crompton greaves an indian mnc - cg - · pdf filethe top 10 transformer manufacturers in the...

On May 13, 2005, Crompton Greaves completedthe acquisition of the Belgium - based PauwelsGroup, having manufacturing facilities inBelgium, Ireland, Canada, USA and Indonesiaand well spread distribution network across theglobe.

This acquisition catapults the Company amongstthe top 10 transformer manufacturers in theworld. It has truly transformed into an IndianMNC making a long-cherished dream finallycome true.

Besides strengthening its foothold in the Indianmarket, Crompton Greaves' acquisition of thePauwels Group and i ts t rans fo rmermanufacturing facilities in five countries isexpected to provide a significant impetus to theCompany's international presence. CromptonGreaves is perhaps the only Indian Company toconclude an acquisition of such magnitude,making its presence felt with manufacturingfacilities over a wide geographical spread overfive countries.

The additional turnover of approximately

Rs.1380 crores - the Pauwels Group's sales

turnover for its last fiscal year is expected to

increase Crompton Greaves' international

business to around 50% of its turnover, making

the Company a force to reckon with, in the

International market.

An Indian MNCCrompton Greaves

Crompton Greaves Ltd.

Auditors

Solicitors

Bankers

Sharp & Tannan

Crawford Bayley & Co.

ABN-Amro BankBank of BarodaBank of IndiaBank of MaharashtraCanara BankCorporation BankICICI BankIDBI Bank Ltd.Standard Chartered BankState Bank of IndiaSyndicate BankUCO BankUnion Bank of IndiaVijaya Bank

Board of Directors

Chief Financial Officer

Company Secretary

Registered Office

G. Thapar

S. M .Trehan

S. Bisht

O. Goswami

S. Labroo

K. Thapar

B.R.Jaju

W. Henriques

6 Floor, CG House,

Dr. Annie Besant Road,

Worli, Mumbai 400030

Chairman

Managing Director

th

Corporate Information

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Performance Culture driven by Values

Strong Financials

Leadership position in most products

Widely recognised technologies and tie-upswith the best in the world

Strong Brand Equity

Large number of International ProductCertifications

Increasing International presence

Exhaustive product portfolio

Well established marketing and service network

Key Strengths

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The BM Thapar Group's Crompton Greaves Limited has been a pioneer in the

management and application of electrical energy. Today, with the acquisition of the

Belgium-based Pauwels Group and its transformer manufacturing facilities in five countries,

Crompton Greaves has positioned itself in the global market as a truly Indian MNC.

Since its incorporation in 1937, as one of India's largest private sector enterprise, Crompton

Greaves has been a name that has become almost synonymous with electrical engineering

products. The Company is a one-stop for designing, manufacturing and marketing of high

technology electrical products and services related to power generation, transmission,

distribution as well as execution of turnkey projects.

Power Systems

Industrial Systems

Consumer Products

Crompton Greaves has been a transformation from a national business entity

toanaggressiveworldclassplayer.Expanding itsservices to foreignshores, theCompany is

nowemergingasapreferredchoice in theglobalmarket forhighqualityelectricalequipment.

All the financial parameters have shown consistent improvement for the last three years,

endorsing the Company's sound financials.

The Company's business operations consist of 22 manufacturing divisions spread

across five states - Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka, with

Marketing Headquarters in the four Metros. The Company's large customer base

includes State Electricity Boards, government bodies and large companies in the

private and public sectors.

Besides having clearly identifiable promoters, who are professionals of stature, Crompton

Greaves' high standards of Expertise and Management have contributed to shaping

the Company's present and future prospects.

The BM Thapar Group currently holds 38.36% of the Company’s equity capital and this

Group comprises Greaves Cotton Ltd., Greaves Leasing Finance Ltd., English

Indian Clays Ltd., Bharat Projects Pvt. Ltd., Bharat Starch Products Ltd., DBH International

Pvt. Ltd., Deoria Sugar Mills Ltd., Karun Carpets Pvt. Ltd., KCT Chemicals & Electricals Ltd.,

New Savan Sugar & Gur Refining Co. Ltd., Shree Sitaram Sugar Co. Ltd., Solaris

Biochemicals Ltd., Solaris Chem Tech Ltd., Solaris Industrial Chemicals Ltd., Solaris

Holdings Ltd. and Standard Refinery & Distillery Ltd.

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inter alia

The three Strategic Business Groups are:

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About CG


The Pauwels acquisition marks the culmination of the Company's endeavours for inorganic

growth through an acquisition that would use the Company's strengths acquired over the

years, to establish itself in International markets. From the many proposals explored by the

Company, the Pauwels acquisition presented the most strategic fit, with its complementary

product range, country presence together with wide geographical spread, well-accepted

international brand equity and wide distribution network across the globe.

The Pauwels Group's largest manufacturing facility is in Belgium with other facilities

in Ireland, Canada, USA and Indonesia. Transformer sales account for over 85% of its

revenues with the balance from contracting and other services. The sales turnover of the

Pauwels Group was approximately Euro 245 million (Rs.1380 crores) for the year ended

December 2004.

Pauwels Transformers are renowned for their world-class performance and reliability.

The Pauwels range of Transformers has achieved top tank status in terms of energy

efficiency, minimal noise levels and compactness, meeting the highest international quality

standards. Pauwels also offers a full range of after-sales services as well as repairs and

maintenance for Transformers and on-load tap changers.

Pauwels manufactures a wide range of Transformers, significant amongst which are:

Liquid-filled Distribution Transformers (15 kVA to 10 MVA/36 kV)

Cast Resin Transformers (100 kVA to 10 MVA/36 kV) as an alternative to liquid-filled

Distribution Transformers, with the emphasis on reduced environmental impact and

increased fire safety.

Medium and Large Power Transformers (upto 575 MVA/525 kV) for the transmission

of electrical energy.

Auto-transformers (upto 700 MVA/525 kV)

Phase-shifting Transformers (upto 500 MVA/525 kV)

HVDC Converter Transformers (upto 315 MVA/500 kV DC)

Reactors upto 500 kV

Mobile and Compact Substations (upto 500 MVA, 245 kV class)

Special Application Transformers, which include Traction Transformers, Testing

Transformers and Slim Transformers.

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Pauwels Acquisition

7


With this acquisition, the sales of Crompton Greaves will grow significantly by around 65%.

Not only will around 50% of its total turnover come from International business,

manufacturing locations and sales entities across the world, our Transformer business

would be ranked amongst the top ten in the world.

In today's environment, the customer looks for a Solutions Company, not just a Products

Company, which can offer products and services, including Transformers (power and

distribution), Switchgear (medium and high voltage), Circuit Breakers, Power Quality

Products, Mobile Sub-Stations, Turnkey jobs and after-sales services. Post-acquisition,

Crompton Greaves would leverage the Pauwels facilities and network, to enhance all these

products and services already present in its portfolio. The Company sees this acquisition as

a powerful enabler, which would lead to the emergence of a 'Solutions Company'.

The acquisition of Pauwels is expected to provide Crompton Greaves a foothold in the

USA and European markets, and increase the Company's international footprint. Whilst

approx. 75% of Pauwels' revenues come from Europe and USA, Crompton Greaves' export

revenues portfolio on a similar basis comprise about 80% from Middle East and South

America. Hence, this acquisition will provide opportunities for cross-selling of products

of the two Companies in these markets. The “Pauwels” brand which enjoys an enviable

reputation world-wide will certainly be a competitive advantage.

Pauwels transformer range is upto 500 kV as against 400 kV for Crompton Greaves.

Pauwels is also strong in upto 36 kV single-phase distribution transformers, which should

help Crompton Greaves gain market share in that segment in India. Both ranges will help

Crompton Greaves realise higher revenues in the international market.

Crompton Greaves will also have access to Pauwels' sales and marketing network across

the world.

The Company has already embarked on an integration plan to maximise value from

this acquisition.


Business InitiativesTo sustain its competitive edge in costs and other efficiencies, the Company-wide initiatives

in the areas of Fiscal Management, Human Resources, Information Technology,

e-Sourcing, e-Commerce, Six Sigma, CGPS and Quality Management Systems continue

to be pursued with renewed vigour. In addition, during the year, the Transformer Group

has initiated measures for Product Lifecycle Management in its efforts for improved

overall productivity and profitability.

The net cash generated during the year from operating activities after considering working

capital changes, tax and exceptional items, was Rs.133 crores, which places the Company

in a strong liquidity position, to meet its future growth requirements.

Progressive management initiatives, continue to emphasise and take advantage of

globalised financial products and practices as well as effective management of cash flow

surpluses. Despite the rise in overall interest rates during the year, the Company has

managed to maintain its interest rate on working capital at last year's level. Besides, the

Company has been persistent in reducing its Working Capital borrowings since the last

three years, despite the rising level of operations.

The Company's debt portfolio reduced from Rs. 334 crores last year to Rs. 315 crores in the

current year, improving the debt equity ratio from 0.98 last year to 0.77 this year. Besides,

the interest and other financial costs reduced by 40% from Rs. 38 crores to Rs. 23 crores in

the financial year under review. Consequently, the interest coverage ratio has become

more favourable from 4.7 times last year to 8.2 times this year.

Fiscal Management

9


The Company's newly introduced in-house suppliers' Bill Discounting Scheme has given an

impetus to the vendors' supply chain management programmes and also increased the

Company's negotiation ability towards lower cost of purchases.

During the year under review, several treasury actions were initiated to leverage the

Company's exposure in foreign currency, resulting in substantial foreign exchange earnings

of Rs 3.93 crores. To further strengthen the Company's position in its approach to forex risk

management, it has appointed a firm of reputed International consultants to assist the

Company in setting direction and framing policies for forex management in the future.

The Company's superior performance and prudent fiscal management during the year

enabled the Company to maintain its short-term credit rating of 'F1+' awarded by FITCH

Ratings India for an enhanced amount of Rs. 100 crores as compared with the earlier

threshold of Rs. 40 crores. This is the highest credit rating for short-term credit instruments.

The Company has also maintained its credit rating of 'A+ (Ind)' for its long-term debt

program, indicating adequate credit quality and timely repayment capacity.

Since the financial parameters for the Company have stabilised, the Company is

re-orienting its HR processes to include achievement of Non-Financial Enablers in its

overall mechanisms for recognition and reward, so that, besides the present, adequate

emphasis is placed on the future. The HR Systems link individual rewards with Divisional/

Regional performance. The Company's compensation philosophy continues to be

differentiation based on professionalism and performance excellence, together with the

Executive's role and complexity of responsibilities. Active measures are being taken to

enhance the professional profile and decrease the age profile of the Executive workforce.

During the year, actions have been taken to flatten the Organisation structure to consist

of three broad levels - Executives, Managers and Leadership, thereby eliminating four

layers in the structure. This will also increase the ability of young professionals to assume

leadership positions faster.

Employee Engagement continues to be a priority after the Engagement Survey last year

and several workshops were held to equip Managers with Employee Engagement skills.

Human Resource Development


In furtherance of its belief that HR can succeed only with line involvement, all HR decisions

of the Company are planned and executed by Corporate HR in partnership with an internal

HR Council consisting of Business Heads. Benchmarking with other companies for

remuneration and also other HR Policies is an on-going practice.

To recognise the evolution of the Company during the past four years and what it

now stands for, the Management together with the entire Executive population redefined

the Company's Values into the 5 Values - Performance Excellence, Leading Edge

Knowledge, Nurturance, Customer Orientation and Intellectual Honesty and, for easy

implementation, simplified these into Positive Behavioural Indicators and Negative

Behavioural Indicators of each Value. These Values are the platform on which the

Company's businesses are built. To further enhance the performance excellence

thresholds, during the year, the Company embarked on a more robust Goal Setting

exercise. This initiative besides strengthening performance parameters, will also help the

Divisions/Regions balance financial performance with deliverables in non-financial areas.

Training and development is imparted after identifying needs both at Corporate and at the

Divisional/Regional level supported by a Corporate Training Calendar, as well as Training

Programmes at different locations. The focus continues to be skill-based training with high

business impact, with need-based training in behavioural skills. Leadership development is

addressed by inviting Faculty from reputed Institutions and also sponsorship of Senior

Executives for high-end Business Leadership Programmes.

During the year, with the support of the Workers and Unions, the Company concluded long-

term Wage Settlements at two Divisions. These settlements, similar to earlier settlements,

have been for longer durations with crystallised financial outflows and improvement in

CGPS productivity norms.

Gurukul - CG Management Development Centre, Mulshi.


IT Initiatives

e-Sourcing

e-Commerce

During the year, the Company upgraded its ERP software - SAP to the latest Version 4.7.

Simultaneously, it also converged from a multiple server system to a single server system

and upgraded several of its other computer systems. These actions are expected to

augment the capabilities of the Company's various business processes and also

strengthen its management information systems for better business results.

During the year, the Company has invested an amount of Rs.5 crores in IT systems. The

payback for these investments is expected in the near future considering the impact on

business decisions that it will facilitate.

IT has also provided a vehicle for Order Management and After Sales Service through

dedicated portals for these business activities. The order generation through the Order

Management portal has been approximately Rs. 100 crores.

During the year, the Company has further improved its information systems security

infrastructure. Towards isolating the Company's critical servers and reducing business

downtime, the Company will be setting up a best-in-class Disaster Data Centre at a

separate location.

e-Sourcing has been a predominant vehicle for reduction in direct raw material costs and

expanding the supplier arena, together with greater transparency. This drive has resulted in

a savings of approx. Rs.18 crores over the past two years. The quantum of raw materials

sourced during the last two years exceeded Rs.350 crores which accounts for approx 25%

of the direct raw material expenditure. Besides cost savings, the Company's e-sourcing

initiative has also helped in identification of new suppliers and introduction of Best Practices

in sourcing. To strengthen competence in e-sourcing, the Company is widely conducting

training programmes in this area.

The Order Management System which was introduced last year has stabilised, and efforts

have intensified to induce dealers through incentives, to place orders through this system

rather than manually. In addition, this year an After Sales Service portal was introduced,

networking all service centres of the Company, thus reducing service lead times and

increasing spare part efficiencies.


Six Sigma

CGPS

Quality Certifications

Product Lifecycle Management

In accordance with plan, the second phase of Six Sigma implementation commenced

during the year with increasing Executives being trained in the Six Sigma methodology. For

the products covered in the first phase, the Six Sigma methodology has been extended to

the design activity of these products, in the Company's efforts to embed Six Sigma quality

into designs. The second phase will consist of 9 products in addition to the 10 products

covered in the first phase. Increasing coverage of products with the Six Sigma approach will

progressively help the Company achieve "product quality as perceived by the customer"

which is the sole purpose of the Six Sigma drive.

Operational efficiencies through CGPS continue to increase, with the additional impetus

of improved productivity through engineering methods. This increased capability has

enabled the Company's various plants to respond to the increasing market demands. With

the co-operation of the workers and Unions, several Divisions of the Company have

delivered productivity at 133% of CGPS norms. Workers are actively involved in validation of

processes and intensive training is an on-going process. Till date, more than 300 CGPS

enablers have been trained Company-wide.

23 Division/Regions of the Company are certified for ISO 9001:2000, whilst 7 manufacturing

Units are certified for ISO 14001 and 4 Units for OHSAS 18001.

Product Lifecycle Management as a solution has been adopted for the first time in

Transformers to achieve quantum reduction in development cycle time. The Division is now

live with respect to pre-sales business processes, from enquiry to order acceptance.

Further business processes upto the Bill of Material stage, with SAP integration, is in

progress. It is expected that all Transformer plants will adopt the PLM methodology

by August 2005. Through reduction of cycle time, customer response time will

dramatically improve.

13


New Products and Processes

15

Matching the Industry's constantly-evolving dynamics of demand, Crompton Greaves

successfully introduced a range of products and processes in 2004-05.

By strategically expanding its product range and services as well as production capacity,

the Company has further consolidated its market position as one of the top two players in

most of its product categories. A few new products and processes introduced during the

financial year under review:

For the first time in India, the largest 3-phase rating in 400 kV class Generator

Transformer was tested successfully. The BIL level of this transformer is 1425 kVp

(Lightning Impulse) compared to 1300 kVp, normally adopted in the country.

Largest rating Shunt Reactor in 220 kV class was manufactured successfully for the

first time. Shunt Reactors in India are normally used in 420 kV class of capacities upto

80 MVAr.

72 kV and 145 kV Six Sigma range of Bushings and 145 kV Capacitor Voltage

Transformer and 145 kV Inductive Voltage Transformer received the prestigious

certification by KEMA, Netherlands.

Successful completion of dielectric tests for Polymeric 420 kV Current Transformers and

420 kV Capacitor Voltage Transformers.

Development of Motors and Alternators for the modern 4000 HP Broad Gauge Diesel

Electric Locomotive.

Commercialisation of 630 Frame industrial duty DC Motor - largest in India, by HT

Motors.

Pumps Division has diversified into 10 HP Air Compressors and Diesel Generating Sets,

synergizing its expertise base in compressor driven water pumps and diesel engines;

besides developing a new range of Jet pumps and 4” water-filled and oil-filled

Submersible pumps.

LT Motors developed for the first time in India a 110 to 160 kVA aluminium body

Alternator.

The Railway Signalling Division developed metal-to-metal signalling Relays and new

export markets for “Q” type Relays.

The Infiltration method for manufacture of vacuum interrupter contacts has been

introduced. The Vacuum Interrupters made with this technology have been successfully

tested at KEMA, Netherlands.

High efficiency Ballast Lamination, by the Stampings Division to supply 3.0 watt/kg

material, with permeability exceeding 3000 at 1.5 tesla which opens doors to the large

export market.

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Brand EnhancementCG has always enjoyed a position of pride with respect to its various products & processes,

and has positioned itself as a company with a high degree of quality consciousness and

product innovation.

Traditionally, CG has been low key in creating Brand awareness. However, during the past

two years, and especially the year under review, several conscious initiatives have been

taken, to ensure meaningful branding and related launch strategies.

The thrust for the year, has been unification of the CG logo for all its product groups,

with the undiluted focus on “Everyday Solutions” which is the underlying theme through

which CG's products in all its Business Groups touch lives everyday.

CG's Brand building has been a multi-dimensional approach with emphasis on the

individual buyer, corporate customers and influencers together with industrial and

professional associations. During the year under review, CG spent in excess of Rs.11 crores

on Brand building and advertising, representing the importance that it places on sustaining

and improving its Brand Equity.

To influence the individual buyer, CG uses the major TV channels, which have an expansive

reach, to project under one fold its consumer products such as fans, lights and pumps.

Brand recall is also assured through cost-effective, high visibility advertisements on trains,

airport translites and wall paintings for these end-user products.

The corporate customers and specifiers are influenced by press media campaigns in

leading dailies, reputed business magazines and trade journals, through carefully timed

launches. This campaign was made more effective by arranging direct mailing of the

relevant magazines to industrial customers and dealers, the ultimate decision-makers and

market-influencers of industrial products.

CG regularly participates in accredited trade fairs and exhibitions both national and

international, sponsored by prestigious professional and industry associations, thus

promoting the CG brand to varied customers.

To strengthen CG's creditability as a supplier of choice, regular customer and dealer

meets in all segments are organised, and a structured feedback mechanism has also

been initiated.

Through its various campaigns and more importantly, its post-launch strategy of meeting

its commitments, CG has built a long-term mainstream market acceptance.

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Crompton Greaves believes that a boost in productivity need not be synonymous with a

surge in costs; which is why, the Company has initiated productive but also cost-effective

consolidations and streamlining of production capacities.

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The LT Motors Division commissioned an EOU facility for manufacture of AC Motors

from frame 62 to 300, which will increase capacity by a further 60,000 Motors per

annum. This initiative will further strengthen the Division's ability to compete in

International markets.

The Stampings Division took a major step in capacity expansion, cost reduction and

better competitiveness by setting up an independent, 5000 MT per annum Unit at

Ahmednagar.

The Fans Division has initiated measures to set up an additional facility for

manufacture of fans at Baddi in Himachal Pradesh. This location will provide a back-

up to the Goa facility. Baddi as a location offers several tax incentives and other

subsidies, which will contribute to overall cost reduction and increased profitability of

the fans Unit in future years.

New Manufacturing Facilities


For the period ended 31st March, 2005

® EVA is a registered trademark of Sten Stewart & Co. The figures are based on Indian GAAP Financial Statements.above

1 Average capital employed (Rs. in crs.) 682.88 695.58 761.93

2 Average debt (Rs. in crs.) 324.10 396.44 514.97

3 Avg. debt/ Avg. capital employed 47.46% 56.99% 67.59%

4 Beta Variant Number 1.7450 1.9580 0.9618

5 Risk free debt cost 6.00% 6.00% 6.00%

6 Market premium 7.00% 7.00% 8.00%

7 Cost of equity 18.22% 19.71% 13.69%

8 Cost of debt (post-tax) 4.52% 6.22% 7.91%

9 Weighted average cost of capital 11.71% 12.02% 9.79%

10

11

Operating profit before interest & tax (Rs. in crs.) 148.31 122.17 95.43

Less: Tax (Current and deferred tax) (Rs. in crs.) (10.03) (18.69) (9.03)

Less: Cost of capital (Rs. in crs.) (79.99) (83.62) (74.57)

(Rs. in crs.)

12 Enterprise value

Market value of equity (Rs. in crs.) 2,269.68 806.84 269.21

Less: Cash and cash equivalents (Rs. in crs.) (73.42) (76.15) (54.74)

Add: Closing debt (Rs. in crs.) 314.54 333.65 459.22

(Rs. in crs.)

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EVA as a percentage of average capital employed

Enterprise value/ Average capital employed Times 3.68 1.53 0.88

Year Ended March 31 Unit 2005 2004 2003

PAT as a percentage to average capital employed 16.81% 10.18% 3.70%

Economic Value Added (EVA)

Economic Value Added 58.29 19.86 11.83

Enterprise Value 2,510.80 1,064.34 673.69

Ratios

8.54% 2.85% 1.55%

70.00

60.00

50.00

40.00

30.00

20.00

10.00

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%0.00

F.Y. 2002-03 F.Y. 2003-04 F.Y. 2004-05

11.8319.86

58.29

3.70%

10.18%

16.81%

EVA (Rs. Cr.)

PAT as % age to average capital employed

Economic Value Added Analysis

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For the year ended 31st March, 2005

Directors' Report

To,

The Members,

The Directors are pleased to present their Sixty-eighth Report with the audited accounts for

the year ended 31st March, 2005.

For the first time in the history of the Company, the Company has recorded a 'three digit'

profit before tax and profit after tax of Rs.124.81 crores and Rs.114.78 crores respectively,

an impressive increase of 39% and 62% respectively as compared with last year.

The Company has attained a position of strength, both financially and operationally, in its

business areas; a testimonial to the Company's focussed strategies over the years. The

Company achieved a turnover growth of 16% this year.

The Company is now one of the few Indian multinationals, a status that it acquired

recently through its strategic acquisition of the Pauwels Group-Belgium. The details of this

acquisition are given on Pages 7 & 8 of this Report.

Operations


The Profit Before Interest and Tax of the respective Business Groups, compared with last

year is given below:

A detailed review of the operations and performance of each Business Group is contained

in the Management Discussion & Analysis Report, which forms a part of this Report.

Power Systems 66.04 64.03

Industrial Systems 76.74 40.80

Consumer Products 58.02 53.62

SBU 2004-2005 2003-2004

Financial Highlights

(Rs. Crores)

(a)

(b) Less: Excise Duty 180.27 149.73

1972.51 1711.32

(c) Less: Operating Expenses 1796.92 1553.75

(d)

(e) Add: Dividend and Other Income 26.89 27.02

(f) Profit before Interest, Depreciation, Amortisation, 202.48 184.59Exceptional Items and Taxes

(g) Less: Interest 23.08 38.48

(h) Profit before Depreciation, Amortisation, 179.40 146.11Exceptional Items and Taxes

(i) Less: Depreciation 42.09 44.22

(j) Less: Miscellaneous Expenditure Amortised/charged 12.08 18.20

(k)

(l) Add: Exceptional Items (Net) -0.42 5.83

(m)

(n) Less: Provision for Current Year Tax 10.03 6.76

(o) Less: Provision for Deferred Tax 0.00 11.93

(p)

(q) Transfer to General Reserve -11.48 -7.08

(r) Transfer to Doubtful Debts Reserve -2.80 -5.09

(s) Transfer from Securities Premium Account 0.00 8.27

(t) Interim Dividend -36.66 -15.71

(u) Final Dividend 0.00 -20.95

(v) Corporate Tax on Dividend -4.84 -4.69

(w) Balance brought forward from previous year 12.09 -13.49

Particulars 31.3.2005 31.3.2004 GrowthRs.Crores Rs.Crores

Gross Sales 2152.78 1861.05 16%

Operating Profit 175.59 157.57

PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXES 125.23 83.69 50%

Profit Before Tax 124.81 89.52 39%

Profit After Tax 114.78 70.83 62%

BALANCE CARRIED TO BALANCE SHEET 71.09 12.09

21


Dividend

Reserves

Directorate

The Company declared two interim dividends during the year:

Rs.3.50 per equity share (35%) aggregating to a total dividend payout of Rs.18.33

crores (excluding dividend tax of Rs.2.42 crores) on 25th November, 2004; the Record

Date for this purpose was 4th December, 2004 and the Interim Dividend was paid on

17th December, 2004.

Rs.3.50 per equity share (35%) aggregating to a total dividend payout of Rs. 18.33

crores (excluding dividend tax of Rs.2.42 crores) on 22nd March, 2005; the Record Date

for this purpose was 31st March, 2005 and the Interim Dividend was paid on 8th April,

2005.

A proposal for confirmation of the abovementioned two interim dividends as final dividend

is being placed before the Members at the forthcoming Annual General Meeting.

The Reserves at the beginning of the year were Rs.288.11 crores. The Reserves at the end

of the year are Rs.356.40 crores. The Deferred Tax Asset of Rs.14.40 crores has not been

recognised in the books of account, since this forms part of the amount of Deferred Tax

Asset written off during earlier years against the balance in the Securities Premium Account

vide Order dated 15th September, 2003, of the High Court of Judicature at Mumbai.

Mr KK Nohria retired as Chairman as well as Director of the Company after the conclusion of

67th Annual General Meeting held on 22nd July, 2004. The Board places on record its

sincere gratitude and appreciation for Mr Nohria's guidance, support and immense

contributions during his long association with the Company since 1978, in his role as the

Managing Director since 1985, and his dual role as Chairman and Managing Director since

1997. Under his leadership and with his foresight and vision, the Company grew from a

small company with a turnover of only Rs.241 crores into one of India's largest private sector

enterprises in the Electrical Engineering Industry with a turnover of Rs.1861 crores.

Mr G Thapar was appointed as Chairman of the Company with effect from 22nd July, 2004.

Mr SM Trehan's tenure as Managing Director was for a period of three years upto 2nd May,

2005. Considering the substantial progress made by the Company under Mr Trehan's

leadership, the Board of Directors has approved his re-appointment as the Company's

Managing Director for a further period of four years. Members' approval is being sought to

his re-appointment and the terms related thereto; the details are contained in the

accompanying Notice of the forthcoming Annual General Meeting.

Mr K Thapar retires by rotation at the forthcoming Annual General Meeting, and being

eligible, offers himself for re-appointment to the Board. As required by Clause 49 of the

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Listing Agreement with Stock Exchanges, the details of the Director to be re-appointed are

contained in the accompanying Notice of the forthcoming Annual General Meeting.

During the year, the R&D activities focused on scaling up technology and transfer of

developed platform technologies to enable commercialisation, whilst continuing with

R&D efforts to upgrade to the next level. Efforts are on-going to objectively analyse the

technology competency levels of various expert areas with a need to plan and bridge future

core competency requirements.

Technology roadmaps were envisioned in identified Technology Mission areas to be

pursued, to become a 'Centre of Excellence'.

New products & processes developed are detailed in the Annexure.

During the year, the Company, which held 49% shareholding in Hitachi CG Motor

Engineering Private Limited (HCME), a joint venture with Hitachi Ltd, Japan, acquired the

balance 51% shareholding held by Hitachi Ltd, thus making HCME a 100% subsidiary of the

Company. Subsequently, the name of HCME has been changed to "CG Motors Private

Limited". During the year, CG Capital & Investments Ltd, which is a 100% subsidiary of the

Company, divested its 82.06% shareholding consisting of 2,28,098 equity shares of

Rs.100/- each in one of its subsidiaries, CTR Manufacturing Industries Ltd. Consequently,

CG-PPI Adhesive Products Ltd is the only subsidiary of CG Capital & Investments Ltd.

Hence, in terms of the provisions of the Companies Act, 1956, CG-PPI Adhesive Products

Ltd is also the Company's subsidiary.

To implement and effectuate the acquisition of the Pauwels Group which the Company

acquired in its entirety, a company under the name and style of CG International B.V. was

incorporated in April, 2005, in Amsterdam, Netherlands, which is also a 100% subsidiary of

the Company. The Company has invested an amount of EUR 6 Million (equivalent to

Rs.33.95 crores) in the paid-up capital of CG International B.V.

The Company has obtained an exemption under Section 212 of the Companies Act, 1956,

from annexing to this Report, the Annual Reports of CG Capital & Investments Ltd, CG-PPI

Adhesive Products Ltd and CG Motors Private Limited, for the year ended 31st March,

2005. However, if any Member of the Company or its Subsidiaries so desires, the Company

will make available, the annual accounts of the Subsidiaries to them, on request. The same

will also be available for inspection at the Registered Office of the Company and of its

Subsidiaries, during working hours upto the date of the Annual General Meeting.

Research and Development

Subsidiary Companies

23


The details of each Subsidiary with respect to capital, reserves, total assets, total liabilities,

details of investment (except in case of investment in subsidiaries), turnover, profit before

taxation, provision for taxation, profit after taxation and proposed dividend are detailed at

Pages 95 & 96 of this Report.

As required by Accounting Standards AS-21 and AS-23 of the Institute of Chartered

Accountants of India, the financial statements of the Company reflecting the consolidation

of the Accounts of the Company, its 3 Subsidiaries mentioned above, and 6 Associate

Companies, are annexed to this Report. The Associate Companies are Brook Crompton

Greaves Ltd, CG Actaris Electricity Management Ltd, CG Lucy Switchgear Ltd, CG Maersk

Information Technologies Pvt Ltd, CG Smith Software Pvt Ltd and International

Components India Ltd.

For the purposes of consolidation in accordance with AS-23, certain Associate Companies

which do not fulfill the criteria specified in the said Accounting Standard have been

excluded. Investments in such Associate Companies have been accounted for, in

accordance with AS-13.

