self-explanatory and/or suitably explained in various notes tothe Accounts.

On behalf of the Board

August 11, 2008 (SUNIL WADHWA) CHAIRMAN

FORM-B

- The company is a trading Company therefore; particulars with respect to R& D Technologyabsorption and adaptation are not available/required to be given.

DIRECTOR’S REPORT

AVRO SALES PRIVATE LTD.

9 1

AUDITORS’ REPORT

We have audited the attached balance sheet of Avro Sales Private Limited as at 31st March, 2008 andthe profit & loss account for the year ended on that date annexed thereto. These financial statementsare the responsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supperting the amounts and desclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by the managementas well as evaluating the overall presentation of financial statements. We believe that our auditprovides a reasonable basis for our opinion.

Since paid-up capital and reserves of the company are below Rs. 50.00 lacs there were no loansoutstanding in excess of Rs. 25.00 lacs from any bank or financial institutions and the turnover did notexceed Rs. 5.00 crores, the Companies (Auditors Report) order, 2003 (CARO) is not applicable to thecompany and has therefore not been commented upon.

Further we report that :-

(a) We have obtained all the information and explanations, which to the best of our knowledgeand belief, were necessary for the purpose of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the company sofar as appears from our examination of the books.

(c) The company’s Balance Sheet and Profit & Loss account dealt with by this report are in agreementwith the books of account.

(d) In our opinion the Profit & Loss account and Balance Sheet of the Company comply withaccounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

(e) Based on the representations made by all the Directors of the Company and the informationand explanation duly certified given to us by the Company none of the Directors of the Companyhas prima facie any disqualification as referred to in clause (g) of sub-section (1) to section 274of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us,the said accounts read with the notes to the accounts and Statement of Accounting Policiesappended thereto, give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view:

(i) In the case of the Balance Sheet of the state of affairs of the Company as at 31st March,2008; and

(ii) In the case of the Profit & Loss account of the Company of the loss for the year ending onthat date.

For V. Sahai & Co..Chartered Accountants

New Delhi (Mahesh Sahai)August 11, 2008 Partner

M. No. 6730

9 2


As at March 31, 2008

Schedule AS AT AS AT 31.3.2008 31.3.2007

Rs. Rs.LIABILITIES

Share Capital 1 966700 966700

Reserves and Surplus 2 958021 1357735

Current Liabilities and Provisions 3 271045 423595

TOTAL 2195766 2748030

ASSETS

Investments 4 61150 61150

Fixed Assets 5 43999 191971

Current Assets, Loans and Advances 6 2090617 2494909

TOTAL 2195766 2748030

Significant accounting Policies & Notes to Accounts 10

Schedules 1 to 6 & 10 annexed form part of this Balance Sheet.In terms of our seperate report of even date.

For V. SAHAI & CO.Chartered AccountantsMahesh SahaiPartnerM.No. 6730

Raj GoelNew Delhi S.S. Singhal Sunil Wadhwa August 11, 2008 Directors Chairman

BALANCE SHEET

9 3

For the year ended 31st March, 2008

Schedule Current Year Previous Year

Rs. Rs.INCOMESales 174984 6283963Commission Received 7171 225092Other Income 7 27101 985904Closing Stocks 112630 164776

TOTAL - (A) 321886 7659735

EXPENDITUREOpening Stock 164776 913751Purchases 145166 4893561Administrative & Other Expenses 8 382410 1955978Interest Paid 9 1703 22570

Total (B) 694055 7785860

Gross Loss before Depreciation/Tax C=(A-B) -372169 -126125

Depreciation 24685 61718

Loss for the year before Taxation -396854 -187843

Less : Provision for Taxation - -Less : Provision for FBT 2860 23060Less : Deferred Tax adjustment - 46793Net Loss after Tax -399714 -257696Add : Balance b/f from last year -123680 134016

Balance carried to Balance sheet -523394 -123680

Schedules 7, 8, 9 and 10 annexed form part of this Profit & Loss Account.

In terms of our seperate report of even date.