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors)

Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption

and foreign exchange earnings and outgo are given in the prescribed format as an

Annexure to this Report.

The statement of particulars required pursuant to Section 217(2A) of the Companies

Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2002,

forms a part of this Report. However, as permitted by the Companies Act, 1956, the Report

and Accounts are being sent to all Members and other entitled persons excluding the

above statement. Those interested in obtaining a copy of the said statement may write to

the Company Secretary at the Registered Office and the same will be sent by post.

The statement is also available for inspection at the Registered Office, during working hours

upto the date of the Annual General Meeting.

The Company's explanation to the Auditors' observation in their Report has been detailed

in Note 1 in the Notes on Accounts contained in Schedule B to the Accounts, which forms

Consolidation of Accounts

Conservation of Energy, Technology Absorption and ForeignExchange Earnings and Outgo.

Particulars of Employees

Auditors' Report & Certificate


part of the Annual Report. The Auditors have also certified the Company's compliance of

the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement

and the same is enclosed as an Annexure to the Report on Corporate Governance.

The Directors would like to assure the Members that the financial statements for the year

under review conform in their entirety to the requirements of the Companies Act, 1956.

The Directors confirm that:

the Annual Accounts have been prepared in conformity with the applicable Accounting

Standards;

the Accounting Policies selected and applied on a consistent basis, give a true and fair

view of the affairs of the Company and of the profit for the financial year;

sufficient care has been taken that adequate accounting records have been maintained

for safeguarding the assets of the Company; and for prevention and detection of fraud

and other irregularities;

the Annual Accounts have been prepared on a going - concern basis.

The Company's Auditors, Sharp & Tannan, hold office upto the conclusion of the

forthcoming Annual General Meeting and, being eligible, are recommended for

re-appointment on terms to be negotiated by the Audit Committee of the Board of Directors.

They have furnished the requisite certificate to the effect that their re-appointment, if

effected, will be in accordance with Section 224(1B) of the Companies Act, 1956.

Currently, the Company has discontinued acceptance of fresh deposits and also renewal of

existing deposits. 852 persons had not claimed repayment of their matured deposits

amounting to Rs.123.55 lacs as at 31st March, 2005. At the date of this Report, an amount of

Rs.42.50 lacs therefrom has been claimed and repaid.

Intime Spectrum Registry Limited continue to be the Company's Registrars for all matters

related to the Company's Fixed Deposit Scheme. The contact details of Intime Spectrum

are mentioned in the Report on Corporate Governance annexed hereto.

The Company's share registry function is being looked after by Sharepro Services, which is

a SEBI-registered Registrar & Transfer Agent. The contact details of Sharepro Services

are mentioned in the Report on Corporate Governance annexed hereto. Investors are

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Directors' Responsibility Statement

Auditors

Fixed Deposits

Share Registrar & Transfer Agent


requested to address their queries, if any, in this regard, to Sharepro Services; however, in

case of difficulties, they are welcome to contact the Company's Investor Services

Department, the contact particulars of which are contained in the accompanying Notice of

the forthcoming Annual General Meeting.

The Company continues to focus on the health, safety and environment of its factories and

establishments. Its Health and Safety Policy, which addresses the Regulatory requirements

and preventive measures ensures the desired safety standards on a sustainable basis.

During the year, the Company's Railway Signalling Division at Pithampur, Motors Division at

Mandideep and Switchgear & Power Quality Division at Aurangabad have received the

OHSAS 18001 Certification for their occupational health and safety management systems.

Hence, four Divisions have now achieved this certification. The Company conducts on-

going safety awareness programmes, which, together with safety audits and continual

safety training, comprise the systems and processes implemented in this area.

The Company, with the approval of the Members at the Annual General Meeting held on

22nd July, 2003, and in accordance with the Securities and Exchange Board of India

(Delisting of Securities) Guidelines, 2003, had applied for delisting of its shares from the

Calcutta, Delhi and Madras Stock Exchanges. During the year, the Company received

approval for delisting of shares from the Calcutta Stock Exchange. With this approval, and

the approvals received from the Delhi and Madras Stock Exchanges last year, the

Company's shares are effectively listed and traded only on the Mumbai and National Stock

Exchanges. The Company's GDRs are listed on the London Stock Exchange. The payment

of listing fees is up-to-date.

The Directors thank all the employees for their hard work, dedication and commitment

towards the growth and stability of the Company.

The Directors also thank all the Members, Dealers, Customers, Suppliers, Financial

Institutions, Bankers and other Business Associates for their support and co-operation as

partners in the Company's progress.

On behalf of the Board of Directors

Mumbai, 23rd May, 2005G. THAPAR

Chairman

Health & Safety Policy

Listing Arrangements

Acknowledgments


Under Section 217(1)(e) of the Companies Act, 1956

Annexure to Directors' Report

A. Conservation of Energy

B.Technology Absorption

On a continuous basis, conscious efforts towards energy conservation are being

undertaken across all functional areas of the Company through installation of

energy saving devices, substitution of wind, solar and thermal energy for electricity,

maintenance of power factor around 0.99 and use of natural ventilation &

illumination.

The typical improvement initiatives taken towards further energy efficient

manufacturing processes are:

✦ Change of welding processes from arc welding to CO based welding

✦ Optimisation of vacuum furnaces and autoclave loading and lighting system

selection

✦ Usage of Induction heating for rotor shaft pressing

✦ Change of notching to Fastec technique for laminations

The power factor improvement panel, improvements in autoclave cooling module

and time temperature cycle of vacuum brazing furnace are being introduced at

chosen locations.

Through effective energy utilisation and process optimisation, there will be reduction

in energy consumption. However, this saving has no major impact on the cost of

goods, as our manufacturing processes are not energy intensive.

During the year under review, the emphasis continued on improving the productivity &

reliability of existing products & processes, introduction of new products & processes

and optimisation of design & material content.

(a) Energy Conservation Measures taken:

(b) Additional investments and proposals, if any, being implemented for

reduction in consumption of energy:

(c) Impact of the measures at (a) and (b) for reduction of Energy consumption

and consequent impact on the cost of production:

1. Specific areas of significance in which R&D is carried out by the Company:

2

Research and Development (R & D)

New initiatives related to product & system developments were launched in

Technology Mission Areas.

400 kV, 290 MVA, 3-phase 15.75/420 kV generator transformer with Basic Insulation

level 1425 kVp

15 MVAr 132 kV & 25 MVAr 245 kV 3-phase shunt reactor with gapped core

630 kVA VPI dry type distribution transformer

145 kV, 170 kV, 300 kV capacitor voltage transformer; 300 kV current transformer

52 kV & 245 kV bushings for current ratings upto 2000 A

18 kV Class 3, and 30 kV porcelain type distribution and 1.5 kV Distribution Class

polymeric type lightning arresters

170 kV, 40 kA single pole operated gas circuit breaker & 170 kV, 25 kA, 3 pole gas

circuit breaker

Automatic control and monitoring of vacuum circuit breakers (CBmaster)

12 kV vacuum contactor for capacitor switching duty

7.2 kV & 12 kV one pole and two pole vacuum contactors

36 kV, 20 kA vacuum interrupter in 4 frame

145 kV inductive voltage transformer to conform to KEMA as per IEC & ANSI

standards

110 kVAr, 180 kVAr, 500 kVAr active harmonic filters

11 kV, 33 kV upto 80 kVAr damping reactors

11 kV, 400 A pole mounted outdoor capacitor switch for Medium Voltage Automatic

Power Correction Factor

11 kV automatic power factor correction system

630 frame DC motors

3-Phase AC traction motors for 4000 HP diesel electric locomotives

Traction alternator type C1014

BLDC carriage fan and re-rolling mill motors

ND400L frame in TEFC construction for squirrel cage and slip ring motors

2. Benefits derived as a result of the above R&D:

New products developed

Power Systems

Industrial Systems

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Efficiency level 1 flameproof enclosure motor in compliance with IS 12615-2004

36 kW dynamic breaking resistor DC motor

110-160 kVA aluminum body alternator

2 pole 15 kVA to 50 kVA alternator

5, 7.5 kVA slip ring alternators; 5 to 12.5 kVA brushless alternator

Laminations for high efficiency (luminaire) ballast

Relays Metal-to-metal, Neutral ACI, Non-ACI 60 V DC

Industrial fans, air-curtains & IP55 exhaust fans

Ceiling fans - improved version of Whirlwind, Riviera, 750 mm Pluto, 5-blade with

decorative under-light Jupiter, 1400 mm Whirlwind Decora

High Flo multi-feature fan (plastic body), SDX 16” pedestal fan, Crom Air 12” wall fan

Instant water heaters in plastic and metal body

Storage water heater - 'Pressure Plus' for multi-storied buildings and 'Hard-water'

application for water from bore-wells

Flood lights (Profile), Street lights (improved version of Citivision), Hospital bed lights

with quadra optics (Care), aesthetically appealing landscape lighting (Agni) and

Luminaires for clean room application in pharmaceutical, food and beverage industry

(Pure)

25 and 30 HP centrifugal moonset pumps

Stainless steel pumps - Range of 150 mm borewell submersible pump, self priming

centrifugal jet pumps for shallow wells

Submersible pumps for 72 mm, 80 mm borewells

Openwell submersible pumps with copper rotors

Diesel generator sets upto 22..5 kVA

Product Lifecycle Management System (PLM) for transformers

Close looping of condenser core winding machine and vacuum flooding station to

achieve Six Sigma quality for instrument transformers

Auto recording of test results through customized software for current transformers

Infiltration method for manufacture of vacuum interrupter contacts

Single shot method for manufacture of vacuum interrupters

CNC surface grinding and vertical machining in precision tool manufacturing for

lamination

Consumer Products

New Processes Implemented

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(Rs.Crores)

(Rs.Crores)

%

%

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CNC surface grinding and vertical machining in precision tool manufacturing for

lamination

Prediction of short circuit performance of power transformer

Steady state thermal and fluid flow analysis of power transformer

Prediction of eddy current (stray load) loss minimization in transformer tank

Prediction of effect of space harmonics and interbar currents on induction motor

performance

During the year, the Company was granted one patent, seven patents filed during the

year are pending registration.

The Company has identified five technology mission areas relating to motor

technology, intelligent electronic devices, condition monitoring & diagnostics, design

automation and advanced materials & processes to become a Centre for Excellence.

The effectiveness and efficiency of the Company's Research and Development is

being reshaped to support the Company's global vision.

(a) Capital 1.74

(b) Revenue 13.79

(c) Total (a + b)

(d) Total R & D expenditure:

as a percentage of total turnover 0.72

as a percentage of profit before tax 12.31

The independent efforts of the Company's in-house Research and Development

team coupled with the collaborative working of technological tie-ups and consultancy

arrangements have resulted in addressing the demands of the domestic and

International markets, through product upgradation. The R&D focus is not only

limited to new product development but also extends to engineering inputs for

Technology Competence Achieved

Technology Absorption, Adaptation and Innovation

Patents

3. Future Plan of Action

31st March, 2005

15.53

1. Efforts and Benefits :

4.Expenditure on R & D

productivity improvement, cycle time reduction, process design, cost reduction and

material substitution.

2001-2002 Gas Insulated Hyundai Heavy Industries In progress.

Switchgear Co. Ltd., Korea.

2004-2005 800 kV Auto Transformers, Toshiba Mitsubishi In progress.

Generator Transformers Transmission and Distribution

and Shunt Reactors Corporation, Japan

(

The Company's activities and initiatives relating to Exports are contained in the

Management Discussion and Analysis Report that forms a part of this Report.

Total Foreign Exchange Earned 298.29

Total Foreign Exchange Used 172.90

2. Imported Technology:

Year of Product Imported From Status ofImport Absorption

a) Activities relating to exports; initiatives taken to increase exports; development of

new export markets for products and services; and export plans:

(b) Total Foreign Exchange Earned and Used :

(Rs. Crores)


Mumbai, 23rd May, 2005 ChairmanG. THAPAR

C.Foreign Exchange Earnings And Outgo

31


Report on Corporate Governance

1. Company's Philosophy on Corporate GovernanceThe Company has, from time to time, institutionalised every corporate governance

practice and requirement that has been mandated by the Regulatory Authorities.

However, it believes that true corporate governance emanates from the Values that

an Organisation lives by, whilst interacting with all its stakeholders. This is a journey

that never ends, and the Company continuously strives to reach higher standards

in conducting its corporate and business affairs. CG's five Values of Performance

Excellence, Leading Edge Knowledge, Nurturance, Customer Orientation and

Intellectual Honesty constitute the platform for promoting a harmonious environment

for the growth and responsiveness to the interests of its various stakeholders.

Every Executive of the Company is required to fulfill the principles contained in the

“Rules of Procedure for Management” and “CG Values”. The “Rules of Procedure for

Management” documents the decision-making levels with respect to areas of

responsibility in the Company's day-to-day operations. The “CG Values” elaborate both

Positive Behavioural Indicators, which an Executive is expected to demonstrate, and

also Negative Behavioural Indicators, which every Executive is required to actively

discourage. These two documents form the foundation of the Company's quest for

corporate governance at all levels.

The Company's systems are under constant scrutiny for their enhancement towards

greater control, reliability and integration, better product and service quality, cost

efficiencies and information transparency, which will lead to higher operational

efficiencies and optimise shareholder value in the long-term.

As on 31st March, 2005, the Board of Directors comprised the Managing Director and

5 Non-Executive Directors.

During the year, 5 Board Meetings were held, on 26th May, 2004; 22nd July, 2004;

29th October, 2004; 31st January, 2005; and 22nd March, 2005. The Company's last

Annual General Meeting was held on 22nd July, 2004.

2. Board of Directors


The particulars of Directors, their attendance during the financial year 2004-2005 and

also other Directorships (including Private Limited Companies, but excluding Alternate

Directorships) and Board Committee Representations of Public Limited Companies are

as under:

The Audit Committee comprises four Non-Executive Directors of which three are

Independent Directors. After Mr KK Nohria's retirement from the Chairmanship and the

Board of the Company, the Audit Committee was reconstituted, and Mr G Thapar was

appointed as a member of the Audit Committee, in place of Mr KK Nohria. Presently, the

Committee comprises Dr O Goswami (Chairman), Mr S Bisht, Mr S Labroo and Mr G

Thapar. The Chief Financial Officer, the Chief of Internal Audit and a representative of the

Statutory Auditors attend the meetings of the Audit Committee; the Company Secretary

is Secretary to the Committee.

During the year, besides the regular review of the financial reporting processes, financial

statements, internal control systems of the Company and compliance with regulatory

guidelines, the Audit Committee suggested revisions to the rating system for the

Company's Divisions/Regions, which have led to greater objectivity and clarity. Other

areas addressed by the Audit Committee included the Company's Forex Management,

3. Audit Committee

Name of the Director Particulars Attendance Other Board Representations

Board LastAGM Directorships Committees

Mr KK Nohria

Mr G Thapar

Mr SM Trehan

Mr S Bisht

Dr O Goswami

Mr S Labroo

Mr K Thapar

-(Upto 22.07.2004)

-(From 22.07.2004)

Institutional Nominee;Non-Executive; Independent

Non-Executive; Independent 4 7 5

Non-Executive; Independent 2 - 14 2

Promoter Nominee; 5 10 5

Chairman

Managing Director

Non- Executive; 2 NA NAIndependent

Promoter Nominee; 5 13 7Non-Executive

Executive 5 5 1

5 2 2

Non-Executive

Chairman

Meetings

33


Disaster Recovery Management and other Information Technology Systems,

effectiveness of e-Sourcing, creditors analysis and review of risk exposure in various

business areas. The Committee held regular interactions with external Auditors to

benefit from their professional perspective on the Company's Accounts.

During the financial year 2004-2005, four Audit Committee Meetings were held on 26th

May, 2004, 22nd July, 2004, 28th October, 2004 and 31st January 2005.

The composition and details of attendance of the Audit Committee are as under:

Mr. K.K. Nohria (Upto 22.7.2004) Chairman 2

Dr. O. Goswami (From 31.8.2004) Chairman 3

Mr. S. Bisht Member 2

Mr. S. Labroo Member 2

Mr. G. Thapar (From 31.8.2004) Member 2

Although not mandatory in terms of the Listing Agreement with Stock Exchanges,

the Company has a Remuneration Committee comprising 3 Non-Executive Directors.

After Mr KK Nohria's retirement from the Chairmanship and the Board of the Company,

Mr S Labroo was appointed as Member of the Remuneration Committee at the Board

Meeting held on 29th October, 2004. Presently, the Committee comprises Mr S Labroo

(Chairman), Mr S Bisht and Mr G Thapar .

Although the Listing Agreement and the Companies Act require the Remuneration

Committee to only review the remuneration paid to Executive Directors, the Committee

as part of its terms of reference, also reviews the remuneration of Senior Executives.

At a Meeting of the Remuneration Committee held in April, 2005, an additional amount

of Rs.30 lacs was approved, to be paid to the Managing Director, in recognition of his

past contributions to the Company's performance and profitability, such amount to

be treated as remuneration for the year ended 31st March, 2005. Payment of such

additional amount is subject to the approval of Members in General Meeting.

The details of remuneration paid to the Managing Director for the financial year

2004-2005 is as under:

Name of the Director Status No of Meetings Attended

Executive Directors

4. Remuneration Committee & Directors' Remuneration


*The Remuneration amount under 'Others' is subject to Members' approval at the 68 Annual General Meeting.th

Mr S.M. Trehan,

Salary

Rs. Rs. Rs. Rs. Rs. Rs.

Perquisites Retirement Performance Others TotalBenefits Incentive/

Commission

48,00,000 7,96,926 19,45,600 24,00,000 30,00,000* 1,29,42,526Managing Director

A service contract exists with the Managing Director which contains his service terms

and conditions including remuneration, notice period, severance fees etc, as approved

by the Members.

As indicated in the Directors' Report, Mr SM Trehan has been re-appointed as the

Company's Managing Director for a period of four years with effect from 3rd May, 2005.

The terms and conditions of his re-appointment are contained in the accompanying

Notice of the forthcoming Annual General Meeting.

The Members, at the 63rd Annual General Meeting of the Company held on 10th August,

2000, approved payment of commission to Non-Executive Directors not exceeding 1%

of the net profits of the Company per annum, computed in the manner provided in

Section 309(5) of the Companies Act, 1956. In terms of this approval, the actual amount

of commission and its distribution amongst the Non-Executive Directors has been

decided by the Board of Directors, based on parameters such as additional involvement

in the Company's businesses, role as Committee Members and attendance at Board

Meetings. Based on these criteria, the commission payable to Mr G Thapar and Mr K

Thapar is higher than the other Non-Executive Directors.

The details of remuneration paid to the Non-Executive Directors for the financial year

2004-2005 is as under:

Mr. K.K. Nohria 80,000 2,37,000 3,17, 000

Mr. G. Thapar 2,00,000 59,34,000 61,34,000

Mr. S. Bisht 1,40,000 4,22,000 5,62,000

Dr. O. Goswami 1,40,000 4,22,000 5,62,000

Mr. S. Labroo 80,000 2,37,000 3,17,000

Mr. K. Thapar 1,40,000 59,34,000 60,74,000

The Company presently does not have any Stock Option Plans or Schemes thereunder.

Non-Executive Directors

Name of the Director Sitting Fees Commission Total

Rs. Rs. Rs.

(Upto 22.07.2004)

35


5. Shareholders/Investors Grievance Committee

6. General Body Meetings

The Committee comprises Mr G Thapar (Chairman) and Mr SM Trehan, Managing

Director. Mr W Henriques, Company Secretary, has been designated by the Board as

the Compliance Officer. The Committee reviews the redressal of shareholders' and

investors' complaints related to transfers and transmission of shares, non-receipt of

annual reports, dividends and other share related matters, the periodicity and

effectiveness of the share transfer process, statutory certifications, depository related

issues and activities of the Registrar and Transfer Agent. In addition to review by this

Committee, the Company continues its existing practice of reporting to the Directors at

each Board Meeting, the number and category of shareholder complaints received and

the status of their resolution.

The Company has received five shareholders' complaints during the financial year,

which were satisfactorily resolved; there are no outstanding complaints or shares

pending transfer as on 31st March, 2005.

The details of the last three Annual General Meetings are as under:

2001-2002 Patkar Hall, Mumbai 400 020 28th August, 2002 3.30 p.m.

2002-2003 Patkar Hall, Mumbai 400 020 22nd July, 2003 3.30 p.m.

2003-2004 Patkar Hall, Mumbai 400 020 22nd July, 2004 3.30 p.m.

Special Resolutions transacted at the last three Annual General Meetings held on:

Re-appointment of Mr SM Trehan as Managing Director for a period of three years

from 3rd May, 2002 to 2nd May, 2005, as per terms and conditions set out in the

Explanatory Statement annexed to the Resolution.

Location of the Register and Index of Members and Debenture Holders and other

documents mentioned in Section 163 of the Companies Act, 1956, at the Company's

Administrative Office situated at Kanjur Marg (East), Mumbai 400 042, instead of at

its Registered Office.

Amendment of the Company's Articles of Association to permit utilisation of

Securities Premium Account for any application as permitted by Law and approval

Financial Year Location Date Time

28th August, 2002

22nd July, 2003

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to the Company for implementation of a Scheme of Capital Reduction by utilising

the Securities Premium Account for adjustment of Miscellaneous Expenditure to the

extent not written off or adjusted, Deferred Tax Asset, and Debit balance in the Profit

& Loss Account as at 31st March, 2003 and variations thereto upto 31st July, 2003.

Voluntary delisting of the Company's shares from the Calcutta Stock Exchange

Association Limited, Delhi Stock Exchange Association Limited and Madras Stock

Exchange Limited.

No Special Resolution was passed at the 67th Annual General Meeting, held on

22nd July, 2004.

No Special Resolutions were implemented through postal ballot during the year under

review, nor are any Resolutions presently proposed.

Considering the size and nature of operations, there were no related party transactions

of a materially significant nature in terms of the Listing Agreement with Stock

Exchanges, that may have a potential conflict with the interests of the Company at large.

The Company has complied with all requirements of the Listing Agreement with Stock

Exchanges as well as the Regulations and Guidelines prescribed by SEBI. There were

no penalties or strictures imposed on the Company by any statutory authorities for non-

compliance on any matter related to capital markets, during the last three years.

The Company's quarterly results in the format prescribed by the Stock Exchanges are

approved and taken on record by the Board within the prescribed time frame, and sent

immediately to all Stock Exchanges on which the Company's shares are listed. These

results are published in leading newspapers - The Economic Times, Financial Express

and Business Standard in English and the Maharashtra Times in vernacular, and are

also uploaded on the Electronic Data Information Filing And Retrieval System, as

required by the Listing Agreement with Stock Exchanges.

Information about the Company in general, its financial results, and other information

including official press releases can be accessed at the Company's website

www.cglonline.com.

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✦ 22nd July, 2004

7. Disclosures

8. Means of Communication

37


Meetings are held with institutional investors and research analysts, as necessary.

The Management Discussion & Analysis Report forms an integral part of the

Directors Report.

Friday, 22nd July, 2005 at 3.30 p.m.

Date, time and venue Patkar Hall, Nathibai Thackersey Road,

New Marine Lines, Mumbai 400 020

First Quarter Results End July

Second Quarter Results End October

Third Quarter Results End January

Last Quarter Results and MayAnnual Audited Results

9th July, 2005 to 22nd July, 2005

Not applicable, since no final dividendhas been recommended by the Board

During the year, the Company received approval for delisting of shares from the

Calcutta Stock Exchange. With this approval, and the approvals received from the

Delhi and Madras Stock Exchanges last year, the Company's shares are effectively

listed and traded only on the Mumbai and National Stock Exchanges. The Company's

GDRs are listed on the London Stock Exchange.

The details of the Stock Exchanges on which the Company's shares are listed areas under:

The Stock Exchange, Mumbai Phiroze Jeejeebhoy Towers, 500093

Dalal Street, Mumbai 400 001

National Stock Exchange Exchange Plaza, CROMPGREAV

of India Ltd Bandra-Kurla Complex,

Bandra (E), Mumbai 400 051

The Company's payment of listing fees are upto date.

International Securities Identification Number (ISIN)

INE067A01011 (NSDL & CDSL)

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Annual General Meeting

Financial Calendar

Dates of Book Closure

Dividend Payment Date

Listing Details

Name Address Stock Code

9. General Shareholder Information


Market Price Data - The Stock Exchange, Mumbai

Month Highest (Rs.) Lowest (Rs.) Closing (Rs.)

of the Month of the Month (1st trading day of the Month)

Share Performance Vs BSE Sensex

Registrar and Agents

For Shares

Sharepro Services

April 2004 195.90 146.05 162.50

May 2004 186.50 138.00 177.00

June 2004 153.50 129.00 150.20

July 2004 180.50 129.00 136.90

August 2004 197.00 160.00 167.60

September 2004 227.95 184.00 184.85

October 2004 256.00 211.10 229.40

November 2004 275.95 233.00 242.25

December 2004 303.00 245.00 253.25

January 2005 301.00 265.00 290.60

February 2005 401.00 285.00 297.50

March 2005 499.90 372.55 380.25

The entire share registry activities of the Company are handled by a SEBI registered

Registrar & Transfer Agent - Sharepro Services. The contact details of Sharepro

Services are as under:

Unit: Crompton Greaves Ltd, 912, Raheja Centre,

Free Press Journal Road, Nariman Point, Mumbai 400 021

Tel: 22881568/69, 22825163. Fax: 22825484.

Email: [email protected]

�

�

100

150

200

250

300

350

400

450

4500

5000

5500

6000

6500

7000

1/4/0

4

3/5/

04

1/6/

04

1/7/

04

2/8/

04

1/9/

04

1/10

/04

1/11

/04

1/12

/04

3/1/

05

1/2/

05

1/3/

05

31/3

/05

Share Performance Vs BSE Sensex

Crompton Sensex

Clo

sing

Sh

ares

Pri

ce in

(R

s.)

Sen

sex

39


Unit: Crompton Greaves Ltd, Satam Estate, 3rd Floor,

Above Bank of Baroda, Chakala, Andheri (E), Mumbai 400 099.

Tel: 28215168/28215169. Fax: 28375646.

Email: [email protected]

The Registrar details are as under:

Intime Spectrum Registry Limited., C-13

Pannalal Silk Mills Compound, L B S Marg

Bhandup (West), Mumbai 400 078.

Tel: 55555340/55555454. Fax: 55555353.

Email : [email protected] / [email protected]

The Company's shares are compulsorily traded in dematerialised form. In the case of

transfers in physical form which are lodged at the Registrar & Transfer Agent's Office;

these are processed within a maximum period of 30 days from the date of receipt.

All share transfers and other share related issues are approved by a Director or by a

Senior Executive who is duly authorised by the Board; approvals are on weekly basis;

during the financial year 2004-2005, 51 approvals were obtained.

The total number of shares in physical form transferred during the year under review

was 36,893 shares.

Upto 500 32,036 94.29

501 - 1000 1,153 3.39

1001 - 2000 410 1.21

2001 - 3000 105 0.31

3001 - 4000 58 0.17

4001 - 5000 37 0.10

5001 - 10000 60 0.18

10001 and above 119 0.35

Sharepro Services

For Fixed Deposits

Share Transfer System

Distribution of Shareholding as on 31st March, 2005

No of % of

No of Shares Shareholders Shareholders

33,978 100.00

✦


* Mr K Thapar, a Non-Executive Director, holds 666 equity shares.

Categories of Shareholders on 31st March, 2005

Category No of Shares of Rs.10/- each %

5,23,66,656 100.00

Dematerialisation of Shares

Outstanding GDRs/Warrants or any Convertible Instruments

Plant Locations

Address for Correspondence

Promoters 2,00,87,724 38.36

(including persons acting in concert)

Indian Institutional Investors 21,90,596 4.18

Bodies Corporate 10,52,825 2.00

Foreign Institutional Investors 41,58,705 7.94

NRIs, OCBs, GDRs 77,30,637 14.77

Mutual Funds 1,21,78,092 23.25

General Public 49,53,357 9.47

Directors 14,720 0.03

As on 31st March, 2005, 96.91% of the total shares of the Company have been

dematerialised.

The outstanding GDRs are represented by underlying equity shares that are a part

of the existing equity capital. No convertible instruments are outstanding as on

31st March, 2005 and therefore there will be no consequential impact on equity.

Detailed information on Plant locations, products, establishments and service

centres with their contact details, is provided at the end of the Annual Report.

The Corporate Secretarial Department is located at the Company's Registered Office

situated at 6th Floor, CG House, Dr Annie Besant Road, Worli, Mumbai 400 030.

In addition to the Share Registrar & Transfer Agent, our Investor Services Department,

which is located at the Company's Registered Office, will be happy to assist, in case

Investors experience any difficulties in their interaction with Sharepro Services.

✦

✦

✦

✦

Corporate Secretarial Department

Investor Services Department

Contact Person : Mr AR Patil, Sr Manager - Corporate Secretarial

Time : 2.00 pm to 5.00 pm (Mondays to Fridays)

Tel : 24237804,24237805. Fax : 24237788.

E-mail : [email protected]

*

41


Non-Mandatory Requirements

The Company has implemented the following non-mandatory requirements recommended under Clause

49 of the Listing Agreement:

Chairman's Office

A Chairman's Office with requisite facilities is provided and maintained at the Company's expense for

use by its Non-Executive Chairman. The Company also reimburses all expenses incurred in furtherance

of the Company's business interests.

Audit Qualifications & Justification

The only audit qualification pertains to no provision for Excise and Sales Tax demands as on 31st March,

2005, aggregating to Rs.6.29 crores (net of tax). The Company has filed appeals against the orders

passed. Since it has enough legal merits in its favour, the Company is confident that these demands will

be dismissed in favour of the Company and hence no provision is considered necessary. The

Management is of the opinion that such non-provision does not impact the true and fair view of the

underlying business transactions.

Remuneration Committee

A Remuneration Committee comprising three Non-Executive Directors is already functional, for review

and decisions on remuneration packages of Executive Directors and Senior Executives of the

Company.

Financial results as published in the newspapers are made available to the Members on request.


Mumbai, 23rd May, 2005

�

�

�

�

G. THAPARChairman

To

The Members

Crompton Greaves Limited, CG House

Dr Annie Besant Road, Worli, Mumbai 400 030

Dear Sirs,

We have reviewed the implementation of the requirements of Corporate Governance by the Company, as prescribed by the Listing

Agreement with Stock Exchanges, for the year ended 31st March, 2005, with the relevant records and other documents maintained by

the Company, furnished to us for our review and the report on Corporate Governance as approved by the Board of Directors.

On the basis of the above and according to the information and explanations given to us, in our opinion, the Company has complied with

Clause 49 of the Listing Agreement with Stock Exchanges, in respect thereof.

Mumbai , 23rd May, 2005

For Sharp & Tannan

L VAIDYANATHAN

Chartered Accountants

Partner

Membership No.16368

Certificate on Corporate Governance

This year has been the best year in the Company's history, with the sales turnover crossing

Rs.2000 crores and the profits surpassing three digits. In actual terms, the gross sales

increased to Rs.2153 crores, an increase of 16% over last year. Profit Before Tax and Profit

After Tax have risen to Rs.124.81 crores and Rs.114.78 crores, thus registering a growth of

39% and 62% respectively.

Economic Value Addition (EVA) has increased to Rs.58.29 crores, 194% over last year and

Earnings Per Share increased to Rs.21.92, an increase of 62%.

EBIDTA is marginally lower by 0.5% over last year, at 10.3% of net sales. The Management

sees no adversity in this decline, since operational margins have improved. This decline in

EBIDTA is the result of a conscious decision, and as a first-time occurrence, to provide for

future warranties in compliance with Accounting Standard AS-29, higher provisioning for

non-recoverable debts/advances and additional outlay towards the Company's image and

brand building initiatives.

This performance could be achieved as a result of increased productivity from all the

resources viz manpower, materials and machines, all delivering at optimum capacities

together with several business initiatives providing productivity and quality enhancements,

sourcing strategies, human resources and fiscal management, etc., separately detailed at

Pages 9 to13 of this Report.

A comprehensive overview of the three Strategic Business Units - Power Systems, Industrial

Systems and Consumer Products is separately covered at Pages 51 to 59 of this Report.

Management Discussion & Analysis

43

Performance Overview


Securing The Future

Business Prospects

During the year, to increase its competitive strength and sustainability for the future, the

Company has taken several actions for organic as well as inorganic growth, within India

and Internationally. Within India, all initiatives have been focussed in the high-productivity

low-cost manufacturing locations.

The Pauwels Acquisition represents the culmination of the Company's endeavours

for inorganic growth, to establish a firm presence in the International market. A more

detailed coverage of this acquisition is contained at Pages 7 & 8 of this Report.

The LT Motors Division commissioned an EOU facility at Ahmednagar for

manufacture of AC Motors from frame 63 to 200, which will increase capacity by a

further 60,000 motors per annum.

The Stampings Division set up a new unit at Ahmednagar with a capacity of 5000

MT per annum.

The Fans Division at Goa upgraded its entire manufacturing facilities. This Division

has also set up an additional facility for manufacture of fans at Baddi in Himachal

Pradesh, a location with several tax incentives.

The Engineering Projects Division has been relocated from Chennai to Gurgaon for

greater proximity and responsiveness to important customers.

The priority during the year has been upgrading of all manufacturing facilities towards

achieving best-in-class standards. The capital expenditure during the year was Rs.53

crores, and will increase to approx Rs.90 crores in the coming year.

The ensuing year will also witness a substantial expansion in transformer manufacturing

facilities, towards capturing the potential market in the 765 kV range of transformers and the

establishment of a new LT Motors manufacturing facility at Goa.

The above actions will equip the Company to respond to the business opportunities

expected to emerge from Government reforms in the power transmission and distribution

sector and infrastructure development programmes.

The Transformer business witnessed development of new International markets and

acceptance by several international EPC contractors of repute. The business model has

✦

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been re-directed with a thrust on repairs and refurbishment; the response for this new

business area within India and also from Middle and Far East has strengthened profitability,

with considerable potential for the future.

For the first time in India, CG introduced a 290 MVA, 3-phase 420 kV Generator Transformer,

the largest rating in 3 phase configuration in 400 kV class with Basic Insulation Level at

1425 kVp and was also the first in India to manufacture the largest rating Shunt Reactor in

220 kV class.

The Company's technical collaboration with Toshiba-Mitsubishi for manufacture of 765 kV

Generator Transformers will further strengthen the position of the Transformer business in

the Indian and International markets. Amidst stiff International competition, the Company

has secured its first order for supply of 11 numbers 260 MVA 765 kV Generator Transformers

to NTPC.

The Transformer facilities at Malanpur are being developed as a Centre of Excellence for the

Distribution range of Transformers, with sophisticated Dry Type facilities; a state-of-the-art

resin impregnation plant has already been installed.

The 72 kV and 145 kV Six Sigma range of Bushings and 145 kV Capacitor Voltage

Transformer and 145 kV Inductive Voltage Transformer received the prestigious certification

by KEMA, Netherlands.

The future will witness the introduction of Polymeric 420 kV Current Transformers/

Capacitor Voltage Transformers for the first time in India, MV Switchgear products for indoor

application with SCADA and an overall range expansion for International markets.

The market for LT Motors is expected to witness growth in the short-term future. The

Company has taken adequate measures to effectively respond to the increased market

demand. The Company's LT Motors facilities are the largest integrated manufacturing

facilities in India, with latest processes and product technology. The expansion of the HT

Motors facility at Mandideep will positively impact the Company's price competitiveness,

which is an important criteria in this segment. The differentiator for the overall Motors

business will be operational efficiencies and lower costs. The Company's agility enabled it

to capture market share from competition in several emerging markets.

The Company's upgraded manufacturing facilities for fans at Goa and the new facilities

being set up at Baddi, Himachal Pradesh, will go a long way in maintaining the existing

market dominance for fans. Several dedicated initiatives for design optimisation and

45


improved quality have resulted in greater customer acceptance, thus strengthening the

ability of this business to cater to a wide range of industry segments and effectively respond

to the changing demands of the urban, semi-urban and rural markets. The upsurge in

commercial and housing projects, easy availability of loans and government initiatives for

development of rural infrastructure are indicators that the market trend will be positive.

The Light Sources business, despite pricing pressures from indigenous manufacturers

and competition from low-cost imports held its ground. Competitive pressures from

manufacturers within India and imports continue, with net realisations decreasing. The

advent into clean room Luminaires has opened up market opportunities in the

pharmaceutical as well as food and beverage businesses. The investment in the steel,

automobile and the construction industry as well as consciousness of environmental

issues and energy efficient light sources are expected to foster this Division's growth

especially in the commercial and domestic luminaire segment, contributing to an

increasing optimism for the future.

The introduction of de-watering pumps by the Pumps Division would also open up

avenues into industries, mainly effluent treatment plants. The Division is progressively

working on the development of new technologies for its products such as brushless DC

technology and stainless steel fabrication technology, besides diversifying into related

areas of business such as air compressors upto 10 HP and diesel generating sets. New

entrants, both in the organised as well as unorganised sectors, continue to provide stiff

competition with low priced products, increasing the Division's challenge to respond to

these threats, in a market which has been behaving inconsistently for the past three years.

All economic indicators point towards the manufacturing sector being the future driver of

India's economic growth.

India is today a preferred destination for sourcing various engineering goods not only due

to low cost but also due to high quality of products, services, scale of operations and

technical competence that the Indian workforce provides. Although the climate for the

manufacturing sector is bright, the concern is the threat of imminent competition from

global players who are already in the process of setting up manufacturing facilities in India.

The market is expected to remain competitive with an added element of competition from

imported products.

As per the “International Energy Outlook 2004”, the electricity sectors of developing Asia

are expected to be the fastest growing in the world in the next two decades.

Looking Ahead


The electrical engineering industry is experiencing favourable market conditions, fuelled

by the growth of the power generation and transmission sector and the industrial sector;

the Index for Industrial Production was 8.4% as compared with 7% last year. The proposed

capacity addition of 41,110 MW during the 10th five-year plan, will generate demand

for evacuation and transmission of power, which will be the first driver for growth in the

coming years.

The rise in demand for general purpose industrial motors in all segments of industry

spurred by the upturn in industrial production will augur well for the motors business. The

current upsurge in housing and commercial sector projects and availability of housing

loans at lower interest rates and the priority given for rural infrastructure developments

under the National Common Minimum Programme are expected to stimulate demand

for consumer products in the future.

Globally, the market demand for transformers and switchgear has grown considerably

during the last year with several international manufacturers setting up additional capacities

in China, the Far East and India. Increasingly, Indian manufacturers are upgrading their

facilities to world standards, with state-of-the-art testing facilities; they are also aggressively

pursuing International product certifications with quality of products being certified by

Internationally accepted testing agencies. With these growing technological capabilities

and competitiveness, Indian manufacturers are steadily becoming the preferred choice of

foreign buyers. India is also cost-competitive in foreign markets, despite the increase in

critical raw material prices. Although the demand for these products from China is high,

commercial barriers of the Chinese market will inhibit the ability of Indian manufacturers to

respond to the Chinese demand. Indian manufacturers export transformers and switchgear

to over 50 countries, which is evidence of this preference. Industrial growth in the Indian

sub-continent will further add to demand.

Industry has responded to these buoyant market conditions by expanding capacities and

range of power sector solutions. International heavy engineering equipment manufacturers

have already declared plans to set up operations in India, which will increase the

competition for Indian Companies. The total production of transformers has increased by

approx 25% in the last year and the total production of switchgear has increased by approx

8%. The APDRP will specially benefit the MV and EHV switchgear segment. Increased

output of transformers will result in increased demand for HT circuit breakers.

The International market demand for motors is showing a positive direction with increased

industrialisation. There is an identified demand spurt for diesel generating sets and

alternators in South-East Asia. In the price sensitive low voltage motors and fractional horse

47


power motors, Chinese motors continue to dominate the market. The growth in South-East

Asia and Bangladesh will be contributing factors for demand from the transportation

segment. In the industrial motors segment also, there is now greater acceptability of Indian

products due to international standards of Indian manufacturers. The future outlook for

motors other than the price sensitive, low-end motors appears encouraging.

To seize the above opportunities in the respective business areas, the Company has

already initiated several measures to consolidate its present position as well as strengthen

its future ability to compete both in India and Internationally. Some of these measures are:

(i) The Pauwels Acquisition described at Pages 7 & 8 of this Report, which will give the

Company transformer manufacturing facilities in five countries, access to the Pauwels

global marketing network and the reputed Pauwels brand.

(ii) Conscious efforts as mentioned above, to set up new manufacturing facilities and also

expand the existing manufacturing facilities in low-cost high-productivity locations, and

also upgrade its manufacturing facilities to be best-in-class.

(iii) Several business initiatives in the areas of Fiscal Management, Human Resources,

Information Technology, e-Sourcing, e-Commerce, Six Sigma, CGPS, Quality

Management Systems and Product Lifecycle Management as described at Pages

9 to 13 of this Report.

The above actions will have a long-term positive impact on the Company's ability to

compete both with respect to its product range as well as an increasing presence in

expanding markets, both within India and internationally.

1. Power Sector Scenario: The growth in the domestic power sector is not keeping

pace with demand, with the result that the country is facing energy shortages. During the

9th Plan, only 19015 MW power generating capacity was added against a target of

40245 MW. However, in the 10th Plan, there appears to be an improvement with respect

to planning and execution of power projects as compared with the 41110 MW of

planned capacity.

The proposed review of the Electricity Act, 2003 by the new Government and the

pace of reforms in the electricity sector create some uncertainties, which may impact

future investments in this sector. This could reduce demand for electrical equipment

manufactured by the Company.

Risks and Concerns


Restoration of the financial health of several SEBs and improvement in their operating

performance continues to be an issue of concern. However, the Company has been

consistently reducing its business exposure to SEBs.

2. Raw Material Prices: Key raw material prices and availability continues to be a concern

area for the industry. The CRGO type of steel and other critical metal inputs, specially

used for transformers, is mainly sourced from manufacturers in Europe, USA, Japan

and Russia. Since July 2003, CRGO prices have increased by 46%, steel by 56%,

copper by 59% and aluminium by 16%, and this trend is expected to continue, albeit with

less impact. This development coupled with increased global competition will bring

margins under pressure and could weaken the competitive position.

3. Currency: Any adverse movement in the value of the rupee could increase the

Company's liability on account of its foreign currency exposures comprising exports,

imports and forex borrowings including External Commercial Borrowings. The

Company has however adopted adequate foreign exchange risk management

measures to protect itself.

4. Pauwels: Considering its wide geographical spread as well as work culture and

business practices which are diverse to CG, integration across locations would be a

challenge and could impact the business synergy and competitive strengths in global

markets. However, considering the business experience and capabilities of the

Company's present Management and its existing product profile, the Company is

confident of success.

5. Competition: Competition is evident from global players, who are already in the process

of setting up manufacturing facilities in India, with respect to the businesses

in which the Company operates. The several measures that the Company has

already taken and its plans for the future, together with the business impact of the

Pauwels acquisition, will equip the Company to respond in adequate measure to this

competitive pressure.

The brief particulars of the Company's Joint Ventures as at 31st March, 2005, are annexed

as information to the Members at Page 59.

Joint Ventures

49


Internal Control SystemsThe Company has in place an adequate and appropriate system of internal control,

commensurate with the size of the Company and the nature of its business

operations to ensure efficacy of operations and compliance with applicable

legislation. Towards achieving the above, the Company has in place the following

mechanisms:

Monthly business reviews for each Division/Region by Senior Management

Evaluation of the progress on all corporate initiatives of e-Sourcing, Six Sigma, CGPS

etc. by Senior Management with regular periodicity

Comprehensive compliance framework with reporting from accountability levels to

the Division/Region and onwards to Senior Management and the Board

Comprehensive internal audit plans and regular internal audits of the

Divisions/Regions with concentration on systems audit; review of Audit findings by

the Audit Committee in addition to other business areas

The latest IT systems including SAP Version 4.7 on a single server platform for

authenticity of data and Management reporting

Regular reporting to the Board on investor related matters as well as fulfilment of

SEBI, Listing Agreement requirements and other Corporate laws.

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✦

✦

Statements in this 'Management Discussion & Analysis' of financial conditions and results of operations of the

Company may be construed as forward looking statements that involve risks and uncertainties, within the

meaning of applicable securities laws and regulations. Actual results could differ from those expressed or

implied. Important factors that could make a difference to the Company's operations include global and Indian

demand-supply conditions, finished goods prices, raw material availability and prices, litigations and workmen

negotiations, changes in Government regulations, tax regimes, economic developments within India and the

countries within which the Company operates its business. The Company assumes no responsibility to

publish, amend, modify or revise any forward looking statements, on the basis of any subsequent

development, information or events or otherwise.

Strategic Business Units - PerformanceThe Company's business is organised into three Strategic Business Units as under:

: Transformers, Switchgear, Power Quality and Engineering Projects

: Motors & Alternators, Railway Transportation & Signalling Productsand Stampings

: Fans & Appliances, Light Sources, Luminaires and Pumps

A comparative performance table of the Business Units for the year under review is given

below:

Power Systems

Industrial Systems

Consumer Products

Sales 881.54 554.79 671.18

PBIT 66.04 76.74 58.02

Net Capital Employed 306.55 139.61 44.87

ROCE (%) 21.5 55.0 129.3

Contribution To Company Turnover (%) 41 26 31

Last Year's Contribution (%) 40 24 33

Power Industrial ConsumerSystems Systems Products

(Rs. Crores)

IndustrialSystems

24%Power

Systems40%

Others3%

ConsumerProducts

33%

% Sales 2003-04

IndustrialSystems

26%Power

Systems41%

Others2%

ConsumerProducts

31%

% Sales 2004-05

51


Performance of the SBU for the year

This SBU was the largest sales revenue generator for the Company, with sales of

Rs.881.54 crores representing 41% of total sales.

The Transformer Business registered an increase of 23% compared with last year. The

Company is market leader in Transformers, with a market share of 18%. Despite a

substantial increase in copper and CRGO prices, MS ratios were maintained through

improvement in design capabilities and operational efficiencies.

The exports of the Transformer business have been maintained at comparative levels with

last year, despite the Company refusing orders for Transformers although short-listed; the

weakened US Dollar and increase in key raw materials prices rendered these orders

uneconomical.

The acquisition of the Pauwels Group with its high quality manufacturing facilities in five

countries, the reputed Pauwels brand and marketing network across the world, will further

enhance the ability of the Transformers Group to compete more effectively in International

markets. The Transformer business will also benefit from the synergy between Pauwels and

the Company in its range of Transformers and countries to which they export.

The Switchgear and Power Quality business increased by 28% over last year. The Company

is amongst the top two manufacturers in this business segment. Switchgear exports have

registered a significant rise of 59% over last year.

Several new products were added in the areas of Current Transformers, Capacitor Voltage

Transformers, Inductive Voltage Transformers, Lightning Arrestors and Polycrete Vacuum

Sales 881.54 755.32 16.7%

Net Sales (excl Excise) 807.87 698.38 15.7%

Export Sales (CIF excl deemed exports) 209.95 147.77 42.1%

PBIT 66.04 64.03 3.2%

Net Capital Employed 306.55 274.09 11.8%

Unexecuted Order Book 799.45 670.65 19.2%

Order Input 1148.00 1074.00 6.9%

No. of Permanent Employees (year-end) 1928 2012 (4.2%)

Net Sales per Employee (in lacs) 41.90 34.71 7.2

ROCE 21.5% 23.4% (1.9%)

PBIT to Net Sales 8.2% 9.2% (1.0%)

2004-05 2003-04 Increase/(Decrease)

Power Systems

(Rs. Crores)

53


Interrupters, to respond to the needs of new International markets captured during the year.

This business group also made significant investments in high-end testing facilities to meet

the stringent requirements of the International markets.

The focus for the Engineering Projects Division during the coming year will be on projects

undertaken by Power Grid Corporation of India, projects funded by international agencies,

private distribution companies and neighbouring countries like Bhutan, Bangladesh, Nepal

and Sri Lanka.

The key customers and significant orders of this SBU were:

Power Grid Corporation of India Transformers & Reactors and Switchgear

Electricity Boards Transformers & Reactors and Switchgear

Andhra Pradesh Transmission Corpn Transformers

Larsen & Toubro Ltd. Transformers and Switchgear

ABB Ltd Transformers and Reactors

Sales 554.79 439.70 26.2%



PBIT 76.74 40.80 88.1%


Unexecuted Order Book 202.16 163.95 23.3%

Order Input 470.00 388.00 21.1%



ROCE 55.0% 42.9% 12.1%

PBIT to Net Sales 15.9% 10.7% 5.2%

This SBU generated sales of Rs.554.79 crores, representing 26% of total sales.

The LT Motors business registered a turnover increase of 42% compared with last year, with

a market share of 36%. The Company enjoys market leadership for AC Motors and the

second position in AC Generators and DC Motors. The products of this business have

received wide national as well as International product certifications and acceptance by

reputed consultants. This business is the first in India to develop 110 to 160 kVA aluminum

body Alternators. The emphasis for the year was the textile sector, sponge iron business

Key Customers Products


Performance of the SBU for the year (Rs. Crores)

Industrial Systems


and large steel plants, which are growing customer segments. LT Motors surpassed its

earlier achievements, and recorded its highest-ever annual export sales with an increase of

46% over last year, through its focus on original equipment manufacturers for NEMA-T and

NEMA-D Motors, IEC Metric with Epact efficiency and Flameproof Motors.

For HT Motors, the competitiveness and sustainability of the Large Machines Division at

Kanjur continues to be a cause for concern. However, the progress at the Mandideep

location was heartening, with a 49% growth in sales compared with last year. The Company

enjoys second position in this product segment. The Company's market share for HT

Motors was 39%. The Division secured breakthrough orders for Traction Motors for 3100

HP/3300 HP High Adhesion Broad Gauge Diesel Electric Locomotive and for orders for

Re-Rolling Mill Motors Frames 450 to 560 with highest rating upto 2000 HP. This Division

developed Motors and Alternators for the modern 4000 HP Broad Gauge Diesel Electric

Locomotive and also commercialised 630 Frame, the largest industrial duty DC Motor.

The FHP Motors Division enjoys a 21% market share in the organised sector, despite stiff

competition. The international certification for Flameproof Gas Group IIA and IIB Motors

manufactured by this Division will strengthen exports to the European Markets.

Development of custom built Motors for its OEM customer base of air handling equipment

was the focus area.

The Railway Signalling Division registered a sales growth of 22% over last year. The

Company is a market leader in the manufacture of Relays and Point Machines. The focus

during the year was on developing new export markets for “Q” Type Signalling Relays.

Development of metal-to-metal signalling Relays as compared with metal-to-carbon

Relays is expected to influence the future profitability of this Division in a positive manner.

This Division has already started benefiting from commercialisation of the brushless DC

technology, initially being implemented for Railway Carriage Fans.

The Stampings Division is a market leader with 23% market share. The turnover increased

by 21% over last year. To achieve cost competitiveness, over the years, the Division has

upgraded its technology to the latest Fastec tooling. The Division was able to absorb the

impact of the steep increase in steel prices, through firm MOUs with raw material suppliers.


Kirloskar Brothers Ltd Motors

Diesel Locomotive Works Motors

Enercon (India) Ltd Stampings

Whirlpool India Ltd Motors

Mather & Platt Ltd Motors



Performance of the SBU for the year

Sales 671.18 611.88 9.7%



PBIT 58.02 53.62 8.2%


Order Input 675.00 621.00 8.7%



ROCE 129.3% 141.4% (12.1%)

PBIT to Net Sales 9.1% 9.3% (0.2%)

This SBU was the second largest sales revenue generator for the Company, with sales of

Rs.671.18 crores representing 31% of total sales.

The Fans Business continues to enjoy the Superbrand status. The Company is the market

leader, with a market share of 21% and the widest distribution network. The Company has

maintained its competitive position despite stiff competition from imported products as well

as contemporaries in the domestic organised sector. 24 new products were introduced

during the year under review.

The Lighting Business also continues to enjoy the Superbrand status. The Lighting

Division, which comprises Light Sources and Luminaires, has achieved a sales growth of

9.1% for the financial year. Although the Company enjoys a definite market presence for

the products of this Division, it continues to strive for market leadership. The Light Sources

manufacturing facility at Baroda, during the year, commissioned a gas-based power plant,

thereby reducing the dependence on electricity, besides yielding a considerable cost

reduction. Emerging high growth product segments of High Intensity Discharge Lamps,

Compact Fluorescent Lamps and Metal Halide Lamps contributed to turnover growth.

During the year, the Division increased its manufacturing capacity of High Intensity

Discharge Lamps by 140%, making it the second largest player in the Sodium Vapour

Lamps market. The strength of the Luminaires business continues to be its financial

efficiencies with negative working capital and progressive vendor development, which is

the backbone for this business. 44 new products were introduced during the year.

The sales turnover of the Pumps Division increased marginally over last year. All new

products introduced focused on differential technology, product efficiencies and cost

reduction. The Division made in-roads into new business segments by introducing


(Rs. Crores)

Consumer Products

57


petrol-start-kerosene-run engine pump sets and diesel generating sets. New entrants,

both in the organised as well unorganised sectors, continue to provide stiff competition

with low priced products.

As mentioned in last year's Annual Report, exports is not a thrust area for this SBU.

However, to maintain a presence in the International market, prestigious orders for fans

continue to be pursued.


Infosys Technologies Ltd Fans

Larsen & Toubro Ltd. Industrial Lights

Reliance Energy Ltd Industrial Lights

Bharat Petroleum Corporation Ltd Floodlights and Metal Halide Lamps

Indian Space Research Organisation Fans

Total exports during the current year were Rs. 308 crores (CIF including deemed exports

of Rs. 47 crores) as against previous year's figures of Rs.286 crores (CIF including deemed

exports of Rs. 101 crores). Physical Exports increased significantly from Rs.188 crores

in 2003-04 to Rs.261 crores this year. The Company views this as a healthy trend, indicative

of an increasing International presence.

The Unexecuted Order Book for physical exports is Rs.271 crores, 50% higher than the

corresponding figure of Rs.180 crores last year. Higher Order Input across the product

range in 2004-05 is indicative of the significant growth trend in physical exports that will be

witnessed in the ensuing year.


International Operations

Joint Ventures

1 Brook Crompton Greaves Ltd @ 4.26 (2.35) 16.00 49.00

2 CG Lucy Switchgear Ltd 31.79 6.39 1.20 50.00

3 Power Equipment Ltd, Dubai # # # #

Sr. Name Of Company Turnover P B T Subscribed CG % HoldingNo Capital

@ Financial Year 1 January, 2004 to 31 December, 2004 # Activities suspendedst st

Period : April 2004 To March 2005(Rs. Crores)

59


Ten Years' Financial Highlights

( # ) EBIDTA = Earnings Before Interest, Depreciation, Tax, Miscellaneous Expenditure Amortised/Charged and Exceptional Items.( # # ) Tangible Net Worth = Shareholders' Funds - Miscellaneous Exps. (unamortised) - Deferred Tax Asset@ Remittances in transit and Technical know-how (unamortised) have been re-grouped .

Total Income 2179.67 1888.07 1739.85 1615.84 1383.19 1690.54 1693.91 1594.55 1517.69 1496.22

Gross Sales 2152.78 1861.05 1726.39 1601.85 1378.33 1674.56 1682.46 1583.53 1508.81 1480.73

Net Sales 1972.51 1711.32 1587.02 1478.57 1254.34 1525.83 1554.91 1459.14 1394.99 1386.12

EBIDTA (#) 202.48 184.59 170.27 156.67 -43.57 35.35 165.02 135.07 149.40 166.21

PBT 124.81 89.52 37.20 6.88 -72.91 -146.32 24.12 20.62 30.76 80.04

PAT 114.78 70.83 28.17 4.13 -73.16 -146.57 23.12 21.52 30.76 64.04

Dividend % 70 70 - - - - 25 25 25 50

Dividend Pay-out Rs.Crs. 36.66 36.66 - - - - 13.05 13.05 12.55 22.16

Gross Block (Incl. Capital WIP) 818.02 801.22 791.96 773.44 768.88 770.04 712.12 648.81 543.99 445.62

Net Block (Incl. Capital WIP) 351.50 368.46 393.93 415.69 450.65 479.02 475.01 455.02 388.05 321.45

Investments 68.21 69.93 73.96 94.86 119.57 116.57 111.26 100.07 79.36 73.19

Net Current Assets, Loans & Advances @ 303.60 246.01 282.52 298.22 323.20 620.98 696.65 651.14 574.78 437.73

Net Assets Employed 723.31 684.40 750.41 808.77 893.42 1216.57 1282.92 1206.23 1042.19 832.37

Borrowings @ 314.54 333.65 459.22 570.71 627.32 851.01 734.62 648.53 474.29 435.93

Share Capital 52.37 52.37 52.37 52.37 52.37 52.37 52.15 52.15 52.03 45.39

Reserves & Surplus 356.40 288.11 403.14 403.80 410.33 410.96 522.01 518.69 529.81 366.34

Profit and Loss Account 0.00 0.00 -13.49 -38.90 -137.87 -62.77 0.00 0.00 0.00 0.00

Shareholders' Funds 408.77 340.48 442.02 417.27 324.83 400.56 574.16 570.84 581.84 411.73

Tangible Net Worth (# #) @ 408.77 340.48 291.19 238.06 266.10 365.56 548.30 557.70 567.90 396.44

Book Value Per Share Rs. 78.06 65.02 55.61 45.46 50.81 69.81 105.15 106.93 109.13 87.33

Earnings Per Share Rs. 21.92 13.52 5.38 0.79 -13.97 -27.99 4.43 4.13 5.91 14.11

Cash Earnings Per Share Rs. 29.96 25.99 21.35 14.98 -0.78 -14.82 16.29 13.38 13.79 20.41

Current Ratio 1.52:1 1.38:1 1.49:1 1.54:1 1.62:1 2.04:1 2.47:1 2.37:1 2.23:1 1.93:1

Debt Equity Ratio 0.77:1 0.98:1 1.58:1 2.40:1 2.36:1 2.33:1 1.34:1 1.16:1 0.84:1 1.10:1

EBIDTA / Net Sales % 10.27 10.79 10.73 10.60 -3.47 2.32 10.61 9.26 10.71 11.99

Return On Tangible Net Worth % 28.08 20.80 9.67 1.73 -27.49 -40.09 4.22 3.86 5.42 16.15

Fixed Assets Turnover Ratio Times 5.61 4.64 4.03 3.56 2.78 3.19 3.27 3.21 3.59 4.31

Unit 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996

EARNINGS

WHAT THE COMPANY OWNED

WHAT THE COMPANY OWED

NET WORTH OF THE COMPANY

RATIOS

Year Ended 31st March,

(Rs. Crores)


We have audited the attached Balance Sheet of CROMPTON GREAVES LIMITED, as at

31st March 2005, the Profit and Loss Account and also the Cash Flow Statement for the

year ended on that date annexed thereto. These financial statements are the responsibility

of the Company's management. Our responsibility is to express an opinion on these

financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted

in India. Those Standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audit provides a reasonable

basis for our opinion.

In accordance with the provisions of section 227 of the Companies Act 1956, we

report that:

1. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central

Government of India in terms of sub-section (4A) of section 227 of the Companies Act,

1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4

and 5 of the said Order.

2. Further to our comments in the annexure referred to above, we report that:

(a) We have obtained all the information and explanations, which to the best of our

knowledge and belief were necessary for the purposes of our audit ;

(b) In our opinion, proper books of account as required by law have been kept by the

Company so far as appears from our examination of those books ;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by

this report are in agreement with the books of account ;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement

dealt with by this report comply with the accounting standards referred to in sub-

section (3C) of section 211 of the Companies Act, 1956 ;

To the Shareholders of Crompton Greaves Limited

Auditor's Report

61


(e) On the basis of the written representations received from the Directors, as on

31st March, 2005 and taken on record by the Board of Directors, we report that none

of the Directors is disqualified as on 31st March, 2005 from being appointed as a

Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies

Act, 1956;

(f)No provision has been made in the accounts in respect of (See Note No.1 of

Schedule B)

(i) Excise demands (net after income tax saving Rs. 4.16 crores) 4.51

(ii) Sales tax demands (net after income tax saving Rs. 2.13 crores) 2.31

We report that, had the observations made by us in item (f) above been considered, the

Profit Before Tax for the year would have been Rs. 125.11crores (as against the reported

figure of Rs. 124.81crores), credit balance in the Profit and Loss Account would have

been Rs.62.85 crores (as against the reported figure of Rs.69.67 crores), the Current

Liabilities and Provisions would have been Rs.594.05 crores (as against the reported

figure of Rs.587.23 crores).