Raj GoelNew Delhi S.S. Singhal Sunil WadhwaAugust 11, 2008 Directors Chairman

PROFIT AND LOSS ACCOUNT

9 4


SCHEDULE 1SHARE CAPITAL

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

AUTHORISED CAPITALEquity Shares - 10000 Shares of Rs.100 each 1000000 1000000

TOTAL 1000000 1000000

ISSUED, SUBSCRIBED & PAID UPEquity Shares - 9667 shares of Rs. 100 each fully paid up 966700 966700

TOTAL 966700 966700

SCHEDULE 2RESERVES AND SURPLUSES

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

General reserves 1348527 1348527

Share Premium 132888 132888

Profit & Loss A/C -523394 -123680

TOTAL 958021 1357735

9 5

SCHEDULE 3CURRENT LIABILITIES AND PROVISIONS

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

CURRENT LIABILITIESSundry Creditors 113062 93458Others 16512 158527Other Provisions

- Provision for Gratuity 93411 103350- Provision for leave encashment 45200 45200- Provision for FBT 2860 23060

TOTAL 271045 423595

`

SCHEDULE 4INVESTMENTS

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

Investment in SharesNon Trade (at cost)QUOTED :

- 540 (540) Fully paid up Equity Shares in Siel Ltd. @ 26/- - 14278Market Value-Rs.14175/-(31698/-)

- 2025 (2025) Fully paid up Equity Shares in - 46872Mawana Sugar Ltd. @ 26/-Market Value-Rs.75430/-(253935)

- 1192 fully paid equity shares in Mawana 61150 -Sugar Ltd @ Rs 10/- issued in lieu of1 share for every 3 shares of Siel Ltd1 share for every 2 shares of Mawana LtdMarket Value Rs.37310/- (N.A.)

TOTAL 61150 61150

9 6


SCHEDULE 6CURRENT ASSETS, LOANS AND ADVANCES

As at As at31.3.2008 31.3.2007

Lac/Rs. Lac/Rs.

CURRENT ASSETSStock in Trade - Finished goods 112630 164776Sundry Debtors-(Unsecured, considered good)Due for more than six months 1093355 899834Due for Less than six months - 625318Cash & Bank Balances :Cash balance in hand 2493 19140With scheduled banks - Current A/c’s 294604 158251

LOANS AND ADVANCES (Unsecured, considered good)Advances recoverable in cash or in kindor for value to be received. 29485 35822Income Tax 358891 358393Advance - FBT - 16216Security Deposits 199159 217159

TOTAL 2090617 2494909

NOTES : Stocks are as certified by the Management.

SCHEDULE 5FIXED ASSETS

BOOK VALUE DEPRECIATION NET BOOK

VALUE

Description As At Additions (T.Y.) As At Up To Deduc- For the Up To As At As At

31.3.07 Below Addition Deduc- 31.3.08 31.3.07 tion Year 31.3.08 31.3.08 31.3.07Rs. 5000 tions on sale 2007-08

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Furniture 239048 - - 239048 - 187166 196557 9391 - - 51882

OfficeEquipment 329349 - - 186159 143190 212035 122074 11618 101579 41611 117314

Gensets -13.91% 37200 - - 37200 - 24639 25367 728 - - 12561

Computers-40% 279078 - - 164878 114200 268864 160000 2948 111812 2388 10214

TOTAL 884675 - - 627285 257390 692704 503998 24685 213391 43999 191971

Previous Year 1814650 93105.00 1023080 884675 1489179 858193 61718 692704 191971 325471

9 7

SCHEDULE 7OTHER INCOME


Lac/Rs. Lac/Rs.

Dividend Received - 2085Discount Received 500 376Interest received - 35329Annual Receipts (Maint.) - 756321Excess Provision written back 16726 6820Repairs/Installation Income 6342 77107Profit on sale of Fixed Assets 3533 30251Others - 77615

TOTAL 27101 985904

NOTE : Tax deducted at sourceCommissions - 22152 Miscellaneous Receipts - 42123

SCHEDULE 8EXPENDITURE


Lac/Rs. Lac/Rs.

ADMINISTRATIVE & OTHER EXPENSES- Salaries, Bonus,Leave & Gratuity 92370 387613- Director’s Remuneration - 129515- Provident and Other Funds 13971 39735- Provident and Other Funds - Director - 21400- Insurance - 8463- Payment to Auditors - Audit Fees 7000 8285

- Tax Audit Fees - 3500- Excess Provision Written off 4884 343118- Staff Welfare 1594 3948- Rent 25000 192300- Freight & cartage 17497 74747- Telephone Expenses 16506 91159- Vehicle Running & Maintenance - 93109- Legal & Professional Charges 91600 58906- Service expenses 33087 146091- Conveyance 25306 48600- Office expenses 35335 96964- Other Expenses 18260 208525

TOTAL 382410 1955978

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SCHEDULE 9INTEREST PAID


Lac/Rs. Lac/Rs.