Subject to the foregoing, in our opinion and to the best of our information and according

to the explanations given to us, the said accounts, read together with the Significant

Accounting Policies as per Schedule A and Notes On Accounts appearing in Schedule B,

give the information required by the Companies Act, 1956, in the manner so required and

give a true and fair view in conformity with the accounting principles generally accepted

in India :

(a) In the case of the Balance Sheet, of the state of affairs of the company as at

31st March, 2005;

(b) In the case of the Profit and Loss Account, of the profit for the year ended on that

date; and

(c) In the case of the cash flow statement, of the cash flows for the year ended on

that date.

Mumbai, May 23, 2005

For Sharp & Tannan

L. Vaidyanathan


Partner

Membership No: 16368

(Rs. Crores)


(i) (a) The Company is maintaining proper records to show full particulars includingquantitative details and situation of all fixed assets.

(b) As explained to us, the assets have been physically verified by the management inaccordance with a phased programme of verification, which in our opinion, isreasonable, considering the size and nature of its business. The frequency ofverification is reasonable and no material discrepancies have been noticed onsuch physical verification.

(c) During the year, the Company has not disposed off major part of the fixed assets.According to the information and explanation given to us, we are of the opinionthat the sale of the said part of assets has not affected the going concern status ofthe Company.

(ii) (a) As explained to us, inventory has been physically verified by the management atreasonable intervals during the year. In our opinion, the frequency of suchverification is reasonable.

(b) The procedures of physical verification of inventories followed by themanagement are, in our opinion, reasonable and adequate in relation to the sizeof the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepanciesnoticed on verification between the physical stocks and the book records whichwere not material, have been properly dealt with in the books of account.

(iii) (a) The Company had granted unsecured loans to two other companies coveredin the register maintained under section 301 of the Companies Act, 1956. Themaximum amount involved during the year was Rs.10.74 crores and the year-endbalance of loans granted to such parties was Rs.4.10 crores.

(b) In our opinion, the rate of interest and other terms and conditions of loans given bythe Company are not, prejudicial to the interest of the Company; and

(c) The parties have repaid the principal amounts as stipulated and have beenregular in the payment of interest; and

(d) There is no overdue amount of loans granted to companies, firms or other partieslisted in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company has taken an unsecured loan, from a company, covered in theregister maintained under section 301 of the Company Act, 1956. The maximumamount involved during the year was Rs.2.75 crores and the year-end balance ofthe loan taken from such party was Rs.2.75 crores.

(f) In our opinion, the rate of interest and other terms and conditions of loans taken bythe Company are not, prejudicial to the interest of the Company; and

(g) The Company is regular in repaying the principal amounts as stipulated and hasbeen regular in the payment of interest.

(iv) In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of theCompany and the nature of its business, for the purchase of inventory and fixed

prima facie

prima facie

Annexure to Auditor's Report

63

Referred to in paragraph 1 of our Report of even date


assets and for the sale of goods and services. During the course of our audit, wehave not observed any continuing failure to correct major weaknesses in internalcontrol system.

(v) (a) According to the information and explanations given to us, we are of the opinionthat particulars of contracts and arrangements that need to be entered into theregister maintained under section 301 of the Companies Act, 1956 have been soentered.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in theregister maintained under section 301 of the Companies Act, 1956 have beenmade at prices which are reasonable having regard to prevailing market prices atthe relevant time.

(vi) In our opinion and according to the information and explanations given to us, theCompany has complied with the provisions of sections 58A and 58AA or any otherrelevant provisions of the Companies Act, 1956 and rules framed thereunder withregard to deposits accepted from the public. We have been informed by theCompany that no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) In our opinion, the Company has an internal audit system commensurate with the sizeand nature of its business.

(viii) In our opinion and according to the information and explanations given to us, theCompany is maintaining accounts and records as prescribed by the CentralGovernment under Section 209(1)(d) of the Companies Act, 1956 in respect ofelectric fans, motors, power driven pumps, transformers and electric lamps and weare of the opinion that the prescribed accounts and records have beenmade and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund, investor education and protection fund,employees' state insurance, income tax, sales tax, wealth tax, service tax customduty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputedamounts payable in respect of income tax, sales tax, wealth tax, service tax,customs duty, excise duty and cess were in arrears, as at 31st March 2005 for aperiod of more than six months from the date they became payable.

(c) According to the information and explanations given to us, the dues of sales tax,income tax, customs duty, wealth tax, service tax, excise duty and cess whichhave not been deposited on account of disputes and the forum where the disputeis pending are as under :

prima facie

Sr. Name of Nature of Disputed Amount Forum where theNo. The Statute the Dues (Net of Dispute is

1 The Central Excise Duty/ 10.34 Commissioner(A)

2 The Income Income Tax 1.49 Income Tax

3 Sales Tax Acts Sales Tax 2.31

Payments made) pending

Excise Act, 1944 Service Tax and CEGATDemands

Tax Act, 1961 and Interest Appellate Tribunal

Dues Tribunal andand Interest Dy. Commissioner

Appeals

(Rs. Crores)

(x) The Company does not have accumulated losses and has not incurred cash lossesin the current financial year covered by our audit and the immediately precedingfinancial year.

(xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to a financial institution, bank ordebenture holders.

(xii) During the year, the Company has not granted loans and advances on the basis ofsecurity by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society.Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order,2003 are not applicable to the Company.

(xiv) According to the information and explanations given by the management, theCompany is not dealing in or trading in shares, securities, debentures and otherinvestments except for investment in Mutual Funds. The Company has maintainedproper records and timely entries have been made. The investments are held in thename of the Company.

(xv) In our opinion, the terms and conditions on which the Company has given guaranteesfor loans taken by others from banks or financial institutions are not prejudicial to theinterest of the Company.

(xvi) In our opinion, the term loans have been applied for the purpose for which theywere raised.

(xvii) According to the information and explanations given to us and on an overallexamination of the Balance Sheet of the Company, we report that no funds raised onshort-term basis have been used for long-term investment.

(xviii) The Company has not made preferential allotment of shares to parties andcompanies covered in the register maintained under section 301 of the CompaniesAct, 1956 during the year.

(xix) During the financial year, the Company did not issue any debentures. Hence theprovisions of Clause 4(xix) of the Companies (Auditor's Report) Order, 2003regarding creation of security or charge for debentures are not presently applicableto the Company.

(xx) The Company has not raised any money by way of public issues during the year.Accordingly, the provisions of Clause 4(xx) of the Companies (Auditor's Report)Order, 2003 on the end use of money are not presently applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by theCompany has been noticed or reported during the course of our audit.

Mumbai, May 23, 2005.

SHARP & TANNAN

L. Vaidyanathan

ForChartered Accountants

PartnerMembership No.16368


65

66 CEP 1 D:\SALES\JOE REGO\CROMPT ON AR-05/CROMPTON MAIN-05.PMD --- SBC/10-6/kvf/1 1-6/SBC/21-6/

As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

ScheduleScheduleScheduleScheduleSchedule Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

SOURCES OF FUNDSSOURCES OF FUNDSSOURCES OF FUNDSSOURCES OF FUNDSSOURCES OF FUNDSShareholders’ FundsCapital 11111 52.3752.3752.3752.3752.37 52.37Reserves and Surplus 22222 356.40356.40356.40356.40356.40 288.11

408.77408.77408.77408.77408.77 340.48Loan FundsSecured Loans 33333 248.82248.82248.82248.82248.82 253.73Unsecured Loans 44444 65.7265.7265.7265.7265.72 79.92

314.54314.54314.54314.54314.54 333.65

Deferred Tax Liability 55555 0.000.000.000.000.00 10.27

723.31723.31723.31723.31723.31 684.40

APPLICAAPPLICAAPPLICAAPPLICAAPPLICATION OF FUNDSTION OF FUNDSTION OF FUNDSTION OF FUNDSTION OF FUNDSFixed AssetsGross Block 66666 808.56808.56808.56808.56808.56 790.35Less : Depreciation and Impairment 466.52466.52466.52466.52466.52 432.76

Net Block 342.04342.04342.04342.04342.04 357.59Capital Work-in-Progress (Net of Impairment) 9.469.469.469.469.46 10.87

351.50351.50351.50351.50351.50 368.46Investments 77777 68.2168.2168.2168.2168.21 69.93Current Assets, Loans & AdvancesInventories 88888 177.09177.09177.09177.09177.09 174.26Sundry Debtors 99999 541.08541.08541.08541.08541.08 526.85Cash and Bank Balances 1010101010 73.4273.4273.4273.4273.42 76.15Loans and Advances 1111111111 99.2499.2499.2499.2499.24 117.00

890.83890.83890.83890.83890.83 894.26

Less: Current Liabilities & ProvisionsLiabilities 1212121212 571.56571.56571.56571.56571.56 610.39Provisions 1313131313 15.6715.6715.6715.6715.67 37.86

587.23587.23587.23587.23587.23 648.25

Net Current Assets 303.60303.60303.60303.60303.60 246.01

723.31723.31723.31723.31723.31 684.40

Significant Accounting Policies [A][A][A][A][A]

Notes on Accounts [B][B][B][B][B]

The Schedules referred to above and the notesattached, form an integral part of the Accounts

Mumbai, 23rd May, 2005 Mumbai, 23rd May, 2005

As per our report attached.SHARP & TSHARP & TSHARP & TSHARP & TSHARP & TANNANANNANANNANANNANANNAN B. R. JajuB. R. JajuB. R. JajuB. R. JajuB. R. Jaju S. M. TS. M. TS. M. TS. M. TS. M. TrehanrehanrehanrehanrehanChartered Accountants Chief Financial Officer Managing Director

LLLLL. V. V. V. V. Vaidyanathanaidyanathanaidyanathanaidyanathanaidyanathan WWWWW. Henriques. Henriques. Henriques. Henriques. Henriques G.ThaparG.ThaparG.ThaparG.ThaparG.ThaparPartner Secretary ChairmanMembership no 16368

as at 31st March, 2005

Balance Sheet


67

2004-052004-052004-052004-052004-05 2003-04ScheduleScheduleScheduleScheduleSchedule Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

INCOMEINCOMEINCOMEINCOMEINCOMEGross Sales 2152.782152.782152.782152.782152.78 1861.05Less: Excise Duty 180.27180.27180.27180.27180.27 149.73

Net Sales 1972.511972.511972.511972.511972.51 1711.32Other Income 1414141414 26.8926.8926.8926.8926.89 27.02

1999.401999.401999.401999.401999.40 1738.34

EXPENDITUREEXPENDITUREEXPENDITUREEXPENDITUREEXPENDITUREMaterials 1515151515 1369.761369.761369.761369.761369.76 1206.11Staff and Welfare 1616161616 142.32142.32142.32142.32142.32 136.40Manufacturing, Selling and Administration 1717171717 284.84284.84284.84284.84284.84 211.24Interest and Commitment Charges 23.0823.0823.0823.0823.08 38.48Depreciation 42.0042.0042.0042.0042.00 44.13Amortisation of Intangible Assets 0.090.090.090.090.09 0.09Miscellaneous Expenditure Amortised / Charged 12.0812.0812.0812.0812.08 18.20

1874.171874.171874.171874.171874.17 1654.65

Profit Before Exceptional Items and TProfit Before Exceptional Items and TProfit Before Exceptional Items and TProfit Before Exceptional Items and TProfit Before Exceptional Items and Taxaxaxaxax 125.23125.23125.23125.23125.23 83.69Exceptional Items (Net) (Refer Note 28) -0.42-0.42-0.42-0.42-0.42 5.83

Profit Before TProfit Before TProfit Before TProfit Before TProfit Before Taxaxaxaxax 124.81124.81124.81124.81124.81 89.52Provision for :Current Tax -10.03-10.03-10.03-10.03-10.03 -6.76Deferred Tax (Refer Note 29) 55555 0.000.000.000.000.00 -11.93

Profit After TProfit After TProfit After TProfit After TProfit After Taxaxaxaxax 114.78114.78114.78114.78114.78 70.83Brought Forward Profit from Previous Year 12.0912.0912.0912.0912.09 -13.49Transferred from Securities Premium Account 0.000.000.000.000.00 8.27Transfer (to) / from General Reserve -11.48-11.48-11.48-11.48-11.48 -7.08Transfer to Doubtful Debts Reserve -2.80-2.80-2.80-2.80-2.80 -5.09Interim Dividend -36.66-36.66-36.66-36.66-36.66 -15.71Final Dividend 0.000.000.000.000.00 -20.95Corporate Tax On Dividend -4.84-4.84-4.84-4.84-4.84 -4.69

Balance Carried TBalance Carried TBalance Carried TBalance Carried TBalance Carried To Balance Sheeto Balance Sheeto Balance Sheeto Balance Sheeto Balance Sheet 71.0971.0971.0971.0971.09 12.09

Earning Per Share (Basic and Diluted)- Excluding Exceptional Items Rs.Rs.Rs.Rs.Rs. 22.0022.0022.0022.0022.00 12.41- Including Exceptional Items Rs.Rs.Rs.Rs.Rs. 21.9221.9221.9221.9221.92 13.52

Significant Accounting PSignificant Accounting PSignificant Accounting PSignificant Accounting PSignificant Accounting Policiesoliciesoliciesoliciesolicies [A][A][A][A][A]Notes On AccountsNotes On AccountsNotes On AccountsNotes On AccountsNotes On Accounts [B][B][B][B][B]

The Schedules referred to above and the notesattached, form an integral part of the Accounts




for the year ended 31st March, 2005

Profit & Loss Account


SCHEDULE 1: CAPITSCHEDULE 1: CAPITSCHEDULE 1: CAPITSCHEDULE 1: CAPITSCHEDULE 1: CAPITALALALALAL As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

AuthorisedAuthorisedAuthorisedAuthorisedAuthorised6,00,00,000 Equity Shares of Rs.10 each 60.0060.0060.0060.0060.00 60.00

Issued And SubscribedIssued And SubscribedIssued And SubscribedIssued And SubscribedIssued And Subscribed5,23,75,116 Equity Shares of Rs.10 each 52.3752.3752.3752.3752.37 52.37

Paid Up5,23,66,656 Equity Shares of Rs.10 each 52.3752.3752.3752.3752.37 52.37

Add: Forfeited Shares8,460 Equity Shares of Rs.10 each 0.000.000.000.000.00 0.00

Rs.32175 partly paid

52.3752.3752.3752.3752.37 52.37

Of the above, following equity shares were allotted:3,87,200 pursuant to a contract without

payment being received in cash1,62,00,000 as fully paid up Bonus Shares by

capitalisation of General Reserve and SecuritiesPremium Account

14,76,566 as fully paid up pursuant to schemes of amalgamation66,13,750 as underlying shares to an international

offering of Global Depository Receipts(GDRs) in US Dollars

SCHEDULE 2 : RESERVES & SURPLSCHEDULE 2 : RESERVES & SURPLSCHEDULE 2 : RESERVES & SURPLSCHEDULE 2 : RESERVES & SURPLSCHEDULE 2 : RESERVES & SURPLUSUSUSUSUS As at AdditionsAdditionsAdditionsAdditionsAdditions DeductionsDeductionsDeductionsDeductionsDeductions As atAs atAs atAs atAs at31-03-2004 31-03-200531-03-200531-03-200531-03-200531-03-2005Rs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores

Capital Reserve 19.12 0.000.000.000.000.00 0.000.000.000.000.00 19.1219.1219.1219.1219.12Securities Premium Account 227.76 0.000.000.000.000.00 0.000.000.000.000.00 227.76227.76227.76227.76227.76General Reserve 10.74 23.15 (a)23.15 (a)23.15 (a)23.15 (a)23.15 (a) 10.7410.7410.7410.7410.74 (a)(a)(a)(a)(a) 23.1523.1523.1523.1523.15Revaluation Reserve 15.99 0.000.000.000.000.00 0.300.300.300.300.30 (b)(b)(b)(b)(b) 15.6915.6915.6915.6915.69Government Subsidy 0.25 0.000.000.000.000.00 0.000.000.000.000.00 0.250.250.250.250.25Investment Allowance (Utilised) Reserve 0.72 0.000.000.000.000.00 0.000.000.000.000.00 0.720.720.720.720.72Debenture Redemption Reserve 1.40 0.000.000.000.000.00 1.401.401.401.401.40 0.000.000.000.000.00Doubtful Debts Reserve 29.09 2.802.802.802.802.80 0.000.000.000.000.00 31.8931.8931.8931.8931.89Less:Doubtful Debts per contra -29.05 -2.80-2.80-2.80-2.80-2.80 0.000.000.000.000.00 -31.85-31.85-31.85-31.85-31.85

276.02 23.1523.1523.1523.1523.15 12.4412.4412.4412.4412.44 286.73286.73286.73286.73286.73Surplus in Profit & Loss Account 12.09 59.0059.0059.0059.0059.00 1.421.421.421.421.42 (c)(c)(c)(c)(c) 69.6769.6769.6769.6769.67

Total 288.11 82.1582.1582.1582.1582.15 13.8613.8613.8613.8613.86 356.40356.40356.40356.40356.40

Previous year 389.65 55.5955.5955.5955.5955.59 157.13157.13157.13157.13157.13 288.11288.11288.11288.11288.11

Notes:(a) The additions to General Reserves represents Rs 11.48 crores transferred from

Profit & Loss Account in compliance with provisions of Companies (Transfer ofProfit to Reserves) Rules, 1975 read with section 205 (2A) / Rule 2 (iv) of CompaniesAct, 1956, Rs 1.40 crores represents the amount transferred from DebentureRedemption Reserve and Rs 10.27 crores represents the amount transferred fromDeferred Tax Liability, since no longer required. The deduction of Rs 10.74 croresrepresents impairment loss to the extent of opening balance of General Reserve.

(b) Depreciation on revalued fixed assets, recouped from Revaluation ReserveRs 0.28 crores and Revaluation Reserve written back Rs 0.02 crores on assetsdisposed off. Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores

(c) Balance Carried from Profit and Loss Account 71.0971.0971.0971.0971.09Less: Adjusted on account of Impairment Loss(Net) from Opening Balance of

Profit and Loss Account (Refer Note 34 ) 1.421.421.421.421.42

69.6769.6769.6769.6769.67

Schedules forming Part of Balance Sheet


69


SCHEDULE 3: SECURED LSCHEDULE 3: SECURED LSCHEDULE 3: SECURED LSCHEDULE 3: SECURED LSCHEDULE 3: SECURED LOANSOANSOANSOANSOANS As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Debentures:Debentures:Debentures:Debentures:Debentures:(Privately placed with Financial Institutions)13.50% Secured Non-Convertible Debentures of Rs.100 each50,00,000 (VIII Series) redeemable in 18 equalquarterly instalments due from 15th June, 2000 0.000.000.000.000.00 5.55Rupee TRupee TRupee TRupee TRupee Term Loanserm Loanserm Loanserm Loanserm Loans

(a) From Banks 41.7541.7541.7541.7541.75 56.75(b) From Financial Institutions 55.0055.0055.0055.0055.00 12.50

FFFFForeign Currency Toreign Currency Toreign Currency Toreign Currency Toreign Currency Term Loanerm Loanerm Loanerm Loanerm LoanFrom Banks 43.9643.9643.9643.9643.96 0.00

Cash Credit / WCash Credit / WCash Credit / WCash Credit / WCash Credit / Working Capital Demand Loansorking Capital Demand Loansorking Capital Demand Loansorking Capital Demand Loansorking Capital Demand LoansFrom Banks:-

Foreign Currency Loans 108.11108.11108.11108.11108.11 178.93

248.82248.82248.82248.82248.82 253.73

SCHEDULE 4: UNSECURED LSCHEDULE 4: UNSECURED LSCHEDULE 4: UNSECURED LSCHEDULE 4: UNSECURED LSCHEDULE 4: UNSECURED LOANSOANSOANSOANSOANS As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Fixed DepositsFixed DepositsFixed DepositsFixed DepositsFixed Deposits 36.3136.3136.3136.3136.31 51.70(Repayable within a year: Rs. 36.31 crores Previous year Rs.14.79 crores)InterInterInterInterInter-corporate Deposits-corporate Deposits-corporate Deposits-corporate Deposits-corporate DepositsFrom Others 2.752.752.752.752.75 2.75(Maximum amount outstanding at any time during the year Rs.2.75 crores;Previous year Rs.2.75 crores)OthersOthersOthersOthersOthersInterest free Sales Tax Loans and Special Incentive Loans from Central /State Governments 26.6626.6626.6626.6626.66 25.47

65.7265.7265.7265.7265.72 79.92

SCHEDULE 5: DEFERRED TSCHEDULE 5: DEFERRED TSCHEDULE 5: DEFERRED TSCHEDULE 5: DEFERRED TSCHEDULE 5: DEFERRED TAX ASAX ASAX ASAX ASAX ASSET / LIABILITY (–)SET / LIABILITY (–)SET / LIABILITY (–)SET / LIABILITY (–)SET / LIABILITY (–) As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Deferred tax asset / liability (-) -10.27-10.27-10.27-10.27-10.27 81.12Less: Adjusted against Securities Premium Account 0.000.000.000.000.00 79.46Less: Incremental liability charged to Profit & Loss Account 0.000.000.000.000.00 11.93Transferred to General Reserve 10.2710.2710.2710.2710.27 0.00

0.000.000.000.000.00 -10.27



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71


SCHEDULE 7: INVESTMENTSSCHEDULE 7: INVESTMENTSSCHEDULE 7: INVESTMENTSSCHEDULE 7: INVESTMENTSSCHEDULE 7: INVESTMENTS No. of Shares/ As atAs atAs atAs atAs at As atDebentures/Units 31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

Fully paid up ofRs.10 each unless

otherwise specified Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

LLLLLONG TERM (At Cost)ONG TERM (At Cost)ONG TERM (At Cost)ONG TERM (At Cost)ONG TERM (At Cost)

Government and TGovernment and TGovernment and TGovernment and TGovernment and Trust Securitiesrust Securitiesrust Securitiesrust Securitiesrust Securities

1 Central Government Securities10.18% GOI 2026 of Rs. 100 each 39000 0.490.490.490.490.49 0.49

2 State Government Guaranteed Bonds10.50% APSDL 2011 of Rs. 100 each 22000 0.250.250.250.250.25 0.25

3 US 64 Bonds of Rs. 100 each 167210 1.811.811.811.811.81 1.81(On Conversion of US 64 Units)

2.552.552.552.552.55 2.55

TTTTTrade Investmentsrade Investmentsrade Investmentsrade Investmentsrade Investments

Subsidiary companiesSubsidiary companiesSubsidiary companiesSubsidiary companiesSubsidiary companies

1 (a) CG Capital & Investments Limited 9500000 9.509.509.509.509.50 9.50

(b) CG Capital & Investments Limited(7% Non-Convertible, Non-CumulativeRedeemable Preference Shares) 43928044 43.9343.9343.9343.9343.93 43.93

2 CG Motors Pvt. Ltd. 1600000 0.740.740.740.740.74 0.00(Formerly Hitachi CG Motor Engineering Pvt. Ltd)

54.1754.1754.1754.1754.17 53.43

Joint VJoint VJoint VJoint VJoint Venturesenturesenturesenturesentures

1 Brook Crompton Greaves Limited 7840000 7.847.847.847.847.84 7.84(Formerly CG Brook Hansen Electric Motors Limited)

2 CG Lucy Switchgear Limited 599993 0.600.600.600.600.60 0.60

3 CG Maersk Information Technologies Private Limited 131803 0.160.160.160.160.16 0.16

4 CG Smith Software Pvt. Limited 9600 0.010.010.010.010.01 0.01

5 Hitachi CG Motor Engineering Pvt. Ltd 0 0.000.000.000.000.00 0.78(Previous Year - 784000 Shares)

6 International Components India Limited 85500 0.090.090.090.090.09 0.09

7 PAXONET Communications INC.USA 0 0.000.000.000.000.00 1.08of US $ 0.10 each (Formerly Core El Microsystems Inc.USA)(Previous Year - 3000000 Shares)

8 Power Equipment Limited 20600 0.000.000.000.000.00 0.00of US $ 10 each (Current Year - Rs 10)

8.708.708.708.708.70 10.56

Associate CompaniesAssociate CompaniesAssociate CompaniesAssociate CompaniesAssociate Companies

1 Radiant Electronics Ltd 190000 0.000.000.000.000.00 0.00(Current Year - Rs 10; Previous Year - Rs 10)

0.000.000.000.000.00 0.00



SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS (Contd.) No. of Shares/ As atAs atAs atAs atAs at As atDebentures/Units 31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

Fully paid up ofRs.10 each unless

otherwise specified Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresOthersOthersOthersOthersOthers

1 CG CoreEl Logic Systems Limited 1810000 1.811.811.811.811.81 1.81(7% Non-Convertible, Non-CumulativeRedeemable Preference Shares)

2 English Indian Clays Limited 0 0.000.000.000.000.00 0.60(Previous Year - 120000 Shares)

3 Kale Consultants Limited 4200 0.000.000.000.000.00 0.00(Current year Rs.6,000; Previous year Rs.6000)

4 Nicco Corporation Limited * 66078 0.030.030.030.030.03 0.03

1.841.841.841.841.84 2.44

Other InvestmentsOther InvestmentsOther InvestmentsOther InvestmentsOther Investments

1 Dinette Exclusive Club Private Limited 5500 0.060.060.060.060.06 0.06(Share of Rs.100 each)

2 IDBI Limited 142720 0.830.830.830.830.83 0.83(Including 53520 Bonus Shares)

3 UTI Unit Scheme 2002 88215 0.060.060.060.060.06 0.060.950.950.950.950.95 0.95

TTTTTotalotalotalotalotal 68.2168.2168.2168.2168.21 69.93

31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

Book VBook VBook VBook VBook Valuealuealuealuealue Market VMarket VMarket VMarket VMarket Valuealuealuealuealue Book Value Market Value

Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores Rs. Crores

Quoted Investments 3.423.423.423.423.42 3.913.913.913.913.91 4.02 5.41

Unquoted Investments 64.7964.7964.7964.7964.79 0.000.000.000.000.00 65.91 0.00

TTTTTotalotalotalotalotal 68.2168.2168.2168.2168.21 ————— 69.93 —

* Diminution provided Rs 0.42 crores during financial year ending 31.03.05 in the value of Investment as per AS-13


73

SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS SCHEDULE 7: INVESTMENTS (Contd.)1 SHARES/SECURITIES PURCHASED DURING THE YEAR 2004-052004-052004-052004-052004-05 2004-052004-052004-052004-052004-05 2003-04 2003-04

Nos.Nos.Nos.Nos.Nos. Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Nos. Rs. CroresUS 64 Bonds 00000 0.000.000.000.000.00 4210 0.04UTI Unit Scheme 2002 Units 00000 0.000.000.000.000.00 88215 0.06Hitachi CG Motor Engineering Pvt. Ltd 816000816000816000816000816000 0.380.380.380.380.38 0 0.00C 52 Chola Liquid Fund - Cumulative 00000 0.000.000.000.000.00 15292665 19.00C 152 Chola Liquid Inst. Plus Cumulative 2407472324074723240747232407472324074723 31.0031.0031.0031.0031.00 4302488 5.50Deutsche Bank Monthly Fund 00000 0.000.000.000.000.00 3000000 3.00IL & FS Liquid Account - Institutional Plan 00000 0.000.000.000.000.00 19464739 22.50J 13 JM High Liquidity Fund Growth Plan 00000 0.000.000.000.000.00 19573644 33.00J 57 JM High Liquidity Fund 4645936207549146459362075491464593620754914645936207549146459362075491 260.55260.55260.55260.55260.55 263918657 273.06Institutional Plan - GrowthNLFG CANLIQUID Fund - Growth 00000 0.000.000.000.000.00 7156723 7.99GCFG Grindlays Cash Fund - Growth 00000 0.000.000.000.000.00 4781199 5.50Reliance Monthly Fund 00000 0.000.000.000.000.00 10000000 10.00Tata Mutual Fund 1463518620114635186201146351862011463518620114635186201 83.2683.2683.2683.2683.26 0 0.00Prudential ICICI Bank Mutual Fund 32323748123232374812323237481232323748123232374812 12.0012.0012.0012.0012.00 0 0.00Standard Chartered Bank-Mutual Fund 88306800658830680065883068006588306800658830680065 10.5010.5010.5010.5010.50 0 0.00Reliance Mutual Fund 65089066226508906622650890662265089066226508906622 7.507.507.507.507.50 0 0.00Reliance Liquid Fund - Daily Cash Plan 89781110468978111046897811104689781110468978111046 10.0010.0010.0010.0010.00 0 0.00J 74 JM High Liquidity Fund 2812133778128121337781281213377812812133778128121337781 30.0030.0030.0030.0030.00 0 0.00Super Institutional Plan - GrowthJ 94 JM High Liquidity Fund 8046700798980467007989804670079898046700798980467007989 82.0182.0182.0182.0182.01 0 0.00Super Institutional Plan - GrowthCan Bank Mutual Fund 11039258463471103925846347110392584634711039258463471103925846347 131.52131.52131.52131.52131.52 0 0.00HDFC Mutual Fund - Savings Plan Growth 62693804156269380415626938041562693804156269380415 8.508.508.508.508.50 0 0.00HDFC Mutual Fund - Dividend Reinvestment 1410386827914103868279141038682791410386827914103868279 15.0015.0015.0015.0015.00 0 0.00HDFC Mutual Fund - Dividend 99967819879996781987999678198799967819879996781987 10.0010.0010.0010.0010.00 0 0.00HDFC Mutual Fund - Premium Plan Dividend 41486893014148689301414868930141486893014148689301 5.005.005.005.005.00 0 0.00Principal Mutual Fund 50001319565000131956500013195650001319565000131956 5.005.005.005.005.00 0 0.00Birla Sun Life Mutual Fund 9096607300890966073008909660730089096607300890966073008 99.0099.0099.0099.0099.00 0 0.00

801.22801.22801.22801.22801.22 379.66

2 SHARES/SECURITIES SOLD/ 31-3-200531-3-200531-3-200531-3-200531-3-2005 31-3-200531-3-200531-3-200531-3-200531-3-2005 31-3-2004 31-3-2004DISPOSED DURING THE YEAR Nos.Nos.Nos.Nos.Nos. Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Nos. Rs. CroresBallarpur Industries Limited 00000 0.000.000.000.000.00 1119459 4.05English India Clay Limited 120000120000120000120000120000 0.600.600.600.600.60 0 0.00PAXONET Communications INC.USA of US $ 0.10 each 30000003000000300000030000003000000 1.081.081.081.081.08 0 0.00 (Formerly Core El Microsystems Inc.USA)C 52 Chola Liquid Fund - Cumulative 00000 0.000.000.000.000.00 15292665 19.00C 152 Chola Liquid Inst. Plus Cumulative 2407472324074723240747232407472324074723 31.0031.0031.0031.0031.00 4302488 5.50Deutsche Bank Monthly Fund 00000 0.000.000.000.000.00 3000000 3.00IL & FS Liquid Account - Institutional Plan 00000 0.000.000.000.000.00 19464739 22.50J 13 JM High Liquidity Fund Growth Plan 00000 0.000.000.000.000.00 19573644 33.00J 57 JM High Liquidity Fund 4645936207549146459362075491464593620754914645936207549146459362075491 260.55260.55260.55260.55260.55 263918657 273.06Institutional Plan - GrowthNLFG CANLIQUID Fund - Growth 00000 0.000.000.000.000.00 7156723 7.99GCFG Grindlays Cash Fund - Growth 00000 0.000.000.000.000.00 4781199 5.50Reliance Monthly Fund 00000 0.000.000.000.000.00 10000000 10.00Tata Mutual Fund 1463518620114635186201146351862011463518620114635186201 83.2683.2683.2683.2683.26 0 0Prudential ICICI Bank Mutual Fund 32323748123232374812323237481232323748123232374812 12.0012.0012.0012.0012.00 0 0Standard Chartered Bank-Mutual Fund 88306800658830680065883068006588306800658830680065 10.5010.5010.5010.5010.50 0 0Reliance Mutual Fund 65089066226508906622650890662265089066226508906622 7.507.507.507.507.50 0 0Reliance Liquid Fund - Daily Cash Plan 89781110468978111046897811104689781110468978111046 10.0010.0010.0010.0010.00 0 0J 74 JM High Liquidity Fund 2812133778128121337781281213377812812133778128121337781 30.0030.0030.0030.0030.00 0 0Super Institutional Plan - GrowthJ 94 JM High Liquidity Fund 7183269054671832690546718326905467183269054671832690546 73.0173.0173.0173.0173.01 0 0Super Institutional Plan - GrowthCan Bank Mutual Fund 11039258463471103925846347110392584634711039258463471103925846347 131.52131.52131.52131.52131.52 0 0HDFC Mutual Fund - Savings Plan Growth 62693804156269380415626938041562693804156269380415 8.508.508.508.508.50 0 0HDFC Mutual Fund - Dividend Reinvestment 1410386827914103868279141038682791410386827914103868279 15.0015.0015.0015.0015.00 0 0HDFC Mutual Fund - Dividend 99967819879996781987999678198799967819879996781987 10.0010.0010.0010.0010.00 0 0HDFC Mutual Fund - Premium Plan Dividend 41486893014148689301414868930141486893014148689301 5.005.005.005.005.00 0 0Principal Mutual Fund 50001319565000131956500013195650001319565000131956 5.005.005.005.005.00 0 0Birla Sun Life Mutual Fund 9096607300890966073008909660730089096607300890966073008 99.0099.0099.0099.0099.00 0 0

793.52793.52793.52793.52793.52 383.60



SCHEDULE 8: INVENTORIESSCHEDULE 8: INVENTORIESSCHEDULE 8: INVENTORIESSCHEDULE 8: INVENTORIESSCHEDULE 8: INVENTORIES As atAs atAs atAs atAs at As at(At lower of Cost or Net Realisable Value) 31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Stores, spare parts and packing materials 2.722.722.722.722.72 3.31

Raw materials 51.7451.7451.7451.7451.74 49.33

Work-in-Process - Manufacturing 56.1156.1156.1156.1156.11 53.01

Finished goods 42.3042.3042.3042.3042.30 34.21

152.87152.87152.87152.87152.87 139.86Work-in-Progress - Contracts

At cost 15.5615.5615.5615.5615.56 10.98

At realisable sales value 94.3194.3194.3194.3194.31 143.31

Less: Progress payments 85.6585.6585.6585.6585.65 119.89

8.668.668.668.668.66 23.4224.2224.2224.2224.2224.22 34.40

177.09177.09177.09177.09177.09 174.26

SCHEDULE 9: SUNDRY DEBTORSSCHEDULE 9: SUNDRY DEBTORSSCHEDULE 9: SUNDRY DEBTORSSCHEDULE 9: SUNDRY DEBTORSSCHEDULE 9: SUNDRY DEBTORS As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Unsecured

Debts outstanding for a period exceeding six months

Considered good 126.89126.89126.89126.89126.89 155.16

Considered doubtful 31.8531.8531.8531.8531.85 29.05

Less: Doubtful debts reserve per contra -31.85-31.85-31.85-31.85-31.85 -29.05

0.000.000.000.000.00 0.00

Other Debts

Considered good 414.19414.19414.19414.19414.19 371.69

541.08541.08541.08541.08541.08 526.85

SCHEDULE 10: CASH AND BANK BALANCESSCHEDULE 10: CASH AND BANK BALANCESSCHEDULE 10: CASH AND BANK BALANCESSCHEDULE 10: CASH AND BANK BALANCESSCHEDULE 10: CASH AND BANK BALANCES As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Cash on hand * 9.149.149.149.149.14 0.68

Cash at Bank:

On Current Account 19.3419.3419.3419.3419.34 8.58

On Fixed Deposit Account 0.010.010.010.010.01 5.90

(including interest accrued thereon)

Remittances in transit 44.9344.9344.9344.9344.93 60.99

73.4273.4273.4273.4273.42 76.15

* Inclusive of Mutual Fund Investment 9.009.009.009.009.00 0.50



75


SCHEDULE 11: LSCHEDULE 11: LSCHEDULE 11: LSCHEDULE 11: LSCHEDULE 11: LOANS AND ADOANS AND ADOANS AND ADOANS AND ADOANS AND ADVVVVVANCESANCESANCESANCESANCES As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

(Unsecured, Considered Good,unless otherwise stated) Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Advances recoverable in cash or in kind or for value to be received 91.7591.7591.7591.7591.75 103.72

Advances to Subsidiaries 2.922.922.922.922.92 8.88

Balances with excise, customs etc. 4.574.574.574.574.57 4.40

99.2499.2499.2499.2499.24 117.00

SCHEDULE 12: CURRENT LIABILITIESSCHEDULE 12: CURRENT LIABILITIESSCHEDULE 12: CURRENT LIABILITIESSCHEDULE 12: CURRENT LIABILITIESSCHEDULE 12: CURRENT LIABILITIES As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004

Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Sundry Creditors:

(a) Due to Small Scale Industrial Undertaking(s) 86.4886.4886.4886.4886.48 81.45

(b) Due to Others 427.31427.31427.31427.31427.31 488.33

(c) Due to Subsidiaries 0.120.120.120.120.12 2.11

513.91513.91513.91513.91513.91 571.89

Investor Education and Protection Fund

(a) Unclaimed Dividend 0.410.410.410.410.41 0.23

(b) Unclaimed Matured Fixed Deposit 1.241.241.241.241.24 0.55

1.651.651.651.651.65 0.78

Interest accrued but not due on loans 0.370.370.370.370.37 1.32

Other Liabilities:

(a) Security Deposit 3.883.883.883.883.88 2.04

(b) Others 51.7551.7551.7551.7551.75 34.36

55.6355.6355.6355.6355.63 36.40

571.56571.56571.56571.56571.56 610.39

SCHEDULE 13: PROSCHEDULE 13: PROSCHEDULE 13: PROSCHEDULE 13: PROSCHEDULE 13: PROVISION FOR:VISION FOR:VISION FOR:VISION FOR:VISION FOR: As atAs atAs atAs atAs at As at31-03-200531-03-200531-03-200531-03-200531-03-2005 31-03-2004Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Gratuity 2.542.542.542.542.54 3.05

Leave encashment 8.488.488.488.488.48 6.65

Proposed Dividend 0.000.000.000.000.00 20.95

Corporate tax on Dividend 0.000.000.000.000.00 2.68

Provident Fund 0.890.890.890.890.89 0.86

Insurance, Pension and similar Staff benefits 3.763.763.763.763.76 3.67

15.6715.6715.6715.6715.67 37.86


Schedules forming Part of Profit & Loss Account

SCHEDULE 14: OTHER INCOMESCHEDULE 14: OTHER INCOMESCHEDULE 14: OTHER INCOMESCHEDULE 14: OTHER INCOMESCHEDULE 14: OTHER INCOME 2004-052004-052004-052004-052004-05 2003-04Rs CroresRs CroresRs CroresRs CroresRs Crores Rs Crores

Income from

a) Lease Rent 1.501.501.501.501.50 1.55

b) Business Service Centres 7.647.647.647.647.64 6.85

(TDS deducted Rs. 1.50 crores; Previous year Rs.0.16 crores) 9.149.149.149.149.14 8.40

Income from Investments (Net) 1.821.821.821.821.82 1.49

Exchange Gain (Net) 3.933.933.933.933.93 6.17

Profit on sale of fixed assets (Net) 0.000.000.000.000.00 2.42

Miscellaneous Income 12.0012.0012.0012.0012.00 8.54

26.8926.8926.8926.8926.89 27.02

SCHEDULE 15: MASCHEDULE 15: MASCHEDULE 15: MASCHEDULE 15: MASCHEDULE 15: MATERIALSTERIALSTERIALSTERIALSTERIALS 2004-052004-052004-052004-052004-05 2003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Opening StockOpening StockOpening StockOpening StockOpening Stock

Raw materials 49.3349.3349.3349.3349.33 51.26

Work-in-Process

Manufacturing 53.0153.0153.0153.0153.01 50.88

Contracts 10.9810.9810.9810.9810.98 14.35

113.32113.32113.32113.32113.32 116.49

Finished Goods 34.2134.2134.2134.2134.21 40.13

147.53147.53147.53147.53147.53 156.62

Add: Purchases 1414.631414.631414.631414.631414.63 1215.72(including Trading Goods Rs. 455.46 crores;Previous Year Rs.391.95 crores)

Less: Scrap Sales 26.6926.6926.6926.6926.69 18.70

1387.941387.941387.941387.941387.94 1197.02

1535.471535.471535.471535.471535.47 1353.64

Less: Closing StockLess: Closing StockLess: Closing StockLess: Closing StockLess: Closing Stock

Raw Materials 51.7451.7451.7451.7451.74 49.33

Work-In-Process:

Manufacturing 56.1156.1156.1156.1156.11 53.01

Contracts 15.5615.5615.5615.5615.56 10.98

123.41123.41123.41123.41123.41 113.32

Finished Goods 42.3042.3042.3042.3042.30 34.21

165.71165.71165.71165.71165.71 147.53

1369.761369.761369.761369.761369.76 1206.11


77

Schedules forming Part of Profit & Loss Account

SCHEDULE 16: STSCHEDULE 16: STSCHEDULE 16: STSCHEDULE 16: STSCHEDULE 16: STAFF & WELFAFF & WELFAFF & WELFAFF & WELFAFF & WELFAREAREAREAREARE 2004-052004-052004-052004-052004-05 2003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Salaries, Wages and Bonus 115.28115.28115.28115.28115.28 110.08

Provident Fund and Family Pension Scheme Contributions 7.817.817.817.817.81 8.14

Superannuation Fund Contributions 2.292.292.292.292.29 2.20

Gratuity (including contributions to Fund 3.383.383.383.383.38 3.61Rs. 2.54 crores, previous year Rs.3.05 crores)

Workmen and Staff Welfare 13.5613.5613.5613.5613.56 12.37

142.32142.32142.32142.32142.32 136.40

SCHEDULE 17: MANUFSCHEDULE 17: MANUFSCHEDULE 17: MANUFSCHEDULE 17: MANUFSCHEDULE 17: MANUFACTURING, SELLING & ADMINISTRAACTURING, SELLING & ADMINISTRAACTURING, SELLING & ADMINISTRAACTURING, SELLING & ADMINISTRAACTURING, SELLING & ADMINISTRATIONTIONTIONTIONTION 2004-052004-052004-052004-052004-05 2003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Stores and Spare Parts 15.7615.7615.7615.7615.76 13.08

Power and Fuel 18.6018.6018.6018.6018.60 19.93

Repairs

Buildings 2.762.762.762.762.76 1.92

Plant and machinery 7.397.397.397.397.39 6.23

Others 5.505.505.505.505.50 3.09

15.6515.6515.6515.6515.65 11.24

Forwarding, Godown and Packing 53.5453.5453.5453.5453.54 45.52

Advertising 12.5412.5412.5412.5412.54 6.97

Auditors’ Remuneration

Statutory audit fees 0.380.380.380.380.38 0.28

Tax audit fees 0.070.070.070.070.07 0.07

Taxation 0.010.010.010.010.01 0.00

Certification 0.030.030.030.030.03 0.06

Other Services 0.150.150.150.150.15 0.13

Expenses Reimbursed (including Service Tax) 0.090.090.090.090.09 0.10

0.730.730.730.730.73 0.64

Rent 4.574.574.574.574.57 4.61

Rates and Taxes 16.8216.8216.8216.8216.82 9.48

Insurance 4.054.054.054.054.05 4.60

Bad Debts & Advances 31.7431.7431.7431.7431.74 7.44

Vehicle Maintenance 1.521.521.521.521.52 1.21

Travelling 16.5716.5716.5716.5716.57 16.39

Professional Charges 11.2111.2111.2111.2111.21 7.17

Technical Service Fees 0.460.460.460.460.46 0.49

Miscellaneous Expenses 80.4780.4780.4780.4780.47 62.44

Loss on Sale of Fixed Assets (Net) 0.530.530.530.530.53 0.00

Directors’ Fees 0.080.080.080.080.08 0.03

284.84284.84284.84284.84284.84 211.24


Significant Accounting Policies

SCHEDULE [A]SCHEDULE [A]SCHEDULE [A]SCHEDULE [A]SCHEDULE [A]

11111 BASIS OF PRESENTBASIS OF PRESENTBASIS OF PRESENTBASIS OF PRESENTBASIS OF PRESENTAAAAATIONTIONTIONTIONTION

The accounts have been prepared using historical cost convention, except for the revaluation of certain fixed assets, inaccordance with the Generally Accepted Accounting Principles (GAAP) on the accrual basis and in accordance with theAccounting Standards referred to in Section 211(3C) and other provisions of the Companies Act 1956. Insurance and otherclaims are accounted for as and when admitted by the appropriate authorities.

The preparation of accounts under GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets & liabilities and disclosures of contingent liabilities as at the date of the financial statements and thereported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Any revisionsto accounting estimates is recognised prospectively in the current and future periods.

22222 FIXED ASFIXED ASFIXED ASFIXED ASFIXED ASSETSSETSSETSSETSSETS

(a) Fixed assets are stated at cost, except for land and buildings added prior to 30th June 1985 which are stated atrevalued cost as at that date based on technical expert’s evaluation report. The cost so ascertained is adjusted for theaccumulated depreciation / amortisation and provision for impairment to determine the net carrying value of the FixedAssets.

(b) Expenditure relating to existing fixed assets is added to the cost of the assets where it increases the performance / lifeof the assets as assessed earlier.

(c) Fixed assets are eliminated from financial statements, either on disposal or when retired from active use.The retiredassets are disposed off immediately. Assets are removed from fixed asset records on disposal.

(d) Pre-operative expenses, including interest on borrowings for the projects incurred till the projects are ready for commercialproduction, are capitalised.

(e) Internally manufactured / constructed fixed assets are capitalised at factory cost including excise duty wherever applicable.

(f) Lumpsum fees paid for acquisition of technical knowhow relating to Plant & Machinery is capitalised as intangible asset.

(g) i) Machinery spares which are specific to particular item of Fixed Assets and whose use is irregular are capitalised aspart of the cost of machinery.

ii) Machinery spares which are not specific to a particular item of Fixed Assets but can be used generally for variousitems of Fixed Assets are treated as inventory and charged to Profit and Loss Account as and when issued forconsumption in the ordinary course of operation.

33333 INVESTMENTSINVESTMENTSINVESTMENTSINVESTMENTSINVESTMENTS

Current Investments are carried at lower of cost or market value. The determination of carrying costs of such investments isdone on the basis of specific identification. Long term investments are carried at cost after providing for any diminution invalue, if such diminution is of a permanent nature.

44444 INVENTORIESINVENTORIESINVENTORIESINVENTORIESINVENTORIES

Inventories are valued at the lower of cost or net realisable value after providing for obsolescence and damage as under.

(a) Raw materials, packing materials : At Cost, on FIFO/Weighted average basisstores & spares and constructionmaterial

(b) Work-in-Process : At Cost plus appropriate production overheads

(c) Construction Work-in-Progress : At Cost till a certain percentage of completion and thereafter realisable value

(d) Finished goods : At Cost, plus appropriate production overheads, including excise duty paid/payable on such goods.

55555 FOREIGN CURRENCY TRANSACTIONSFOREIGN CURRENCY TRANSACTIONSFOREIGN CURRENCY TRANSACTIONSFOREIGN CURRENCY TRANSACTIONSFOREIGN CURRENCY TRANSACTIONS

(a) Foreign currency transactions are recorded at the exchange rate prevailing at the time of transactions.

(b) Foreign currency current assets and liabilities are converted at the year end rates in compliance with AS-11.

(c) Exchange difference arising on account of liability incurred for acquring fixed assets from a country outside India areadjusted to carrying cost of fixed assets.

(d) The cost of forward exchange contracts is spread over the period of the contract.

(e) Other exchange differences are adjusted in the Profit & Loss Account.

79 CEP 1 D:\SALES\JOE REGO\CROMPTON AR-05/CROMPTON MAIN-05.PMD --- SBC/10-6/kvf/11-6/SBC/21-6/

79

SCHEDULE [A] (Contd.)SCHEDULE [A] (Contd.)SCHEDULE [A] (Contd.)SCHEDULE [A] (Contd.)SCHEDULE [A] (Contd.)66666 REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITION

Revenue from sales and services is recognised in terms of contract with customers.Revenue from construction contracts is recognised based on percentage completion after providing for expected losses.

77777 RETIREMENT BENEFITSRETIREMENT BENEFITSRETIREMENT BENEFITSRETIREMENT BENEFITSRETIREMENT BENEFITS(a) Provident fund and superannuation contributions are accrued each year in terms of contracts with the employees.(b) Provisions for gratuity and leave encashment are determined and accrued on the basis of actuarial valuation.

88888 DEPRECIADEPRECIADEPRECIADEPRECIADEPRECIATIONTIONTIONTIONTION(a) Depreciation on the fixed assets is provided at the rates and in the manner specified in Schedule XIV of the Companies

Act, 1956, on written down value method other than on buildings and plant and equipment which are depreciated on astraight line method.

(b) Building constructed on leasehold land are depreciated at normal rate as prescribed in Schedule XIV to the CompaniesAct, 1956 where the lease period of land is beyond the life of the building.Otherwise over the period of lease agreementis to be amortised.

(c) Lumpsum amounts paid for leasehold land are amortised and charged to depreciation over the primary lease periodsexcept where the option of refund is available.

(d) In the case of revalued assets the difference between the depreciation based on revaluation and the depreciationcharged on historical cost is recouped out of revaluation reserve.

(e) In case of impaired assets, depreciation is charged on the adjusted cost net of impairment(f) The intangible assets are amortised over the period of 5 years.

99999 INTINTINTINTINTANGIBLE ASANGIBLE ASANGIBLE ASANGIBLE ASANGIBLE ASSETS AND AMORTISASETS AND AMORTISASETS AND AMORTISASETS AND AMORTISASETS AND AMORTISATIONTIONTIONTIONTIONIntangible assets are recognized per the criteria specified in Accounting Standard (AS) 26 “Intangible Assets” issued by theInstitute of Chartered Accountants of India and are amortised as follows :(a) Leasehold land: over the period of lease(b) Specialised software: Over a period of five years(c) Lump sum fees for technical know-how: Over a period of five years from the year of commercial production

1010101010 IMPIMPIMPIMPIMPAIRMENT OF ASAIRMENT OF ASAIRMENT OF ASAIRMENT OF ASAIRMENT OF ASSETSSETSSETSSETSSETSThe carrying amount of assets,other than inventories is reviewed at each balance sheet date to determine whether there isany indication of impairment. If any such indication exist, the recoverable amount of the assets is estimated.An impairment loss is recognized whenever the carrying amount of an asset or its cash generating units exceeds itsrecoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use which isdetermined based on the estimated future cash flow discounted to their present values. All impairment losses are recognizedin compliance with AS-28An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount andrecognized in compliance with AS-28.

1111111111 BBBBBORROWING COSTSORROWING COSTSORROWING COSTSORROWING COSTSORROWING COSTSBorrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as partof the cost of such assets. A qualifying asset is an asset that necessarily takes a substantial period over 12 months of timeto get ready for its intended use or sale. All other borrowing costs are recognised as expense in the period in which they areincurred.

1212121212 TTTTTAXES ON INCOMEAXES ON INCOMEAXES ON INCOMEAXES ON INCOMEAXES ON INCOME(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credits computed

in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments /appeals.

(b) Deferred tax is recognised on timing difference between the accounting income and the estimated taxable income forthe period and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date

(c) Deferred tax assets which arise mainly on account of unabsorbed losses or unabsorbed depreciation are recognisedand carried forward only to the extent that there is virtual certainty supported by convincing evidence that sufficient futuretaxable income will be available against which such deferred tax assets can be realised.

1313131313 EVENTS OCCURRING AFEVENTS OCCURRING AFEVENTS OCCURRING AFEVENTS OCCURRING AFEVENTS OCCURRING AFTER THE BALANCE SHEET DTER THE BALANCE SHEET DTER THE BALANCE SHEET DTER THE BALANCE SHEET DTER THE BALANCE SHEET DAAAAATETETETETEWhere material events occurring after the date of balance sheet are considered upto the date of approval of the accounts bythe Board of Directors.

1414141414 PROPROPROPROPROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETSSETSSETSSETSSETS(a) Provisions for warranties has been made on the basis of past experience as regards the amount of expenditure incurred

on repairs/replacements within warranty period.(b) Accounting for contingencies (gains and losses) arising out of contractual obligations, are made only on the basis of

mutual acceptances.(c) Contingent Assets are not recognised.


Notes on Accounts

SCHEDULE [B]SCHEDULE [B]SCHEDULE [B]SCHEDULE [B]SCHEDULE [B] 2004-052004-052004-052004-052004-05 2003-042003-042003-042003-042003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

1 No provision has been made for(a) Excise Duty demands which have been disputed

by the Company (Net of income tax) 4.164.164.164.164.16 2.69(b) Sales tax demands which have been disputed by

the Company (Net of income tax) 2.132.132.132.132.13 1.872 Contingent liability, not provided for, in respect of

(a) Claims against the Company not acknowledged asdebts (Net of income tax) 5.925.925.925.925.92 0.55

(b) Show Cause Notice issued by the CustomAuthorities for levy of penalty under Section 127of the Customs Act which have been disputed by Amount notAmount notAmount notAmount notAmount not Amount notthe Company AscertainableAscertainableAscertainableAscertainableAscertainable Ascertainable

(c) Bills discounted 59.3859.3859.3859.3859.38 38.78(d) Guarantees to bankers, financial institutions and

others on behalf of Associate Companies 4.784.784.784.784.78 7.17(e) Income tax appeals/reference applications made

by the income tax department against the orderspassed by the Appellate Authorities in favour of the 12.0012.0012.0012.0012.00 9.86Company

(f) Excise matters in dispute decided in favour of theCompany at Appellate Level for which the Departmentis in Appeal before CEGAT. (Net of income tax) 5.375.375.375.375.37 7.18

3 Provision for tax for the year represents wealth taxprovision made under Wealth Tax Act, 1957 0.200.200.200.200.20 0.20

4 Estimated amount of contracts remaining to beexecuted on Capital Account and not provided for(Net of advances) 13.9513.9513.9513.9513.95 14.44

5 Sales include(i) Increase / Decrease ( - ) in construction

work-in-progress:Closing work-in-progress 94.3194.3194.3194.3194.31 143.31Less: Opening work-in-progress 143.31143.31143.31143.31143.31 109.71

-49.00-49.00-49.00-49.00-49.00 33.60and are net of:

(i) Brokerage and commission 12.1812.1812.1812.1812.18 9.46

(ii) Cash discount 6.366.366.366.366.36 8.406 Disclosure under AS-7 (Revised) “Construction Contracts”

(i) Contract revenue recognised for the year 107.15107.15107.15107.15107.15 149.97(ii) Advance received 13.0913.0913.0913.0913.09 14.36(iii) Retentions 37.1737.1737.1737.1737.17 41.02(iv) Amount of Contract costs incurred 124.34124.34124.34124.34124.34 136.06

7 Following expenses have been capitalised during the year(a) Materials 0.290.290.290.290.29 1.00(b) Staff and welfare 0.260.260.260.260.26 0.83(c) Manufacturing expenses 0.240.240.240.240.24 0.69

8 Miscellaneous expenditure amortised relates to(a) Testing Fees 0.000.000.000.000.00 0.82(b) Payments under Voluntary Retirement Schemes 0.000.000.000.000.00 7.47(c) Technical Know-How Fees 0.000.000.000.000.00 0.82

0.000.000.000.000.00 9.11


81

SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] (Contd.) 2004-052004-052004-052004-052004-05 2003-042003-042003-042003-042003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

9 Effects of foreign currency transactionsaccounted for in the Profit and Loss Accountduring the year {Gain (+) / Loss (-) }Exchange difference charged to Profit & LossAccount(a) On account of forward contracts -1.64-1.64-1.64-1.64-1.64 -0.01(b) Others 5.575.575.575.575.57 6.18

3.933.933.933.933.93 6.1710 Interest and commitment charges include interest on

(a) Fixed loans 14.7414.7414.7414.7414.74 18.98(b) Debentures 0.250.250.250.250.25 2.79(c) Others 9.639.639.639.639.63 17.78

24.6224.6224.6224.6224.62 39.55(d) Less: Interest income (including tax deducted at

source Rs.0.07 crores; Previous year Rs.0.06 crores) 1.541.541.541.541.54 1.0723.0823.0823.0823.0823.08 38.48

11 Advances recoverable in cash or in kind or for valueto be received include:(a) Advances to associate company pending allotment of

shares - Globalstar India Satellite Services PrivateLimited 1.161.161.161.161.16 1.16

(b) Rent deposit with Directors 0.000.000.000.000.00 0.20(c) Due by an Officer Rs NIL (Previous year Rs. NIL)

(Maximum amount outstanding at any time duringthe year - Rs.NIL; Previous year - Rs.NIL) 0.000.000.000.000.00 0.00

12 Value of imports (On C.I.F. basis)(a) Raw materials 111.71111.71111.71111.71111.71 75.60(b) Spare parts 1.081.081.081.081.08 0.71(c) Capital goods 11.8211.8211.8211.8211.82 5.11(d) Trading goods 18.5118.5118.5118.5118.51 17.35

13 Expenditure in foreign currency(a) Technical assistance / Service fee 0.390.390.390.390.39 0.13(b) Professional charges 3.123.123.123.123.12 0.50(c) Interest 1.241.241.241.241.24 0.16(d) Others 16.4616.4616.4616.4616.46 9.76

14 Remittance in Foreign Currency on account of Dividend :-Interim Dividend 2003-04(a) Number of Non-resident Shareholders ----- 505(b) Number of Shares held ----- 8266008(c) Amount of Dividend ----- 2.48Final Dividend 2003-04(a) Number of Non-resident Shareholders 493493493493493 -(b) Number of Shares held 79004557900455790045579004557900455 -(c) Amount of Dividend 3.163.163.163.163.16 -1st Interim Dividend 2004-05(a) Number of Non-resident Shareholders 469469469469469 -(b) Number of Shares held 78390647839064783906478390647839064 -(c) Amount of Dividend 2.742.742.742.742.74 -2nd Interim Dividend 2004-05(a) Number of Non-resident Shareholders 454454454454454 -


SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] (Contd.) 2004-052004-052004-052004-052004-05 2003-042003-042003-042003-042003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

(b) Number of Shares held 76299167629916762991676299167629916 -(c) Amount of Dividend 2.672.672.672.672.67 -

15 Earnings in foreign currency(a) Export of goods on F.O.B. basis including deemed

exports Rs.47.19 crores (previous year Rs.100.95 crores) 295.94295.94295.94295.94295.94 279.85(b) Service Revenue 2.342.342.342.342.34 1.64(c) Others 0.010.010.010.010.01 1.11

16 Excise duty included in the value of closing finishedgoods inventory 2.962.962.962.962.96 1.93

17 Interest on delayed payments to small scale industrialundertakings (gross) 0.020.020.020.020.02 0.17

18 Expenditure on Research & Development(a) Capital 1.741.741.741.741.74 2.86(b) Revenue 13.7913.7913.7913.7913.79 13.25

19 Raw Materials Consumed: Unit QuantityQuantityQuantityQuantityQuantity 2004-052004-052004-052004-052004-05 Quantity 2003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Ferrous Metals Ton 4971549715497154971549715 224.97224.97224.97224.97224.97 32526 198.41Non-ferrous Metals Ton 1376913769137691376913769 178.91178.91178.91178.91178.91 10402 170.13Chemicals, Oils and Paints K.Ltr 92029202920292029202 31.8731.8731.8731.8731.87 9971 34.40Wires, Pipes, Tubes and Cables K.Mtr 1295012950129501295012950 12.0512.0512.0512.0512.05 13111 14.75Components M.Pc 557557557557557 453.44453.44453.44453.44453.44 534 387.10Others 55.5255.5255.5255.5255.52 20.91

956.76956.76956.76956.76956.76 825.70

20 Consumption of Raw PPPPPercentageercentageercentageercentageercentage 2004-052004-052004-052004-052004-05 Percentage 2003-04Material and Spare Parts: of totalof totalof totalof totalof total of total

ConsumptionConsumptionConsumptionConsumptionConsumption Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Consumption Rs. CroresRaw Materials:Imported 17.3017.3017.3017.3017.30 165.54165.54165.54165.54165.54 9.88 81.58Indigenous 82.7082.7082.7082.7082.70 791.22791.22791.22791.22791.22 90.12 744.12

956.76956.76956.76956.76956.76 825.70Spare Parts:Imported 34.8834.8834.8834.8834.88 0.450.450.450.450.45 27.15 0.41Indigenous 65.1265.1265.1265.1265.12 0.840.840.840.840.84 72.85 1.10