INTEREST PAID/FINANCING EXPENSESTo Banks

- On unsecured Loan - 17774- Others 1703 4796

TOTAL 1703 22570

SCHEDULE 10

ACCOUNTING POLICIES AND NOTES TO ACCOUNTSACCOUNTING POLICIESThe accounts have been prepared on historical costs.1. Fixed Assets:

Fixed assets are shown at cost less depreciation. Cost of comprises purchase price and otherdirectly allocable expenses.

2. Depreciation:(a) The company follows the written down value method of depreciation on all its fixed

assets.(b) The rates specified in Schedule XIV to the Companies Act, 1956 have been adopted.(c) Depreciation has been calculated on a pro-rata basis from the month of acquisition/

installation of the assets.(d) Depreciation is calculated upto the date of sale of fixed assets and any profit/loss there

of is shown separately.3. Investments:

Investments meant to be held for long term period are shown at cost.4. Inventories:

Inventories are valued at lower of cost and net realizable value. Cost is arrived at by adoptingFIFO method, in case of finished goods.

5. Revenue Recognition:The accounts are prepared under the historical cost convention and on the basis of goingconcern. Expenses are accounted for on accrual basis. Income from annual contracts isaccounted for on the basis of the period to which it relates.


Raj GoelNew Delhi S.S. Singhal Sunil WadhwaAugust 11, 2008 Directors Chairman

9 9

NOTES TO ACCOUNTS1. Deferred tax assets Rs. 93452 have not been recognised and carried forward since there is no

reasonable certainity that sufficient future taxable income will be available against which suchDeferred tax assets can be realised.

2. Till the end of last year the company was computing liablities on account of Gratuity and leavesalary as per acturial valuation. However, since only a limited number of employees remain, thesaid liability at the end of current year has been computed on the assumption that eachemployee makes a claim at the end of the year.

3. Balances recoverable /payable on account of debtors (Rs 1093355), Advances (Rs29485) andamounts payable (Rs113062)have been shown as good for recovery/payment and have beenincorporated on the basis of their book balances even though no independentconfirmation ishas been received because in the opinion of management they have a value on realisation /payment to the extent settled in the books of accounts.

4. The figures of the previous year are in brackets and have been regrouped in order to makethem comparable with those of current year

5. Contingent Liabilities

- Liability on account of dispute with four workers on the payment of their wages isestimated at Rs 50000.00 which has not been provided for which company is contigentlyliable

6. Related Party disclosure

a) Related Parties- Holding Company - Usha International Ltd

- Director - Mr Raj Goel

7. The Company is a trading Company and ceased to conduct trading activities in the sale /purchase of generators, inverters, batteries and airconditioners since July 2007 because trade inthese items was not profitable. Though fixed assats have been substantially disposed off andcurrently no staff is employed by the company, Directors are reviewing the possibilities ofresuming business activities in a new range of home appliances and consequently since theDirectos intend to continue business activities in the future, the company has been treated asa going concern.

8. Additional Information persuant to clause 3 to 40 of Part II of the companies Act 1956 to theextent possible.

a) Purchase /Sales/stock in trade

Product Opening Stock Purchases Sales Closing Stock

1.4.07 Y.E. 31.3.08 Y.E.31.3.08 31.3.08

Qty Value Qty Value Qty Value Qty Value(Nos) (Rs) (Nos) (Rs) (Nos) (Rs) (Nos) (Rs)

1. Generators 1 10000 1 1001 46863 36 1614351 36 1770830 1 10000

2. Invertors/Batteries 5 20349 3 4711 8 685416 61724 158 685166 169 765204 5 20349

3. Air-conditioners 1 15000 1 10018 489822 85 1780939 102 2456933 1 15000

4. Miscellaneous 119126 140455 167930 112630315342 808694 1358585 119427

Total - This Year 164475 145166 174984 112630

- Last Year 913751 4889150 6351552 164776

For V. SAHAI & CO.Chartered AccountantsMahesh SahaiPartnerM.No. 6730 Raj GoelNew Delhi S.S. Singhal Sunil WadhwaAugust 11, 2008 Directors Chairman

annual_reports

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