1.291.291.291.291.29 1.51

21 Sales Unit QuantityQuantityQuantityQuantityQuantity 2004-052004-052004-052004-052004-05 Quantity 2003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

a) Transformers, Reactorsand Accessories thereof Nos 95969596959695969596 484.05484.05484.05484.05484.05 8646 397.50

b) Switchgears, ControlEquipments andAccessories thereof Nos 224605224605224605224605224605 330.51330.51330.51330.51330.51 152552 266.12

c) Motors, Alternatorsand Pumps Nos 721092721092721092721092721092 462.71462.71462.71462.71462.71 860024 412.46

d) Electrical steel Stampingsand Laminates M.Ton 30813081308130813081 16.3916.3916.3916.3916.39 2362 15.26

e) Electric Fans,Ventilation Control Systems Nos 28479142847914284791428479142847914 269.80269.80269.80269.80269.80 2562632 231.09

f) Electric Lamps M.Nos 3838383838 93.2993.2993.2993.2993.29 39 85.40


83

SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] (Contd.) Unit QuantityQuantityQuantityQuantityQuantity 2004-052004-052004-052004-052004-05 Quantity 2003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

g) Communication,Computer systemSoftware and Accessories 19.4819.4819.4819.4819.48 21.96

h) Service Revenue 39.2039.2039.2039.2039.20 30.63

I) Others 437.35437.35437.35437.35437.35 400.63

2152.782152.782152.782152.782152.78 1861.05

1 Quantitative figures for Sales are after exclusion of inter-divisional transfers, capitalisation/captive consumption, samples, etc.2 Sales include Excise Duty Rs.180.27 crores (previous year Rs.149.73 crores)

22 Details of licensed capacity, installed capacity and actual production during the year of each class of goods manufactured:

Sl. Products Unit Licensed Capacity *Installed Capacity @Actual ProductionNo. 2004-052004-052004-052004-052004-05 2003-04 2004-052004-052004-052004-052004-05 2003-04 2004-052004-052004-052004-052004-05 2003-04

1 Transformers, KVA 90,00,00090,00,00090,00,00090,00,00090,00,000 +(l)+(l)+(l)+(l)+(l) 90,00,000 +(l) 1,95,00,0001,95,00,0001,95,00,0001,95,00,0001,95,00,000 1,85,00,000 1,40,74,2771,40,74,2771,40,74,2771,40,74,2771,40,74,277 1,31,17,016Reactors and Nos. 19,68719,68719,68719,68719,687 19,687 23,80023,80023,80023,80023,800 17,800 9,3139,3139,3139,3139,313 8,654Accessories +(c)+(f)+(l)+(c)+(f)+(l)+(c)+(f)+(l)+(c)+(f)+(l)+(c)+(f)+(l) +(c)+(f)+(l) +(c)+(f)+(c)+(f)+(c)+(f)+(c)+(f)+(c)+(f) +(c)+(f)thereof

2 Switchgear, Nos. 1,22,0001,22,0001,22,0001,22,0001,22,000 1,22,000 3,21,8503,21,8503,21,8503,21,8503,21,850 2,47,000 2,36,8012,36,8012,36,8012,36,8012,36,801 1,74,720Control + (l)+ (l)+ (l)+ (l)+ (l) + (l)Equipment &Accessoriesthereof

3 (a) Motors, HP 14,39,25014,39,25014,39,25014,39,25014,39,250 +(l+(l+(l+(l+(l) 14,39,250 +(l) 43,48,57043,48,57043,48,57043,48,57043,48,570 42,98,570 35,25,29435,25,29435,25,29435,25,29435,25,294 28,91,502Alternators Nos. 1,98,8351,98,8351,98,8351,98,8351,98,835 +(l)+(l)+(l)+(l)+(l) 1,98,835 +(l) 16,19,50016,19,50016,19,50016,19,50016,19,500 16,19,500 4,83,0174,83,0174,83,0174,83,0174,83,017 8,64,824and Pumps

(b) Electrical Steel MT 7,5007,5007,5007,5007,500 +(l)+(l)+(l)+(l)+(l) 7,500 +(l) 15,00015,00015,00015,00015,000 10,000 12,22112,22112,22112,22112,221 10,102Stamping &Laminates

4 Electric Fans, Nos. 10,00,00010,00,00010,00,00010,00,00010,00,000 10,00,000 28,50,00028,50,00028,50,00028,50,00028,50,000 28,50,000 18,33,78418,33,78418,33,78418,33,78418,33,784 17,11,694Ventilation, & +(l)+(r)+(l)+(r)+(l)+(r)+(l)+(r)+(l)+(r) +(l)+(r)Pollution ControlSystems

5 Lighting - M.Pcs. 19.4619.4619.4619.4619.46 +(I)+(I)+(I)+(I)+(I) 19.46 +(I) 6868686868 68 2323232323 30Electric Lamps

6 Communication, Nos. 4,75,0004,75,0004,75,0004,75,0004,75,000 +(l)+(l)+(l)+(l)+(l) 4,75,000 +(l) 1,2001,2001,2001,2001,200 3,83,000 NILNILNILNILNIL 5,094Computer Lines 1,20,0001,20,0001,20,0001,20,0001,20,000 +(l)+(l)+(l)+(l)+(l) 1,20,000 +(l) 3,80,0003,80,0003,80,0003,80,0003,80,000 3,80,000 NILNILNILNILNIL NILSystems, Software Terminals (l)(l)(l)(l)(l) 2,000 2,0002,0002,0002,0002,000 493 NILNILNILNILNIL NIL& Accessories

7 Other Items Nos. 24,00,25024,00,25024,00,25024,00,25024,00,250 24,00,250 5,0505,0505,0505,0505,050 24,05,550 3,6933,6933,6933,6933,693 32,856System 700700700700700 700 NILNILNILNILNIL 700 NILNILNILNILNIL NIL

* Installed Capacities are as certified by the Managing Director on which Certificate the Auditors have placed reliance.

@ The production figures are as per returns submitted to Department of Industrial Development.

(c) To the extent required for Switchgear manufacture and supply to Associates.

(f) To the extent required for captive use.

(l) Under the liberalised Industrial Policy of Government of India, the Company got the capacities approved by way ofacknowledgements against the IEMs submitted by it.

(r) Registered; Capacity not specified.


SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] (Contd.)

23 INVENTORIES

Products Unit 2004-05 2003-04 2002-03

QuantityQuantityQuantityQuantityQuantity VVVVValuealuealuealuealue Quantity Value Quantity ValueRs.CroresRs.CroresRs.CroresRs.CroresRs.Crores Rs.Crores Rs.Crores

a) Transformers,Reactors andAccessoriesthereof Nos 7171717171 3.33.33.33.33.39 88 2.74 80 2.26

b) Switchgears,ControlEquipmentandAccessoriesthereof Nos 321321321321321 1.551.551.551.551.55 392 0.25 837 0.88

c) Motors,AlternatorsandPumps Nos 91949194919491949194 4.754.754.754.754.75 8072 3.27 11787 6.33

d) ElectricalsteelstampingsandLaminations M.Ton 531531531531531 4.104.104.104.104.10 382 2.51 406 2.68

e) Electric fansVentilationcontrolsystems Nos 9799897998979989799897998 8.508.508.508.508.50 76639 6.10 85193 7.48

f) Electric Lamps M.Nos 2.292.292.292.292.29 4.594.594.594.594.59 1.32 3.23 1.93 4.32

g) Communicationcomputersystem,Software andAccessories 3.433.433.433.433.43 3.84 3.41

h) Others 11.9911.9911.9911.9911.99 12.27 12.77

42.3042.3042.3042.3042.30 34.21 40.13

24 Secured Loans - Securities are as under :-(a) The Debentures (VIII Series) aggregating Rs.NIL (Previous year Rs.5.55 crores ) are secured by first charge / mortgage

over specific movable / immovable properties of the Company(b) Term loans from banks and financial institutions amounting to Rs.140.71 crores (Previous year Rs.69.25 crores) includes

Rs.43.96 crores Foreign Currency Loans (Previous year Rs.Nil) are secured by way of equitable mortgage of land andbuilding and by way of hypothecation of specific movable properties.

(c) Cash Credit / Working Capital Demand Loans from Banks aggregating to Rs.108.11 crores (Previous year Rs.178.93crores) are secured by hypothecation of stocks and book debts, present & future.

25 (a) Names of suppliers being Small Scale / Anciliary Industrial Undertakings in whose account any amount was overdueabove rupees one lac for more than thirty days as on 31st March 2005 are as under :Name of the PartyPearl Metal ProductsRRR IndustriesSteel Tech Engineers

(b) Overdue amounts as at 31st March, 2005 to Small Scale and / or Anciliary Industrial suppliers on account of principalamounts together with interest aggregate to Rs.7.43 lacs (Previous year Rs.26.73 lacs). The same is disclosed on the


85

SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] (Contd.)basis of the information available with the Company regarding the status of the suppliers as defined under the “Intereston delayed payments to Small Scale and Anciliary Industrial Undertakings Act, 1993".

26 The Company has charged to the profit and loss account Rs.Nil (Previous year Rs.8.46 crores) under voluntary retirementscheme (VRS) in respect of closed units / closed departments of certain running units. The company, based on legal opinion,has not considered this amount as deduction for the purpose of computation of net profits for managerial remuneration. TheCompany has been legally advised that for the purpose of calculating profit / loss under Sections 349/350 of The CompaniesAct, 1956 depreciation should not be included in the excess of expenditure over income.

27 (a) During the year 13.5% Secured Non-Convertible Debentures (VIII series) were fully redeemed.

(b) In view of the above, the total amount outstanding to the credit of Debenture Redemption Reserve as on 31.03.2005amounting to Rs.1.40 crores has been transferred to the credit of General Reserve.

2004-052004-052004-052004-052004-05 2003-0428 Exceptional items in the Profit & Loss account pertain to : Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

(a) Diminution in the value of Advances 0.000.000.000.000.00 -3.25(b) Decline in the value of certain Long Term Investments

net of write back of earlier decline Rs.Nil (Previous year Rs.0.75 crores) -0.42-0.42-0.42-0.42-0.42 -0.09(c) Profit on sale of Land & Building situated at Worli 0.000.000.000.000.00 4.80(d) Profit on sale of Land & Building situated at Bhandup 0.000.000.000.000.00 4.37

-0.42-0.42-0.42-0.42-0.42 5.83

29 (a) In view of the set off of accumulated losses / unabsorbed depreciation available to the company under section 72A ofthe Income Tax Act, 1961 there is no tax liability on the company except u/s 115JB of the Act for which necessaryprovision has been made.

(b) Deferred Tax assets & liabilities are attributable to the following items : Rs. Crores

Deferred tax Movement Deferred taxDeferred taxDeferred taxDeferred taxDeferred taxParticulars assets/ assets /assets /assets /assets /assets /

(liabilities) as (liabilities) as(liabilities) as(liabilities) as(liabilities) as(liabilities) asat 01.04.2004 at 31.03.2005at 31.03.2005at 31.03.2005at 31.03.2005at 31.03.2005

Deferred TDeferred TDeferred TDeferred TDeferred Tax Assetax Assetax Assetax Assetax Asset

Expenses allowable for tax purposes when paid/on payment of TDS 1.77 -1.48 0.290.290.290.290.29

Unabsorbed carried forward tax losses / depreciation 105.40 -56.89 48.5148.5148.5148.5148.51

Others 14.90 -6.74 8.168.168.168.168.16

122.07 -65.11 56.9656.9656.9656.9656.96

Deferred TDeferred TDeferred TDeferred TDeferred Tax Liabilityax Liabilityax Liabilityax Liabilityax Liability

Difference between Tax and Book written down value 52.88 10.32 42.5642.5642.5642.5642.5652.88 10.32 42.5642.5642.5642.5642.56

69.19 -54.79 14.4014.4014.4014.4014.40

The Deferred Tax Asset of Rs.14.40 crores has not been recognised in the books of accounts since this forms part of theamount of deferred tax asset written off during earlier years against the balance in Securities Premium Account vide orderdated 15th September, 2003 of High Court of judicature at Mumbai.

30 Disclosures as required by Accounting Standard AS-18 “Related Party Disclosure” in respect of transactions for the yearended 31st March 2005 are as under:-

1 Relationships:

i) List of related parties over which control exists :

Subsidiaries:

(a) CG Capital & Investments Limited is the 100% subsidiary of the company.

(b) CG Motors Private Limited is the 100% subsidiary of the company.

(c) CG PPI Adhesive Products LimitedCG Capital & Investments Limited holds 81.42% of Equity Share Capital in this Company

(d) CTR Manufacturing Industries Limited (Ceased to be a subsidiary w.e.f. 14th July, 2004)CG Capital & Investments Limited was holding 82.06% of Equity Share Capital in this Company



ii) List of related parties with whom transactions were carried out during the year and description of relationship :

Subsidiaries:

(a) CG Capital & Investments Limited is the 100% subsidiary of the company.

(b) CG Motors Private Limited is the 100% subsidiary of the company.

(c) CG PPI Adhesive Products LimitedCG Capital & Investments Limited holds 81.42% of Equity Share Capital in this Company

(d) CTR Manufacturing Industries Limited (Ceased to be a subsidiary w.e.f. 14th July, 2004)CG Capital & Investments Limited was holding 82.06% of Equity Share Capital in this Company

Associates:

(a) Brook Crompton Greaves Limited

(b) CG Lucy Switchgear Limited

(c) CG Smith Software Private Limited

(d) Hitachi CG Motor Engineering Private Limited (Ceased to be an associate w.e.f. 15th June, 2004)

Key Management Personnel and their Relatives :

Mr. SM Trehan - Managing Director

Mr. G.Thapar - Director

Dr. O Goswami - Director

Mr. S Labroo - Director

Mr. K.Thapar - Director

Mr. S Bisht- Nominee Director

Other Related Parties :

(a) Ballarpur Industries Limited

(b) Greaves Cotton Limited

2 The following transactions were carried out with the related parties in the ordinary course of business: Rs. Crores

2004-05 2003-04

Sl Transactions Subsidiaries Associate Total Subsidiaries Associate TotalNo Companies Companies

1 Purchases of goods 2.72 25.45 28.17 11.47 9.17 20.64

2 Sales of goods & service revenue 0.00 1.80 1.80 0.03 0.51 0.54

3 Purchase of Fixed Assets 0.00 0.06 0.06 0.07 0.00 0.07

4 Interest expense 0.02 0.35 0.37 0.36 0.93 1.29

5 Dividend received 0.00 1.35 1.35 0.00 0.96 0.96

6 Commission received 0.00 0.10 0.10 0.00 0.01 0.01

7 Rent income 0.00 0.00 0.00 0.03 0.00 0.03

8 Interest income 0.27 0.00 0.27 0.48 0.00 0.48

9 Due to related parties as at year end 0.78 8.81 9.59 2.11 9.60 11.71

10 Due from related parties as at year end 0.28 0.26 0.54 0.00 0.12 0.12

11 Loan/ Inter corporate deposits taken 0.00 2.75 2.75 0.00 2.75 2.75Balance as at year-end

12 Loan/ Inter corporate deposit placed 2.86 1.24 4.10 8.88 0.00 8.88

Balance as at year-end

Amounts written off / written back during the year in respect of the above parties Rs.Nil (Previous year Rs.Nil)

3 Remuneration to Managing Director, Commission to Directors Rs.2.61 crores (previous year Rs.1.96 crores)

4 Transactions with relatives of Managing Director Rs.Nil (previous year Rs.Nil)


87

SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] SCHEDULE [B] (Contd.) Rs. Crores

5 Transactions with Other Related Parties 2004-052004-052004-052004-052004-05 2003-04

(a) Purchases of goods 0.940.940.940.940.94 0.00

(b) Sales of goods & service revenue 3.013.013.013.013.01 1.94

(c) Due to related parties as at year-end 0.380.380.380.380.38 0.00

(d) Due from related parties as at year-end 0.470.470.470.470.47 0.85

31 Earnings per share (EPS) computed in accordance with Accounting Standard 20: “Earnings Per Share”

Particulars 2004-052004-052004-052004-052004-05 2003-04

No. of Shares issued of Rs.10/- each 5236665652366656523666565236665652366656 52366656

Basic and Diluted EPS

(a) EPS excluding exceptional itemsNumerator

Profit/(loss) for the year after tax Rs. 11520598051152059805115205980511520598051152059805 650019351

(b) EPS including exceptional items

Numerator

Profit / (Loss) for the year after tax Rs. 11478654051147865405114786540511478654051147865405 708357568

(c) DenominatorWeighted average number of equity shares. Nos. 5236665652366656523666565236665652366656 52366656

(d) Earnings per Share ( Basic & diluted )= Numerator / Denominator

(i) Excluding exceptional items Rs. 22.0022.0022.0022.0022.00 12.41

(ii) Including exceptional items Rs. 21.9221.9221.9221.9221.92 13.52

32 The disclosure in respect of Segment information for the year ended 31st March, 2005 Rs.Crores

I A Primary Segments (Business Segment)Primary Segments (Business Segment)Primary Segments (Business Segment)Primary Segments (Business Segment)Primary Segments (Business Segment)Power Consumer Industrial Others Eliminations/ Total

Particulars System Products System Unallocable 2004-05Expenditure /

Assets*

Segment Revenue 881.53 671.18 554.80 45.27 0.00 2152.78

Add: Inter segment Revenue 0.24 0.30 15.83 0.21 -16.58 0.00

Total 881.77 671.48 570.63 45.48 -16.58 2152.78

Segment Results 66.04 58.02 76.74 -14.27 0.00 186.53

Less: Interest 23.08

Less: Other Unallocable ExpenditureNet of Unallocable Income 38.64

Profit before tax 124.81

Capital Employed:Capital Employed:Capital Employed:Capital Employed:Capital Employed:

Segment Assets 557.15 194.75 241.99 39.83 276.82 1310.54

Segment Liabilities 250.60 149.88 102.38 15.68 68.69 587.23

Net AssetsNet AssetsNet AssetsNet AssetsNet Assets 306.55306.55306.55306.55306.55 44.8744.8744.8744.8744.87 139.61139.61139.61139.61139.61 24.1524.1524.1524.1524.15 208.13208.13208.13208.13208.13 723.31723.31723.31723.31723.31



Capital Expenditure 15.91 1.53 18.71 0.11 1.33 37.59

Depreciation 15.15 8.11 14.19 0.50 4.14 42.09

Non Cash Expenditure 0.00 0.00 0.00 0.00 0.00 0.00

* Unallocable Assets comprise Assets and Liabilities which cannot be allocated to the segments. Tax Credit Asset / Liability notconsidered in Capital Employed above.

Rs.crores

Power Consumer Industrial Others Eliminations/ TotalB Particulars System Products System Unallocable 2003-04

Expenditure /Assets*

Segment Revenue 755.32 611.88 439.70 54.15 0.00 1861.05


Total 755.57 613.63 453.84 54.21 -16.20 1861.05

Segment Results 64.03 53.62 40.80 -10.36 0.00 148.09


Less: Other Unallocable ExpenditureNet of Unallocable Income 20.09


Capital Employed:Capital Employed:Capital Employed:Capital Employed:Capital Employed:

Segment Assets 558.47 183.69 215.88 60.45 314.16 1332.65


Net Assets 274.09 37.91 95.11 40.81 236.48 684.40

Capital Expenditure 16.31 1.70 9.30 0.56 -7.71 20.16

Depreciation 15.91 8.43 14.08 1.22 4.58 44.22


* Unallocable Assets comprise Assets and Liabilities which cannot be allocated to the segments. Tax Credit Asset /Liability not considered in Capital Employed above.

II Secondary Segment (Geographical Segment)Secondary Segment (Geographical Segment)Secondary Segment (Geographical Segment)Secondary Segment (Geographical Segment)Secondary Segment (Geographical Segment)

(a) The distribution of the company’s sales by geographical market is as under:

Rs. Crores

Sales Revenue: 2004-052004-052004-052004-052004-05 2003-04

India 1891.581891.581891.581891.581891.58 1673.47

Outside India 261.20261.20261.20261.20261.20 187.58Total 2152.782152.782152.782152.782152.78 1861.05

(b) The company’s tangible fixed assets are located entirely in India.

III Segment Identification, Reportable Segment and Definition of each Reportable Segment:Segment Identification, Reportable Segment and Definition of each Reportable Segment:Segment Identification, Reportable Segment and Definition of each Reportable Segment:Segment Identification, Reportable Segment and Definition of each Reportable Segment:Segment Identification, Reportable Segment and Definition of each Reportable Segment:

(i) Segment Revenue and Results

The expenses which are not directly attributable to any business segment are shown as unallocable expenditure

(ii) Segment Assets and Liabilities

Segment assets include all operating assets used by the business segment and mainly consist of fixed assets, debtorsand inventories. Segment liabilities primarily include creditors and other liabilities. Common Assets and Liabilities whichcannot be allocated to any of the segments are shown as a part of unallocable assets / liabilities.


89


(iii) Primary / Secondary Segment Reporting Format:

1 The risk-return profile of the Company’s business is determined predominantly by the nature of its products andservices. Accordingly, the business segment constitutes the primary segment for disclosure of segment information.

2 In respect of secondary segment information, the Company has identified its geographical segments as (a) Domesticand (b)Overseas. The secondary segment information has been disclosed accordingly.

(iv) Segment Identification:

Business segments have been identified on the basis of the nature of products / services, the risk-return profile ofindividual business, the organizational structure and the internal reporting system of the Company.

(v) Reportable Segments:

Reportable segments have been identified as per the quantitative criteria specified in “Accounting Standard-17: SegmentReporting” issued by the Institute of Chartered Accountants of India.

(vi) Primary Segment

In the opinion of the management, the business segment comprises the following :

(a) Power Systems : Transformer, Switchgear, Turnkey Projects

(b) Consumer Products : Fans, Luminaire, Light Sources and Pumps

(c) Industrial Systems : Electric Motors and Alternators

(d) Others : Telecommunication

33 (a) The Company has not entered into any Finance / Operating Lease as specified in AS-19 “Leases”. The Company hashowever taken various residential/commercial premises and plant & machinery under cancellable operating lease. Theselease agreeements are normally renewed on expiry, where required.

(b) There are no exceptional / restrictive covenants in the lease agreements.

34 Consequent to Accounting Standard - 28 “Impairment of Assets” being made mandatory in respect of accounting yearcommencing on or after 1st April, 2004, the Company has accounted for the impairment loss as on 1st April, 2004 amountingto Rs.17.54 crores. The same has been adjusted against the opening balance of General Reserve, to the extent available, ofRs.10.74 crores and the balance of Rs.6.80 crores against the opening balance of Profit and Loss Account after furtheradjusting Rs.5.38 crores reversed during the year due to sale of certain impaired assets

35 Consequent to AS - 29 “Provisions, Contingent Liabilities and Contingent Assets” being made mandatory in respect ofaccounting year commencing on or after 1st April, 2004, the Company has for the first time made provision in respect of thefollowing categories as shown below :

Nature of Provision Warranties

2004-052004-052004-052004-052004-05 2003-04Rs. CroresRs. CroresRs. CroresRs. CroresRs. Crores Rs. Crores

Carrying amount at the beginning of the year 0.000.000.000.000.00 0.00

Additional provision made during the year 4.424.424.424.424.42 0.00

Amounts used during the year 0.000.000.000.000.00 0.00

Unused amounts reversed during the year 0.000.000.000.000.00 0.00

Carrying amount at the end of the year 4.424.424.424.424.42 0.00


36 Managerial Remuneration :

Computation of Net Profits in accordance with the provisions of Section 349 of the Companies Act, 1956Rs. Crores

Particulars 2004-052004-052004-052004-052004-05 2003-04

Computation of Net Profits in accordance with theprovisions of Section 349 of the Companies Act, 1956

Net Profit Before Tax as per Profit & Loss Account 124.81124.81124.81124.81124.81 89.52

Add: VRS for Closed Units (Refer Note 26) 0.000.000.000.000.00 8.46

Bounties on prepayment of sales taxdeferral liability 0.000.000.000.000.00 19.12

Managerial remuneration 2.612.612.612.612.61 1.96

Directors sitting fees 0.080.080.080.080.08 0.03

Revenue profit on sale of fixed assets 0.000.000.000.000.00 8.86

Loss on sale of fixed assets 0.530.530.530.530.53 0.00

Government subsidy received 0.000.000.000.000.00 0.15

Advance written off 10.0010.0010.0010.0010.00 13.2213.2213.2213.2213.22 3.25 41.83

Less: Profit on sale of investments 6.166.166.166.166.16 4.38

Profit on sale of fixed assets 0.000.000.000.000.00 6.166.166.166.166.16 11.59 15.97

Less: Excess of expenditure over incomeAs calculated under section 349Brought forward from previous years(Refer Note 26) 0.00 0.000.000.000.000.00 42.09 42.09

Net Profit / Loss (-) in terms of Section 349 131.87131.87131.87131.87131.87 73.2973.2973.2973.2973.29

Net profit for the purpose of Sec. 309 Rs.131.87 crores Rs.73.29 crores

Maximum remuneration as per Sec.309(3) @ 5% Rs.6.59 crores Rs.3.66 crores

Commission to Non-executive Directors u/s 309(4) @ 1% Rs.1.32 crores Rs.0.73 crores

Remuneration to Managing Director / Directors 2004-05 2003-04

charged to accounts : Rs. Crores Rs. Crores

(a) Salaries, Commission and incentives 2.34 1.75

(b) Contribution to provident and other funds 0.19 0.13

(c) Other perquisites 0.08 0.08

2.61 1.96

37 During the year the Company has entered into an agreement to acquire Pauwels Contracting N.V., engaged in the businessof Transformer And Contracting & Services of Pauwel Group of Belgium having manufacturing facilities at Belgium, Ireland,Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of Euro 2.10 Million towards100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of the said business. Theacquisition has been effected through it’s wholly owned subsidiary, CG International B.V., incorporated in April, 2005 inAmsterdam, Netherlands

38 The management has suspended the operations w.e.f. 22nd April 2003 in respect of the following Divisions:-(a) Capacitor-Pune, (b) Industrial Electronics-Satpur, Nasik and (c) Digital (Informatics)-Bangalore.

39 There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

40 Miscellaneous income includes profit on sale of investment Rs.6.16 crores (Previous year Rs.4.47 crores).



91

SCHEDULE [B] (Contd.)SCHEDULE [B] (Contd.)SCHEDULE [B] (Contd.)SCHEDULE [B] (Contd.)SCHEDULE [B] (Contd.)

41 Particulars in respect of Loans and Advances in the nature of loans as required by the Listing Agreement:-Rs. Crores

Name of the Company Balance as on Maximum outstanding during

31.03.200531.03.200531.03.200531.03.200531.03.2005 31.03.2004 2004-052004-052004-052004-052004-05 2003-04

A. Loans and advances in the natureof loans given to subsidiaries:-

CG Capital & Investments Ltd. 2.86 8.88 9.509.509.509.509.50 8.88

CG PPI Adhesive Products Ltd. 0.000.000.000.000.00 0.00 0.000.000.000.000.00 4.02

CG Motors Private Ltd. 0.000.000.000.000.00 0.00 0.000.000.000.000.00 0.00

B. Loans and advances in the nature ofloans given to associates

Brook Crompton Greaves Ltd. 1.241.241.241.241.24 0.00 1.241.241.241.241.24 0.00

C. Loans and advances in the nature ofloans where repaymentschedule is not specified

DBH International Limited 1.751.751.751.751.75 1.75 1.751.751.751.751.75 1.75

CG Capital & Investments Ltd. 2.862.862.862.862.86 8.88 9.509.509.509.509.50 8.88


D. Loans and advances in the nature ofloans where interest is not charged

CG Capital & Investments Ltd. 0.000.000.000.000.00 8.88 0.000.000.000.000.00 8.88


42 Prior year figures have been reclassified where necessary to confirm with the current year’s presentation.


Balance Sheet Abstract and Company’s General Business Profile

Additional information, as required under PAdditional information, as required under PAdditional information, as required under PAdditional information, as required under PAdditional information, as required under Part IV of Schedule VI to The Companies Act, 1956.art IV of Schedule VI to The Companies Act, 1956.art IV of Schedule VI to The Companies Act, 1956.art IV of Schedule VI to The Companies Act, 1956.art IV of Schedule VI to The Companies Act, 1956.

I Registration Details:

Registration Number 2641

State Code 11

Balance Sheet Date 31st March, 2005

II Capital Raised during the year: Rs.’000

Public issue —

Rights issue —

Bonus issue —

Private placement —

On amalgamation for consideration other than cash —

III Position of Mobilisation and Deployment of Funds: Rs.’000

Total Liabilities 7233183

Total Assets 7233183

Sources of Funds:

Paid up capital 523699

Reserves and surplus 3564133

Secured loans 2488200

Unsecured loans 657151

Deferred tax liability 0

Application of Funds:

Net fixed assets 3514927

Investments 682089

Net current assets 3036167

IV Performance of the Company : Rs.’000

Turnover (including Other Income) 21796661

Total expenditure 20544301

Profit before exceptional items and tax 1252360

Profit before tax 1248165

Profit after tax 1147865

Earning per share (Rs.) 21.92

Dividend rate %

Interim 70%

V Generic names of the principal products, services of the Company:

Product description Item Code No.

(ITC Code)

Transformers 85.04

Switchgears and power control equipment 85.35

Fans, light sources and luminaires 84.14

Electrical motors and alternators 85.01

Telecom and Networking 85.17





93

for the year ended 31st March, 20052004-052004-052004-052004-052004-05 2003-04Rs.’000Rs.’000Rs.’000Rs.’000Rs.’000 Rs.’000

[A][A][A][A][A] CASH FLCASH FLCASH FLCASH FLCASH FLOWS FROM OPERAOWS FROM OPERAOWS FROM OPERAOWS FROM OPERAOWS FROM OPERATING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIES

Net profit before tax and Exceptional Items 1,252,3601,252,3601,252,3601,252,3601,252,360 836,919Depreciation 420,961420,961420,961420,961420,961 442,207

Interest Net 230,753230,753230,753230,753230,753 384,854

Investment income -18,181-18,181-18,181-18,181-18,181 -14,855

Miscellaneous Expenditure written off 00000 32,006

Profit(-)/Loss(+) on sale of investments -54,691-54,691-54,691-54,691-54,691 -37,226

Exchange Gain -39,341-39,341-39,341-39,341-39,341 -61,658

Profit(-)/Loss(+) on sale of fixed assets 5,3205,3205,3205,3205,320 -24,212

Employee Voluntary Retirement Scheme 60,00060,00060,00060,00060,000 150,013

604,821604,821604,821604,821604,821 871,129

Operating profit before working capital changes 1,857,1811,857,1811,857,1811,857,1811,857,181 1,708,048Adjustments for:

Trade and other receivables -34,989-34,989-34,989-34,989-34,989 -418,840

Inventories -28,225-28,225-28,225-28,225-28,225 188,761

Trade and other payables -391,659-391,659-391,659-391,659-391,659 518,763

Leave encashment provision 18,35618,35618,35618,35618,356 -11,361

-436,517-436,517-436,517-436,517-436,517 277,323

Cash generated from (+)/Used in (-) operations 1,420,6641,420,6641,420,6641,420,6641,420,664 1,985,371

Direct taxes Paid (-) / Refund received (+) -29,924-29,924-29,924-29,924-29,924 8,975

Cash flow before exceptional items 1,390,7401,390,7401,390,7401,390,7401,390,740 1,994,346

Advance written off 00000 -32,500

Employee Voluntary Retirement Scheme Incurred -60,000-60,000-60,000-60,000-60,000 -94,821

Miscellaneous Expenditure Incurred 00000 -33,355

-60,000-60,000-60,000-60,000-60,000 -160,676Cash generated from / (used in) operations [A] 1,330,7401,330,7401,330,7401,330,7401,330,740 1,833,670

[B][B][B][B][B] CASH FLCASH FLCASH FLCASH FLCASH FLOW FROM INVESTING ACTIVITIESOW FROM INVESTING ACTIVITIESOW FROM INVESTING ACTIVITIESOW FROM INVESTING ACTIVITIESOW FROM INVESTING ACTIVITIES

Add: Inflows from investing activities

Sale of fixed assets 148,923148,923148,923148,923148,923 254,841

Sale of investments (Gross) 71,49771,49771,49771,49771,497 77,694

Government Subsidy Received 00000 1,500

Investment income 15,48515,48515,48515,48515,485 14,855

235,905235,905235,905235,905235,905 348,890

Less: Outflows from investing activities

Purchase of fixed assets -530,123-530,123-530,123-530,123-530,123 -340,587

Purchase of investments -3,792-3,792-3,792-3,792-3,792 -958

-533,915-533,915-533,915-533,915-533,915 -341,545Cash generated from / (used in) investing activities [B] -298,010-298,010-298,010-298,010-298,010 7,345

Cash Flow Statement


CASH FLCASH FLCASH FLCASH FLCASH FLOW STOW STOW STOW STOW STAAAAATEMENT (Contd.)TEMENT (Contd.)TEMENT (Contd.)TEMENT (Contd.)TEMENT (Contd.) 2004-052004-052004-052004-052004-05 2003-04Rs.’000Rs.’000Rs.’000Rs.’000Rs.’000 Rs.’000

[C][C][C][C][C] CASH FLCASH FLCASH FLCASH FLCASH FLOW FROM FINANCING ACTIVITIESOW FROM FINANCING ACTIVITIESOW FROM FINANCING ACTIVITIESOW FROM FINANCING ACTIVITIESOW FROM FINANCING ACTIVITIES

Add: Inflows from financing activities

Secured loans 673,039673,039673,039673,039673,039 0

Unsecured loans 00000 0

673,039673,039673,039673,039673,039 0Less: Outflows from financing activities

Secured Loans 00000 -587,134

Unsecured Loans -135,264-135,264-135,264-135,264-135,264 -443,753

Interim Dividend paid -574,225-574,225-574,225-574,225-574,225 -156,233

Corporate tax on Dividend -75,280-75,280-75,280-75,280-75,280 -20,128

Interest paid (net) -240,199-240,199-240,199-240,199-240,199 -379,445

-1,024,968-1,024,968-1,024,968-1,024,968-1,024,968 -1,586,693Cash generated from / (used in) financing activities [C] -351,929-351,929-351,929-351,929-351,929 -1,586,693

NET CHANGES IN CASH AND CASH EQUIVNET CHANGES IN CASH AND CASH EQUIVNET CHANGES IN CASH AND CASH EQUIVNET CHANGES IN CASH AND CASH EQUIVNET CHANGES IN CASH AND CASH EQUIVALENT(A+B+C)ALENT(A+B+C)ALENT(A+B+C)ALENT(A+B+C)ALENT(A+B+C) 680,801680,801680,801680,801680,801 254,322

Cash and cash equivalents - Opening balance -1,055,201-1,055,201-1,055,201-1,055,201-1,055,201 -1,309,523

Cash and cash equivalents - Closing balance -374,400-374,400-374,400-374,400-374,400 -1,055,201

ANNEXURE

BREAK UP OF CASH AND CASH EQUIVALENTS

Cash and bank balances 734,200734,200734,200734,200734,200 761,578

Bank overdraft -1,081,100-1,081,100-1,081,100-1,081,100-1,081,100 -1,789,279

Inter corporate deposits payable -27,500-27,500-27,500-27,500-27,500 -27,500

-374,400-374,400-374,400-374,400-374,400 -1,055,201

NOTES:NOTES:NOTES:NOTES:NOTES:1 The cash flow statement has been prepared under the indirect method as set out in AccountingStandard - 3 “Cash Flow

Statements” issued by The Institute of Chartered Accountants of India except in case of dividend, purchase and sale ofinvestments which have been considered on the basis of actual movements of cash and cash equivalents with correspondingadjustments in assets and liabilities.

2 Additions to fixed assets are stated inclusive of movements of capital work-in-progress between the beginning and the end ofthe year and treated as part of investing activities.

3 Figures for the previous year have been re-grouped/re-classified wherever necessary.


B. R. JajuB. R. JajuB. R. JajuB. R. JajuB. R. Jaju WWWWW. Henriques. Henriques. Henriques. Henriques. Henriques S. M. TS. M. TS. M. TS. M. TS. M. Trehanrehanrehanrehanrehan G.ThaparG.ThaparG.ThaparG.ThaparG.ThaparChief Financial Officer Secretary Managing Director Chairman

AAAAAUDITORS’ CERTIFICAUDITORS’ CERTIFICAUDITORS’ CERTIFICAUDITORS’ CERTIFICAUDITORS’ CERTIFICATETETETETE

We have examined the attached cash flow statement of Crompton Greaves Limited for the year ended 31st March 2005. Thestatement has been prepared by the Company in accordance with the requirements of Clause 32 of the Listing Agreement withthe Stock Exchanges and is based on and in agreement with the corresponding Profit and Loss Account and Balance Sheet of theCompany covered by our report of 23rd May, 2005 to the members of the company.

Mumbai, 23rd May, 2005 SHARP & TANNANChartered Accountants

LLLLL. V. V. V. V. VaidyanathanaidyanathanaidyanathanaidyanathanaidyanathanPartner

Membership No. 16368


95

Statement in accordance with the provisions of Section 212 of the Companies Act, 1956Statement in accordance with the provisions of Section 212 of the Companies Act, 1956Statement in accordance with the provisions of Section 212 of the Companies Act, 1956Statement in accordance with the provisions of Section 212 of the Companies Act, 1956Statement in accordance with the provisions of Section 212 of the Companies Act, 1956

Name of the Subsidiary CG Capital CG-PPI CG Motorsand Adhesive Private

Investments Products LimitedLimited Limited

1 Financial Year of the subsidiary ended on 31.03.2005 31.03.2005 31.03.2005

2 Extent of the interest of the Company in thesubsidiary at the end of the Financial Yearof each

(a) Face value Rs. 10 10 10

(b) Number of shares held by:

i) Crompton Greaves Ltd Nos. 9500000 — 1600000

ii) CG Capital and Investments Ltd Nos. — 3175520 —

(c) Shareholding percent

i) Crompton Greaves Ltd % 100 — 100

ii) CG Capital and Investments Ltd % — 81.42 —

3 (a) Net aggregate amount of profits lesslosses so far as they concern membersof the Company and not dealt with, inthe Company’s account

(i) For the Financial Year ended31-03-2005 Rs. Crores 3.82 1.07 0.01

(ii) For the previous Financial Yearssince it became a subsidiary Rs. Crores 1.63 4.40 —

(b) Net aggregate amount of profits lesslosses so far as they concern membersof the Company and dealt with, in theCompany’s account

(i) For the Financial Year ended31-03-2005 Rs. Crores NIL Nil NIL

(ii) For the previous Financial Yearssince it became a subsidiary Rs. Crores NIL 2.38 NIL


B. R. JajuB. R. JajuB. R. JajuB. R. JajuB. R. Jaju WWWWW. Henriques. Henriques. Henriques. Henriques. Henriques S. M. TS. M. TS. M. TS. M. TS. M. Trehanrehanrehanrehanrehan G.ThaparG.ThaparG.ThaparG.ThaparG.ThaparChief Financial Officer Secretary Managing Director Chairman

Statement under Section 212 of the Companies Act, 1956


Rs. in lacsRs. in lacsRs. in lacsRs. in lacsRs. in lacs

Particulars 31.03.2005 Total 31.03.2004 Total

CG Capital & CG Motors CG-PPI CG Capital & CG-PPI CTRInvestments Private Adhesive Investments Adhesive Manufacturing

Ltd. Ltd. Products Ltd. Ltd. Products Ltd. Ind. Ltd.

Capital

Equity Share Capital 950.01 160.00 390.00 1500.01 950.01 390.00 278.14 1618.15

Preference Share Capital 4392.80 0 0 4392.80 4392.80 0 0 4392.80

5342.81 160.00 390.00 5892.81 5342.81 390.00 278.14 6010.95

Reserves 545.56 -83.18 356.90 819.28 163.39 293.47 354.35 811.21

Total Assets 6201.24 160.00 869.48 7230.72 6394.29 744.43 1148.68 8287.40

Total Liabilities 6201.24 160.00 869.48 7230.72 6394.29 744.43 1148.68 8287.40

Investments(Except Investments inSubsidiaries)

Long Term InvestmentsGovernment orTrust Securities 0 0 0 0 0 0 0.01 0.01

Shares, Debenturesor Bonds 5904.86 0 0 5904.86 5729.06 0 0.10 5729.16

Others 0 0 0 0 150.00 0 0 150.00

5904.86 0 0 5904.86 5879.06 0 0.11 5879.17

Turnover 468.60 2.40 1001.09 1472.09 407.74 852.24 3143.96 4403.94

Profit Before Taxation 427.17 1.44 201.05 629.66 399.97 137.42 105.66 643.05

Provision for Taxation

Current Tax 45.00 0 75.95 120.95 31.00 55.51 68.00 154.51

Deferred Tax 0 0.04 -6.64 -6.60 0 -3.32 -48.65 -51.97

Profit After Taxation 382.17 1.40 131.74 515.31 368.97 85.23 86.31 540.51

Proposed Dividend 0 0 58.50 58.50 0 39.00 0 39.00

Notes :1. CG Motors Private Limited has become subsidiary w.e.f. 15th June, 2004.2. CTR Manufacturing Industries Limited has ceased to be subsidiary w.e.f. 14th July, 2004.

Information in respect of Subsidiaries

97

We have audited the attached Consolidated Balance Sheet of CROMPTON GREAVES LIMITED, its Subsidiaries and Associates as

at 31st March, 2005, the Consolidated Profit and Loss Account for the year then ended on that date annexed thereto and

the Consolidated Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of

the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all

material respects, in accordance with an identified financial reporting framework and are free of material misstatements. An

audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An

audit also includes assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of CTR Manufacturing Industries Limited, CG Capital & Investments Limited,

CG Maersk Information Technologies Private Limited and CG Actaris Electricity Management Limited, whose financial

statements reflect total assets of Rs.113.27 crores as at 31st March, 2005 and total revenues of Rs.61.85 crores for the year

ended on that date. These financial statements have been audited by other auditors whose reports have been furnished to

us, and our opinion, in so far as it relates to the amounts included in respect of the subsidiaries, is based solely on the

report of the other auditors.

We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the

requirements of Accounting Standard 21 on “Consolidated Financial Statements”, AS 23 on “Accounting for investments in

Associates in Consolidated Financial Statements” and AS 27 on “Financial reporting of interests in Joint Ventures” issued

by The Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of

Crompton Greaves Limited, its Subsidiaries and Associates included in the Consolidated Financial Statements.

We further report that no provision has been made in the accounts in respect of

(see Note no. 2 of Schedule “B” )

Rs. Crores

(a) Excise demands 4.51

(net after income tax saving Rs.4.16 crores)

(b) Sales tax demands 2.53

(net after income tax saving Rs.2.27 crores)

We report that, had the observations made by us in items (a) and (b) above been considered, the Profit Before Tax for the

year would have been Rs.128.85 crores (as against the reported figure of Rs.128.43 crores), credit balance in the

Retained Earnings would have been Rs.95.49 crores (as against the reported figure of Rs.102.53 crores), the Current

Liabilities and Provisions would have been Rs.595.47 crores (as against the reported figure of Rs.588.43 crores).

Subject to the foregoing, in our opinion and to the best of our information and explanation given to us, and on the

consideration of the separate audit reports on individual audited financial statements of Crompton Greaves Limited, its

Subsidiaries and Associates, read together with the Significant Accounting Policies as per Schedule A and Notes On

Accounts appearing in Schedule B :

a) The Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of

Crompton Greaves Limited, its Subsidiaries and Associates as at 31st March 2005;

b) The Consolidated Profit and Loss Account gives a true and fair view of the consolidated results of operations of

Crompton Greaves Limited, its Subsidiaries and Associates for the year ended on that date; and

c) The Consolidated Cash Flow Statement gives a true and fair view of the cash flows of Crompton Greaves Limited, its

Subsidiaries and Associates for the year ended on that date.

SHARP & TANNAN


L. Vaidyanathan

Mumbai, 23rd May, 2005 Partner

Membership No: 16368

Consolidated Financial StatementsAuditor’s Report to the Shareholders of Crompton Greaves Limited

As at As at31-03-2005 31-03-2004

Schedule Rs. Crores Rs. Crores Rs. Crores

SOURCES OF FUNDS

Shareholders’ Funds

Capital 1 52.37 52.37

Reserves and Surplus 2 366.59 297.05

418.96 349.42

Minority Interest 3 1.51 2.47

Loan Funds

Secured Loans 4 248.82 257.30

Unsecured Loans 5 65.72 81.51

314.54 338.81

Deferred Tax Liability 6 0.53 11.89

735.54 702.59

APPLICATION OF FUNDS

Fixed Assets

Gross Block 7 814.44 811.03

Less : Depreciation and Impairment 469.38 443.88

Net Block 345.06 367.15

Capital Work-in-Progress (Net of Impairment) 9.66 11.09

354.72 378.24

Goodwill on Consolidation (Net) 0.75 1.59

Investments 8 73.57 75.30

Current Assets, Loans & Advances

Inventories 9 177.75 178.94

Sundry Debtors 10 545.24 536.51

Cash and Bank Balances 11 75.95 80.19

Loans and Advances 12 95.99 109.19

894.93 904.83

Less: Current Liabilities & Provisions

Liabilities 13 572.72 619.48

Provisions 14 15.71 37.89

588.43 657.37

Net Current Assets 306.50 247.46

735.54 702.59Significant Accounting Policies [A]

Notes On Accounts [B]

Consolidated Balance Sheetas at 31st March, 2005

The Schedules referred to above and the Notesattached, form an integral part of the Accounts.


As per our report attached.SHARP & TANNAN B. R. Jaju S. M. TrehanChartered Accountants Chief Financial Officer Managing Director

L. Vaidyanathan W. Henriques G.ThaparPartner Secretary ChairmanMembership no 16368

99

2004-05 2003-04Sch Rs. Crores Rs. Crores

INCOME

Gross Sales 2171.84 1894.62

Less: Excise Duty 183.15 155.52

Net Sales 1988.69 1739.10

Other Income 15 28.42 31.10

2017.11 1770.20

EXPENDITURE

Materials 16 1377.35 1217.86

Staff and Welfare 17 145.13 142.70

Manufacturing, Selling and Administration 18 287.87 217.10

Interest and Commitment Charges 23.16 38.90

Depreciation 42.58 45.19

Amortisation of Intangible Assets 0.09 0.09

Miscellaneous Expenditure Amortised / Charged 12.08 18.64

1888.26 1680.48

Profit Before Exceptional Items and Tax 128.85 89.72

Exceptional Items (Net) -0.42 5.83

Profit Before Taxes 128.43 95.55

Provision for

Current Tax -11.38 -8.28

Deferred Tax 6 0.07 -11.41

Profit After Tax 117.12 75.86

Taxation adjustment of earlier years 0.00 -0.02

Transfer to Doubtful Debts Reserve -2.93 -5.24

Interim Dividend -36.66 -15.71

Final Dividend 0.00 -20.95

Corporate Tax on Dividend -4.89 -4.69

72.64 29.25

Minority Interest -0.25 -0.27

Profit / Loss(–) After Tax and Minority Interest 72.39 28.98

Share of Profit / Loss(–) of Associate Companies 3.02 -5.67

Balance Carried to Balance Sheet 75.41 23.31

Earnings per Share (Basic And Diluted)

- Excluding Exceptional Items Rs. 22.97 12.23

- Including Exceptional Items Rs. 22.89 13.35

Significant Accounting Policies [A]

Notes on Accounts [B]

Consolidated Profit & Loss Account


The Schedules referred to above and the Notesattached, form an integral part of the Accounts.


As per our report attached.SHARP & TANNAN B. R. Jaju S. M. TrehanChartered Accountants Chief Financial Officer Managing Director

L. Vaidyanathan W. Henriques G.ThaparPartner Secretary ChairmanMembership no 16368

Schedulesforming part of Consolidated Balance Sheet

SCHEDULE 2 As at Additions Deductions As atRESERVES & SURPLUS 31-03-2004 31-03-2005

Rs. Crores Rs. Crores Rs. Crores Rs. Crores

Capital Reserve 19.46 0.00 0.00 19.46

Capital Redemption Reserve 0.17 0.00 0.17 (a) 0.00

Securities Premium Account 227.76 0.00 0.00 227.76

Revaluation Reserve 16.36 0.00 0.67 (a) 15.69

Government Subsidy 0.59 0.00 0.21 (a) 0.38

Investment Allowance (Utilised) Reserve 0.73 0.00 0.00 0.73

Debenture Redemption Reserve 1.40 0.00 1.40 0.00

Doubtful Debts Reserve (Net) 0.04 2.93 2.93 0.04

266.51 2.93 5.38 264.06

Retained Earnings 30.54 87.49 (b) 15.50 (c) 102.53

30.54 87.49 15.50 102.53

Total 297.05 90.42 20.88 366.59

Previous Year 399.67 54.51 157.13 297.05

Notes:

(a) The deductions from Capital Redemption Reserve of Rs.0.17 crores, Revaluation Reserve of Rs.0.37 crores and GovernmentSubsidy of Rs.0.21 crores are on account of disposal of a Subsidiary. Depreciation on revalued fixed assets, recouped fromRevaluation Reserve Rs.0.28 crores and Revaluation Reserve written back Rs.0.02 crores on assets disposed off.

(b) The additions to Retained Earnings represent Rs.1.40 crores transferred from Debenture Redemption Reserve,Rs.10.27 crores transferred from Deferred tax Liability, since no longer required, Rs. 0.41 crores adjusted on account ofconversion of an Associate to a Subsidiary and Rs.75.41 crores transfer from Profit and Loss Account.

(c) The deductions from Retained Earnings represent Rs.12.16 crores of impairment loss, Rs.0.07 crores on account of disposalof a Subsidiary, Rs.2.95 crores on account of inclusion of an associate in consolidation and Rs.0.32 crores elimination of ownshare of dividend of a Subsidiary.

SCHEDULE 1 CAPITAL As at As at31-03-2005 31.03.2004Rs. Crores Rs. Crores

Authorised

6,00,00,000 Equity Shares of Rs.10 each 60.00 60.00

Issued and Subscribed


PAID UP


Add: Forfeited shares

8,460 Equity shares of Rs.10 each Rs.32175 partly paid 0.00 0.00

52.37 52.37

Of the above, following equity shares were allotted:

3,87,200 pursuant to a contract withoutpayment being received in cash

1,62,00,000 as fully paid up Bonus Shares bycapitalisation of General Reserve and SecuritiesPremium Account

14,76,566 as fully paid up pursuant to schemes of amalgamation

66,13,750 as underlying shares to an internationaloffering of Global Depository Receipts(GDRs) in US Dollars

101


SCHEDULE 3 As at As atMINORITY INTEREST 31-03-2005 31-03-2004

Rs. Crores Rs. Crores

Opening Balance 2.47 2.27

Add: Share of Profit for the year 0.25 0.27

Less: Dividends to Minority -0.07 -0.07

Less: Share of Revaluation Reserve Recoupment (Rs Nil; Previous Year Rs 19163) 0.00 0.00

Less : Adjustment on account of disposal of Subsidiary -1.14 0.00

1.51 2.47

SCHEDULE 4 As at As atSECURED LOANS 31-03-2005 31-03-2004


DEBENTURES:

(Privately placed with Financial Institutions)13.50% Secured non-convertible debentures of Rs.100 each50,00,000 (VIII Series) redeemable in 18 equalquarterly instalments due from 15th June, 2000 0.00 5.55

RUPEE TERM LOANS

(a) From Banks 41.75 56.75

(b) From Financial Institutions 55.00 12.50

FOREIGN CURRENCY TERM LOANS

From Banks 43.96 0.00

CASH CREDIT / WORKING CAPITAL DEMAND LOANS

From Banks

(a) Rupee Loans / Cash Credit 0.00 3.57

(b) Foreign Currency Loans 108.11 178.93

248.82 257.30


SCHEDULE 5 As at As atUNSECURED LOANS 31-03-2005 31-03-2004


Fixed Deposits 36.31 51.70

(Repayable within a year; Rs.36.31 Crores;

Previous year Rs.14.79 Crores)

Inter - Corporate Deposits 2.75 2.75

(Maximum amount outstanding at any time during the year

Rs.2.75 Crores; Previous year Rs.2.75 crores)

Others

Interest free Sales tax Loans and Special

Incentive Loans from Central / State Governments 26.66 27.06

65.72 81.51

SCHEDULE 6 As at As atDEFERRED TAX ASSET / LIABILITY (-) 31-03-2005 31-03-2004


Deferred tax asset/liability (-) -11.89 78.98

Add: Adjustment on conversion of Associate into a Subsidiary (Rs.7,494) 0.00 0.00

Adjusted against Securities Premium Account 0.00 79.46

Incremental Liability charged to Profit & Loss Account 0.07 11.41

Transferred to General Reserve 10.27 0.00

Adjustment on account of disposal of a subsidiary 1.02 0.00

-0.53 -11.89

103

SCHEDULE 7FIXED ASSETS & DEPRECIATION

GROSS BLOCK (at Cost/Professional Valuation) DEPRECIATION IMPAIRMENT NET BLOCK

ASSETS Opening Additions Deductions As at Opening On For Closing Opening Provided Reversed Closing As at As atAs at 31-03-2005 As at Deductions the Year As at As at during during As at 31-03-2005 31-03-2004

1-04-2004 1-04-2004 31-03-2005 1-04-2004 the year the year 31-03-2005Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores

(A) TANGIBLE ASSETS

Freehold Land 14.54 0.00 0.39 14.15 0.00 0.00 0.00 0.00 0.00 1.04 0.00 1.04 13.11 14.54

Buildings 193.74 3.97 5.92 191.79 45.22 1.55 4.88 48.54 0.00 1.98 0.00 1.98 141.27 148.52

Plant &

Equipment 483.64 40.92 36.06 488.50 314.60 20.71 31.76 325.65 0.00 10.55 5.32 5.23 157.62 169.04

Furniture &

Fixtures 97.00 6.70 5.41 98.29 76.12 4.47 4.99 76.64 0.00 2.14 0.06 2.08 19.57 20.88

Vehicles 10.75 1.79 2.39 10.15 6.20 1.50 1.18 5.89 0.00 0.22 0.00 0.22 4.04 4.55

Sub-total (A) 799.67 53.38 50.17 802.88 442.14 28.23 42.81 456.72 0.00 15.93 5.38 10.55 335.61 357.53

(B) INTANGIBLE ASSETS

Leasehold Land 11.36 0.03 0.00 11.39 1.74 0.00 0.11 1.84 0.00 0.24 0.00 0.24 9.31 9.62

Computer Software 0.00 0.17 0.00 0.17 0.00 0.00 0.03 0.03 0.00 0.00 0.00 0.00 0.14 0.00

Sub-total (B) 11.36 0.20 0.00 11.56 1.74 0.00 0.14 1.87 0.00 0.24 0.00 0.24 9.45 9.62

Total (A+B) 811.03 53.58 50.17 814.44 443.88 28.23 42.95 458.59 0.00 16.17 5.38 10.79 345.06 367.15

(C) CWIP-TANGIBLE ASSETS

Buildings 2.68 2.94 0.59 5.03 0.00 0.00 0.00 0.00 0.00 1.37 0.00 1.37 3.66 2.68

Plant & Equipment 5.40 10.28 12.70 2.98 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.98 5.40

Sub-total (C) 8.08 13.22 13.29 8.01 0.00 0.00 0.00 0.00 0.00 1.37 0.00 1.37 6.64 8.08

(D) CWIP-INTANGIBLE

ASSETS

Technical Know-how 3.01 0.01 0.00 3.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.02 3.01

Sub-total (D) 3.01 0.01 0.00 3.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.02 3.01

Total (C+D) 11.09 13.23 13.29 11.03 0.00 0.00 0.00 0.00 0.00 1.37 0.00 1.37 9.66 11.09

As at 31-03-2005 822.12 66.81 63.46 825.47 443.88 28.23 42.95 458.59 0.00 17.54 5.38 12.16 354.72

As at 31-03-2004 812.27 37.92 28.07 822.12 408.13 9.84 45.60 443.88 0.00 0.00 0.00 0.00 0.00 378.24

Deductions include Rs.15.30 crores adjusted from Gross Block and Rs.0.21 crores adjusted from Depreciation on account of disposal of a subsidiary.

DEPRECIATION 31-03-2005 31-03-2004 AMORTISATION OF INTANGIBLE ASSETS 31-03-2005 31-03-2004

Rs. Crores Rs. Crores Rs. Crores Rs. Crores

Depreciation on fixed assets 42.81 45.45 Depreciation on Intangible assets 0.14 0.14

Less: transferred from revaluation reserve 0.23 0.26 Less: transferred from revaluation reserve 0.05 0.05

42.58 45.19 0.09 0.09

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SCHEDULE 8 As at As atINVESTMENTS 31-03-2005 31-03-2004

Rs. Crores Rs. Crores Rs. Crores

LONG TERM (At Cost)

Government & Trust Securities 2.56 2.56

Fully paid Equity / Preference Shares and Debentures 40.34 46.03

Associate Companies (Under Equity Method)

Cost of Investments 26.33 22.07

Add: Share of Capital Reserves 0.47 0.47

Add: Opening Bal. of Other Reserves 4.17 9.84

Add: Share of Profit / (Loss) during the year 4.37 -1.89

Less: Adjustment on inclusion of an Associate in Consolidation 2.95 0.00

Less: Adjustment on Associate becoming a Subsidiary 0.37 0.00

Less: Dividends received 1.35 3.78

30.67 26.71

73.57 75.30

SCHEDULE 9 As at As atINVENTORIES 31-03-2005 31-03-2004(At lower of Cost or Net Realisable Value) Rs. Crores Rs. Crores Rs. Crores Rs. Crores

Stores, spare parts and packing materials 2.72 3.38

Raw materials 52.15 52.71

Work-in-Process - Manufacturing 56.36 54.18

Finished goods 42.30 34.27

153.53 144.54

Work-in-Progress - Contracts

At cost 15.56 10.98

At realisable sales value 94.31 143.31

Less : Progress payments 85.65 119.89

8.66 23.42

24.22 34.40

177.75 178.94

105


SCHEDULE 10 As at As atSUNDRY DEBTORS 31-03-2005 31-03-2004


Unsecured

Debts outstanding for a period exceeding six months

Considered good 127.32 156.15

Considered doubtful 32.48 29.99

Less: Doubtful debts reserve per contra -32.48 -29.87

0.00 0.12

Other Debts

Considered good 417.92 380.24

545.24 536.51

SCHEDULE 11 As at As atCASH AND BANK BALANCES 31-03-2005 31-03-2004


Cash on hand * 9.15 0.74

Cash at Bank

On Current Account 20.18 11.11

On Fixed Deposit Account 1.69 7.35(including interest accrued thereon)

Remittances in transit 44.93 60.99

75.95 80.19

* Inclusive of Mutual Fund Investment 9.00 0.50

SCHEDULE 12 As at As atLOANS AND ADVANCES 31-03-2005 31-03-2004


(Unsecured, Considered Good, unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received 91.35 104.76

Balances with excise, customs etc. 4.64 4.43

95.99 109.19


SCHEDULE 13 As at As atCURRENT LIABILITIES 31-03-2005 31-03-2004


Sundry Creditors:

(a) Due to Small Scale Industrial Undertaking (s) 86.62 84.04

(b) Due to Others 429.04 494.76

515.66 578.80

Investor Education and Protection Fund

(a) Unclaimed Dividend 0.41 0.24

(b) Unclaimed Matured Fixed Deposit 1.24 0.55

1.65 0.79

Interest accrued but not due on loans 0.37 1.35

Other Liabilities:

(a) Security Deposit 3.88 2.04

(b) Others 51.16 36.50

55.04 38.54

572.72 619.48

SCHEDULE 14 As at As at

PROVISIONS FOR: 31-03-2005 31-03-2004


Gratuity 2.54 3.05

Leave encashment 8.52 6.68

Proposed Dividend 0.00 20.95

Corporate tax on Dividend 0.00 2.68

Provident Fund 0.89 0.86

Insurance, Pension and similar Staff benefits 3.76 3.67

15.71 37.89

Schedules forming part of Consolidated Profit and Loss Account

SCHEDULE 15 2004-05 2003-04OTHER INCOME Rs. Crores Rs. Crores

Income from

a) Lease Rent 1.50 1.55

b) Business Service Centres 7.64 6.85

(TDS deducted Rs.1.50 crores; Previous year Rs.0.16 crores) 9.14 8.40

Income from Investments (Net) 1.87 5.25

Exchange Gain (Net) 3.93 6.17

Profit on sale of fixed assets (Net) 0.00 2.42

Profit on disposal of Subsidiary 1.61 0.00

Miscellaneous Income 11.87 8.86

28.42 31.10

107

Schedulesforming part of Consolidated Profit & Loss Account

SCHEDULE 16 2004-05 2003-04MATERIALS Rs. Crores Rs. Crores Rs. Crores

Opening Stock

Raw Materials 52.71 54.07

Work-in-Process

Manufacturing 54.18 52.27

Contracts 10.98 14.35

117.87 120.69

Finished Goods 34.27 40.27

152.14 160.96

Add : Purchases (Net) 1418.27 1227.74(including Trading Goods Rs.455.46 crores; Previous Year Rs.391.95 crores)

Less: Scrap Sales 26.69 18.70

1391.58 1209.04

1543.72 1370.00

Less: Closing Stock

Raw Materials 52.15 52.71

Work-In-Process:

Manufacturing 56.36 54.18

Contracts 15.56 10.98

124.07 117.87

Finished Goods 42.30 34.27

166.37 152.14

1377.35 1217.86

SCHEDULE 17 2004-05 2003-04STAFF & WELFARE Rs. Crores Rs. Crores

Salaries, Wages and Bonus 117.54 114.75

Provident Fund and Family Pension Scheme Contributions 7.97 8.45

Superannuation Fund Contributions 2.31 2.31

Gratuity (including Contributions to Fund) 3.61 4.22

Workmen and Staff Welfare 13.70 12.97

145.13 142.70

Schedulesforming part of Consolidated Profit & Loss Account

SCHEDULE 18 2004-05 2003-04MANUFACTURING, SELLING & ADMINISTRATION Rs. Crores Rs. Crores Rs. Crores

Stores and Spare Parts 16.01 13.49

Power and Fuel 19.08 20.61

Repairs

Buildings 2.86 2.14

Plant and machinery 7.46 6.37

Others 5.52 3.15

15.84 11.66

Forwarding, Godown and Packing 53.78 46.12

Advertising 12.55 7.02

Auditors’ Remuneration

Statutory audit fees 0.40 0.30

Tax audit fees 0.07 0.07

Taxation 0.01 0.00

Certification 0.04 0.06

Other Services 0.16 0.13

Expenses Reimbursed (including Service Tax) 0.10 0.11

0.78 0.67

Rent 4.63 4.72

Rates and Taxes 16.86 9.60

Insurance 4.09 4.68

Bad Debts and Advances 31.80 7.56

Vehicle Maintenance 1.60 1.38

Travelling 16.85 16.85

Professional Charges 11.40 7.73

Technical Service Fees 0.46 0.49

Miscellaneous Expenses 81.50 64.48

Loss on Sale of Fixed Assets (Net) 0.54 0.00

Directors’ Fees 0.10 0.04

287.87 217.10

109

Schedule [ A ]

1 Basis of presentation of Financial Statements

(i) The Financial Statements of the subsidiaries used in the consolidation are drawn upto the same reporting date as that of

the parent Company, i.e. year ended 31st March, 2005.

(ii) The accounts have been prepared using historical cost convention except for the revaluation of certain fixed assets and

on the basis of a going concern, in accordance with Section 211 (3C) and other provisions of the Companies Act, 1956,

with revenue recognised and expenses accounted on accrual, including for committed obligations.

Insurance and other claims are accounted for as and when admitted by the appropriate authorities.

2 Principles of Consolidation

(i) The financial statements of the parent Company and its subsidiaries have been consolidated on a line by line basis by

adding together the book values of like items of assets, liabilities, incomes and expenses after eliminating intra-group

balances, intra-group transactions and unrealised profits resulting therefrom.

(ii) The financial statements of the parent Company and its subsidiaries have been consolidated using uniform accounting

policies for like transactions and other events in similar circumstances.

(iii) The excess of cost to the parent Company of its investment in each of the subsidiary over its share of equity in the

respective subsidiary, on the acquisition date, is recognised in the financial statements as Goodwill on Consolidation

and carried in the Balance Sheet as an asset. Negative Goodwill is recognised as Capital Reserve on Consolidation.

(iv) Investments in Associate Companies have been accounted under the Equity Method as per Accounting Standard 23

“Accounting for Investments in Associates in Consolidated Financial Statements”, issued by the Council of the Institute

of Chartered Accountants of India.

Under the Equity Method of Accounting the investment is initially recorded at cost, identifying any goodwill / capital

reserve arising at the time of acquisition. The carrying amount of investment is adjusted thereafter for the post acquisition

change in the investor’s share of net assets of the Investee. The consolidated statement of Profit & Loss reflects the

investor’s share of the results of the operations of the Investee.

3 The company has disclosed only such Policies and Notes from the individual financial statements, which fairly present the

needed disclosures. Lack of homogeneity and other similar considerations made it desirable to exclude some of them, which

in the opinion of the management, could be better viewed, when referred from the individual financial statements.

Significant Accounting Policies

Notes on Consolidated Accounts

Schedule [B]2004-05 2003-04

(Rs. Crores) (Rs. Crores)

1 A In terms of AS 21 and AS 23 the consolidated Country of Proportion of Proportion offinancial statements present the consolidated Incorporation Ownership Interest Ownership Interestaccounts of Crompton Greaves Limited (“The Parent % %Company”) with its following Subsidiaries andAssociates

Subsidiaries

(a) CG Capital & Investments Limited India 100.00 100.00

(b) CG Motors Private Limited India 100.00 -(Became a subsidiary w.e.f. 15th June 2004)

(c) CG PPI Adhesive Products Limited India 81.42 81.42

(d) CTR Manufacturing Industries Limited India - 82.06(Ceased to be a subsidiary w.e.f. 14th July 2004)

Associates

(a) Brook Crompton Greaves Limited India 49.00 49.00

(b) CG Actaris Electricity Management Limited India 49.00 49.00

(c) CG Lucy Switchgears Limited India 50.00 50.00

(d) CG Maersk Information TechnologyPrivate Limited India 50.00 50.00

(e) CG Smith Software Private Limited India 50.00 50.00

(f) CG Motors Private Limited India - 49.00(Earlier Hitachi CG Motor Engineering Pvt. Ltd.)(Ceased to be an associate w.e.f. 15th June 2004)

(g) International Components India Limited India 50.00 50.00

B On 14th July, 2004, CG Capital & Investments Limited, a whollyowned Subsidiary of Crompton Greaves Limited disposed off its82.06% holding in CTR Manufacturing Industries Limited. Theconsolidated Profit and Loss Account includes the results of CTRManufacturing Industries Limited upto the said date.

C The Parent Company has acquired on 15th June 2004 the balance51% stake in Hitachi CG Motor Engineering Private Limited,a 49 : 51 Joint Venture between the Parent Company and HitachiLimited, Japan, for a consideration of Rs.0.38 crores.Consequently, Hitachi CG Motor Engineering Private Limitedbecame a wholly owned Subsidiary of the Parent Company.Subsequent to the purchase of entire shareholding, the name ofthe company has been changed to CG Motors Private Limited. Theresults of the said company upto 15th June 2004 have beenincluded in the share of profit / loss from associate companies andthe results thereafter have been included in the Consolidated Profitand Loss Account as a Subsidiary in compliance with AS - 21.

D In case of CG Maersk Information Technology Private Limited andCG Actaris Electricity Management Limited the financial statementsdrawn upto 31st December 2004 have been considered. There wereno material adjustments required for any significant events ortransactions between the associate and any of the other groupcompanies between the said date and 31st March 2005.

111

Schedule [B] (Contd.)2004-05 2003-04


E For the purpose of consolidation in accordance with AS 23, certainAssociates which do not fulfill the criterion specified in the saidAccounting Standard have been excluded. Investments in suchAssociates have been accounted for in accordance with AS 13.The list of Associates not included in the Consolidated FinancialStatements are as under.

(a) Karamchand Thapar (Africa) Limited, Mauritius(Disposed off during the year)

(b) Paxonet Communications Inc. USA(Disposed off during the year)

(c) Power Equipment Limited, Dubai

(d) Radiant Electronics Limited

F The accounts of CG Actaris Electricity Management Ltd. have been

incorporated for the first time during the year ended 31st March, 2005.

The same had not been considered for consolidation upto 31st March,

2004 but were accounted for in accordance with AS 13.

2 No provision has been made for

(a) Excise Duty demands which have been disputed by the Company 4.16 3.03(Net of income tax)

(b) Sales tax demands which have been disputed by the Company 2.27 1.87(Net of income tax)

3 Contingent liability, not provided for, in respect of

(a) Claims against the Company not acknowledged as debts 5.92 0.55(Net of income tax)

(b) Show Cause Notice issued by the Custom Authorities for levy Amount not Amount notof penalty under Section 127 of the Customs Act which Ascertainable Ascertainablehave been disputed by the Company

(c) Bills discounted 61.00 39.50

(d) Guarantees to bankers, financial institutions and others 4.78 7.17on behalf of Associate Companies

(e) Income tax appeals/reference applications made by the 12.00 9.86income tax department against the orders passed by theAppellate Authorities in favour of the Company

(f) Excise matters in dispute decided in favour of the 5.37 7.18Company at Appellate Level for which the Departmentis in Appeal before CEGAT.

4 Provision for tax for the year represents wealth tax provision 0.20 0.20made under Wealth Tax Act, 1957

5 Estimated amount of contracts remaining to be executed on CapitalAccount and not provided for (Net of advances) 13.96 14.84

6 Sales include

(a) Increase / Decrease ( - ) in construction work-in-progress:

(i) Closing work-in-progress 94.31 143.31

(ii) Less: Opening work-in-progress 143.31 109.71

-49.00 33.60

and are net of:

(b) Brokerage and commission 12.18 9.46

(c) Cash discount 6.36 8.40

7 Disclosure under AS - 7 (Revised) “Construction Contracts”

(a) Contract revenue recognised for the year 107.15 149.97

(b) Advance received 13.09 14.36

(c) Retentions 37.17 41.02

(d) Amount of Contract costs incurred 124.34 136.06

8 Miscellaneous expenditure amortised relates to

(a) Testing Fees 0.00 0.82

(b) Payments under Voluntary Retirement Schemes 0.00 7.47

(c) Technical Know-How Fees 0.00 1.26

0.00 9.55

9 Effects of foreign currency transactions accounted for in theProfit and Loss Account during the year {Gain (+) / Loss (-) }Exchange difference charged to Profit & Loss Account

(a) On account of forward contracts -1.64 -0.01

(b) Others 5.57 6.18

3.93 6.17

10 Interest and commitment charges include interest on

(a) Fixed loans 14.74 18.98

(b) Debentures 0.25 2.79

(c) Others 9.71 18.54

24.70 40.31

(d) Less: Interest income (Including tax deducted atsource Rs.0.07 crores; Previous year Rs.0.06 crores) 1.54 1.41

23.16 38.90

11 Advances recoverable in cash or in kind or for value to be receivedinclude:

(a) Advances to associate company pending allotment of shares -Globalstar India Satellite Services Private Limited 1.16 1.16

(b) Rent deposit with Directors 0.00 0.20

(c) Due by an Officer Rs.Nil; (Previous year Rs.Nil)(Maximum amount outstanding at any time during the year Rs.Nil; 0.00 0.00(Previous year- Rs.Nil)

12 (a) During the year 13.5% Secured Non-Convertible Debentures (VIII series)were fully redeemed.

(b) In view of the above, the total amount outstanding to the credit of DebentureRedemption Reserve as on 31.03.2005 amounting to Rs.1.40 crores has beentransferred to Retained Earnings.

2004-05 2003-0413 Exceptional items in the Profit & Loss account pertain to : (Rs. Crores) (Rs. Crores)

(a) Diminution in the value of Advances 0.00 -3.25

(b) Decline in the value of certain Long Term Investments -0.42 -0.09

net of write back of earlier decline Rs.Nil

(Previous year Rs.0.75 crores)

(c) Profit on sale of Land & Building situated at Worli 0.00 4.80

(d) Profit on sale of Land & Building situated at Bhandup 0.00 4.37

-0.42 5.83

Schedule [B] (Contd.)2004-05 2003-04


113

Schedule [B] (Contd.)2004-05 2003-04


14 Goodwill on Consolidation is arrived as under :

Opening Balance 1.59 1.59

Less : Adjustment on disposal of a Subsidiary 0.82 0.00

0.77 1.59

Less : Capital Reserve on acquisition of a Subsidiary 0.02 0.00

0.75 1.59

15 The effect of acquisitions and disposals of stake in subsidiaries during the year on the consolidated financial statements is asunder :

Name of the Company Effect on Net AssetsGroup Profit as at March

After Minority 31, 2005Interest

Acquisition

CG Motors Private Limited 0.01 -0.83(Formerly known as Hitachi CG Motor Engineering Private Limited)

Total 0.01 -0.83

Disposals

CTR Manufacturing Industries Limited -0.34 -6.39

Total -0.34 -6.39

16 (a) In view of the set off of accumulated losses / unabsorbed depreciation available to the company underSection 72 A of the Income Tax Act, 1961 there is no tax liability on the parent company except u/s 115JBof the Act for which necessary provision has been made.

(b) In case of the parent company, The Deferred Tax Asset of Rs.14.40 crores has not been recognised in thebooks of accounts since this forms part of the amount of deferred tax asset written off during earlier yearsagainst the balance in Securities Premium Account vide order dated 15th September, 2003 of High Court ofjudicature at Mumbai.

17 Disclosures as required by Accounting Standard 18 “Related Party Disclosure” in respect of transactions forthe year ended 31st March, 2005 are as under :

1 Relationships:

i) List of related parties with whom transactions were carried out during the year and description of relationship :

Associates :

(a) Brook Crompton Greaves Limited

(b) CG Lucy Switchgear Limited

(c) CG Smith Software Private Limited

(d) Hitachi CG Motor Engineering Private Limited (Ceased to be an associate w.e.f. 15th June, 2004)

ii) Key Management Personnel and their relatives :

Mr. SM Trehan - Managing Director


Dr. O. Goswami - Director

Mr. S. Labroo - Director

Mr. K.Thapar - Director

Mr. S. Bisht - Nominee Director

iii) Other Related Parties

(a) Ballarpur Industries Limited

(b) Greaves Cotton Limited

Schedule [B] (Contd.)

2 The following transactions were carried out with the related parties in the ordinary course of business:

2004-05 2003-04(Rs. Crores) (Rs. Crores)

Sl. Associate AssociateNo. Transactions Companies Companies

1 Purchases of goods 25.45 9.17

2 Sales of goods and service revenue 1.80 0.51

3 Purchase of Fixed Assets 0.06 0.00

4 Interest expense 0.35 0.93

5 Dividend received 1.35 0.96

6 Commission received 0.10 0.01

7 Due to related parties as at year-end 8.81 9.60

8 Due from related parties as at year-end 0.26 0.12

9 Loans / Inter corporate deposits taken

Balance as at the year end 2.75 2.75

10 Loans / Inter corporate deposits placed

Balance as at the year end 1.24 0.00

Amounts written off / written back during the year in respect of the aboveparties Rs.Nil (Previous year Rs.Nil)

3 Remuneration to Managing Director, Commission to Directors 2.61 1.96

4 Transactions with Other Related Parties

(a) Purchases of goods 0.94 0.00

(b) Sales of goods and service revenue 3.01 1.94

(c) Due to related parties as at year-end 0.38 0.00

(d) Due from related parties as at year-end 0.47 0.85

18 Earnings per share (EPS) computed in accordance with Accounting Standard 20: “Earnings Per Share”

Particulars 2004-05 2003-04

No. of Shares issued of Rs.10/- each Nos. 52366656 52366656

Basic and Diluted EPS

(a) EPS excluding exceptional items

Numerator

Profit/(Loss) for the year after tax, Minority Interest Rs. 1203069643 640675138

and Share of Profit / (Loss) of Associate Companies

(b) EPS including exceptional items

Numerator

Profit / (Loss) for the year after tax, Minority Interest Rs. 1198875243 699013355

and Share of Profit / (Loss) of Associate Companies

(c) Denominator

Weighted average number of equity shares. Nos. 52366656 52366656

(d) Earnings per Share ( Basic & diluted )

= Numerator / Denominator

(i) Excluding exceptional items Rs. 22.97 12.23

(ii) Including exceptional items Rs. 22.89 13.35

115

19 The disclosure in respect of Segment information for the year ended 31st March, 2005

I A Primary Segments (Business Segment) Rs Crores

Particulars Power Consumer Industrial Others Eliminations/ Total

System Products System Unallocable 2004-05

Expenditure /

Assets*

Segment Revenue 890.07 681.70 554.80 45.27 0.00 2171.84


Total 890.31 682.86 570.63 45.48 -17.44 2171.84

Segment Results 66.52 60.03 76.74 -13.03 -0.03 190.23


Less: Other Unallocable Expenditure

Net of Unallocable Income 38.64


Capital Employed:

Segment Assets 557.15 206.07 241.99 94.19 224.57 1323.97


Net Assets 306.55 54.20 139.61 78.48 156.70 735.54

Capital Expenditure 15.91 1.81 18.71 0.11 1.33 37.87

Depreciation / Amortisation 15.36 8.48 14.19 0.50 4.14 42.67


* Unallocable Assets comprise Assets and Liabilities which cannot be allocated to the segments. Tax Credit Asset / Liability not

considered in Capital Employed above.

Rs Crores

B Particulars Power Consumer Industrial Others Eliminations/ Total

System Products System Unallocable 2003-04

Expenditure /

Assets*

Segment Revenue 780.04 620.73 439.70 54.15 0.00 1894.62


Total 791.23 623.03 453.84 54.21 -27.69 1894.62

Segment Results 65.92 54.94 40.80 -6.68 0.00 154.98


Less: Other Unallocable Expenditure

Net of Unallocable Income 20.53


Capital Employed:

Segment Assets 580.41 194.24 215.88 114.62 254.81 1359.96


Net Assets 287.51 45.39 95.11 94.98 177.13 700.12

Capital Expenditure 16.84 1.79 9.30 0.56 -7.71 20.78

Depreciation / Amortisation 16.60 8.80 14.08 1.22 4.58 45.28


* Unallocable Assets comprise Assets and Liabilities which cannot be allocated to the segments. Tax Credit Asset / Liability not

considered in Capital Employed above.



II Secondary Segment (Geographical Segment)

(a) The distribution of the company’s sales by geographical market is as under:

Rs. in Crores

Sales Revenue: 31.03.2005 31.03.2004

India 1910.64 1707.04

Outside India 261.20 187.58

Total 2171.84 1894.62

(b) The company’s tangible fixed assets are located entirely in India.

III Segment Identification, Reportable Segment and Definition of each Reportable Segment:

(i) Segment Revenue and Results

The expenses which are not directly attributable to any business segment are shown as unallocable expenditure

(ii) Segment Assets and Liabilities

Segment assets include all operating assets used by the business segment and mainly consist of fixed assets,

debtors and inventories. Segment liabilities primarily include creditors and other liabilities. Common Assets and

Liabilities which cannot be allocated to any of the segments are shown as a part of unallocable assets / liabilities.

(iii) Primary / Secondary Segment Reporting Format:

1 The risk-return profile of the Company’s business is determined predominantly by the nature of its products

and services.

Accordingly, the business segment constitutes the primary segment for disclosure of segment information.

2 In respect of secondary segment information, the Company has identified its geographical segments as (a)

Domestic and (b) Overseas. The secondary segment information has been disclosed accordingly.

(iv) Segment Identification:

Business segments have been identified on the basis of the nature of products / services, the risk-return profile of

individual business, the organizational structure and the internal reporting system of the Company.

(v) Reportable Segments:

Reportable segments have been identified as per the quantitative criteria specified in “Accounting Standard-17:

Segment Reporting” issued by The Institute of Chartered Accountants of India.

(vi) Primary Segment

In the opinion of the management, the business segment comprises the following :

(a) Power Systems : Transformer, Switchgear, Turnkey Projects

(b) Consumer Products : Fans, Luminaire, Light Sources and Pumps

(c) Industrial Systems : Electric Motors and Alternators

(d) Others : Telecommunication

20 (a) The Company has not entered into any Finance / Operating Lease as specified in AS-19 “Leases”. The Company has

however taken various residential/commercial premises and plant & machinery under cancellable operating lease. These

lease agreements are normally renewed on expiry.

(b) The lease agreements provide for an option to the company to renew the lease period at the end of the non-cancellable

period.

(c) There are no exceptional / restrictive covenants in the lease agreements.

21 Consequent to AS - 29 “Provisions, Contingent Liabilities and Contingent Assets” being made mandatory in respect of

accounting year commencing on or after 1st April, 2004, the Company has for the first time made provision in respect of the

following categories as shown below :

Nature of Provision Warranties

2004-05 2003-04


Carrying amount at the beginning of the year 0.00 0.00

Additional provision made during the year 4.42 0.00

Amounts used during the year 0.00 0.00

Unused amounts reversed during the year 0.00 0.00

Carrying amount at the end of the year 4.42 0.00

117

22 During the year the Parent Company has entered into an agreement to acquire Pauwels Contracting N.V., engaged in the

business of Transformer And Contracting & Services of Pauwel Group of Belgium having manufacturing facilities at Belgium,

Ireland, Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of Euro 2.10 Million

towards 100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of the said

business. The acquisition has been effected through it’s wholly owned subsidiary, CG International B.V., incorporated in April,

2005 in Amsterdam, Netherlands.

23 Miscellaneous income includes profit on sale of investments (Net) Rs.5.86 crores; (Previous year Rs.4.47 crores).

24 Prior year figures have been reclassified where necessary to confirm with the current year’s presentation.

25 Figures pertaining to the Subsidiary Companies have been reclassified wherever necessary to bring them in line with the

Parent Company’s financial statements.


As per our report attached.

SHARP & TANNAN B.R. Jaju S.M. Trehan

Chartered Accountants Chief Financial Officer Managing Director

L. Vaidyanathan W. Henriques G. Thapar

Partner Secretary Chairman

Membership no 16368



Consolidated Cash Flow Statement

(Pursuant to Amendment to Clause 32 of Listing Agreement) 2004-05 2003-04Rs.’000 Rs.’000

[A] CASH FLOWS FROM OPERATING ACTIVITIES

Net profit before tax and exceptional item 1,288,635 897,319

Depreciation / amortisation 426,710 452,825

Interest Net 231,622 389,001

Investment income (18,661) (52,456)

Dividend from subsidiary (3,175) 0

Profit on disposal of subsidiary (16,083) 0

Miscellaneous expenditure written off 0 36,357

Profit(-)/Loss(+) on sale of investments (51,732) (37,226)

Exchange Gain (39,348) (61,700)

Profit(-)/Loss(+) on sale of fixed assets 5,390 (24,188)

Employee voluntary retirement scheme 60,000 150,013

594,723 852,626

Operating profit before working capital changes 1,883,358 1,749,944

Adjustments for:

Trade and other receivables (15,355) (276,177)

Inventories 11,780 186,777

Trade and other payables (470,377) 551,543

Leave encashment provision 18,413 (11,280)

(455,539) 450,863

Cash generated from (+)/Used in (-) operations 1,427,819 2,200,807Taxes Paid (-) / Refund received (+) (57,673) (8,010)

Cash flow before exceptional items 1,370,146 2,192,797

Advances written off 0 (32,500)

Employee voluntary retirement scheme incurred (60,000) (94,821)

Miscellaneous Expenditure Incurred 0 (33,355)

Minority Share of Interest in Profits (2,521) (2,742)

Share of Profit (+) / Loss (-) of Associate Companies 30,191 (56,748)

(32,330) (220,166)

Cash generated from / (Used in) operations (A) 1,337,816 1,972,631

[B] CASH FLOWS FROM INVESTING ACTIVITIES

Add: Inflows from investing activities

Sale of fixed assets 213,820 254,994

Sale of subsidiary 68,058 0

Sale of Investments 72,153 79,595

Government subsidy received 0 1,500

Change in Minority Interest 0 2,016

Change in Investment in Associate Companies 0 56,748

Adjustments on associate becoming a subsidiary 3,784 0

Investment Income 18,661 52,456

376,476 447,309

Less: Outflows from investing activities

Purchase of fixed assets (535,211) (347,211)

Purchase of Investments (6,200) (243,458)

Change in Investment in Associate Companies (30,191) 0

Change in Minority Interest (9,563) 0

Adjustments on disposal of subsidiary (62,204) 0

(643,369) (590,669)

Net Cash generated from / (used in) investing activities (B) (266,893) (143,360)

119

CONSOLIDATED CASH FLOW STATEMENT (Contd.)

2004-05 2003-04Rs.’000 Rs.’000

[C] CASH FLOWS FROM FINANCING ACTIVITIES

Add: Inflows from financing activities

Secured loans 673,040 0

673,040 0

Less: Outflows from financing activities

Secured Loans 0 (587,134)

Unsecured Loans (151,177) (447,906)

Interim Dividend (574,243) (156,359)

Dividend Tax (75,790) (20,628)

Interest paid (net) (241,363) (383,331)

(1,042,573) (1,595,358)

Net Cash generated from / (used in) financing activities (C) (369,533) (1,595,358)

NET CHANGES IN CASH AND CASH EQUIVALENTS (A+B+C) 701,390 233,913

Cash and cash equivalents - Opening balance (1,050,513) (1,284,426)

Cash and cash equivalents - Closing balance (349,123) (1,050,513)

BREAK UP OF CASH AND CASH EQUIVALENTS

Cash and bank balances 759,477 801,971

Bank overdraft (1,081,100) (1,824,984)

Inter corporate deposits payable (27,500) (27,500)

(349,123) (1,050,513)

NOTES:

1 The cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 “Cash FlowStatement” issued by The Institute of Chartered Accountants of India except in case of dividend, purchase and sale of investmentswhich have been considered on the basis of actual movements of cash and cash equivalents with corresponding adjustmentsin assets and liabilities.

2 Additions to fixed assets are stated inclusive of movements of capital work-in-progress between the beginning and the end ofthe year and treated as part of investing activities.

3 Figures for the previous year have been re-grouped / re-classified wherever necessary.


B.R. Jaju W. Henriques S. M. Trehan G ThaparChief Financial Officer Secretary Managing Director Chairman

AUDITORS’ CERTIFICATE

We have examined the attached consolidated cash flow statement of Crompton Greaves Limited for the year ended 31st March,2005. The statement has been prepared by the Company in accordance with the requirements of Clause 32 of the Listing Agreementwith the Stock Exchanges and is based on and in agreement with the corresponding Consolidated Profit and Loss Account andConsolidated Balance Sheet of the Company covered by our report of 23rd May, 2005 to the members of the Company.

Mumbai, 23rd May, 2005 SHARP & TANNANChartered Accountants

L. VaidyanathanPartnerMembership no 16368

Summary of Selected Consolidated Financial Data

US GAAPPrepared in substantial compliance with the United States Generally Accepted Accounting Principles

(In Millions, except share data)

Particulars Year ended March 31,

20052005200520052005 20052005200520052005 2004 2004US $US $US $US $US $ INRINRINRINRINR US $ INR

Consolidated Statement of Income Data:Consolidated Statement of Income Data:Consolidated Statement of Income Data:Consolidated Statement of Income Data:Consolidated Statement of Income Data:

Revenues 503.97503.97503.97503.97503.97 21,912.6721,912.6721,912.6721,912.6721,912.67 412.41 18,954.40

Cost of Revenues 411.96411.96411.96411.96411.96 17,912.1117,912.1117,912.1117,912.1117,912.11 344.60 15,837.70

Gross ProfitGross ProfitGross ProfitGross ProfitGross Profit 92.0192.0192.0192.0192.01 4,000.564,000.564,000.564,000.564,000.56 67.8167.8167.8167.8167.81 3,116.703,116.703,116.703,116.703,116.70

Selling, General & Administrative Expenses 47.9747.9747.9747.9747.97 2,085.702,085.702,085.702,085.702,085.70 32.32 1,485.50

Depreciation & Amortization 9.659.659.659.659.65 419.71419.71419.71419.71419.71 9.91 455.30

Foreign Exchange (Gains)/Losses (0.90)(0.90)(0.90)(0.90)(0.90) (39.30)(39.30)(39.30)(39.30)(39.30) (1.38) (63.60)

Operating IncomeOperating IncomeOperating IncomeOperating IncomeOperating Income 35.2935.2935.2935.2935.29 1,534.451,534.451,534.451,534.451,534.45 26.9626.9626.9626.9626.96 1,239.501,239.501,239.501,239.501,239.50

Other Revenues/Gains (Expenses/Losses):Other Revenues/Gains (Expenses/Losses):Other Revenues/Gains (Expenses/Losses):Other Revenues/Gains (Expenses/Losses):Other Revenues/Gains (Expenses/Losses):

Interest & Dividend Income 0.450.450.450.450.45 19.6619.6619.6619.6619.66 1.14 52.50

Gain/(Loss) on Disposal of Property, Plant & Equipment (0.12)(0.12)(0.12)(0.12)(0.12) (5.40)(5.40)(5.40)(5.40)(5.40) 2.52 115.90

Gain on sale of Investments (net) 1.721.721.721.721.72 74.7474.7474.7474.7474.74 0.97 44.70

Interest Expense (5.32)(5.32)(5.32)(5.32)(5.32) (231.24)(231.24)(231.24)(231.24)(231.24) (8.42) (387.20)

Permanent Diminution in value of Investments (0.10)(0.10)(0.10)(0.10)(0.10) (4.20)(4.20)(4.20)(4.20)(4.20) (0.18) (8.40)

Income FIncome FIncome FIncome FIncome From Continuing Operations before Trom Continuing Operations before Trom Continuing Operations before Trom Continuing Operations before Trom Continuing Operations before Taxes, Shareaxes, Shareaxes, Shareaxes, Shareaxes, Share

of Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interest 31.9231.9231.9231.9231.92 1,388.011,388.011,388.011,388.011,388.01 22.9922.9922.9922.9922.99 1,057.001,057.001,057.001,057.001,057.00

Provision for Taxes (2.79)(2.79)(2.79)(2.79)(2.79) (121.27)(121.27)(121.27)(121.27)(121.27) (5.51) (253.20)

Equity in Earnings of Affiliates 0.690.690.690.690.69 30.2030.2030.2030.2030.20 (1.23) (56.70)

Minority Interest (0.06)(0.06)(0.06)(0.06)(0.06) (2.50)(2.50)(2.50)(2.50)(2.50) (0.06) (2.70)

Income FIncome FIncome FIncome FIncome From Continuing Operationsrom Continuing Operationsrom Continuing Operationsrom Continuing Operationsrom Continuing Operations 29.7629.7629.7629.7629.76 1,294.441,294.441,294.441,294.441,294.44 16.1916.1916.1916.1916.19 744.40744.40744.40744.40744.40

Earnings PEarnings PEarnings PEarnings PEarnings Per Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted) 0.570.570.570.570.57 24.7224.7224.7224.7224.72 0.31 14.22

Cash Dividend per Equity ShareCash Dividend per Equity ShareCash Dividend per Equity ShareCash Dividend per Equity ShareCash Dividend per Equity Share 0.180.180.180.180.18 7.937.937.937.937.93 0.17 7.89

Consolidated Balance Sheet Data:Consolidated Balance Sheet Data:Consolidated Balance Sheet Data:Consolidated Balance Sheet Data:Consolidated Balance Sheet Data:

Cash & Cash Equivalents 17.4117.4117.4117.4117.41 759.50759.50759.50759.50759.50 18.48 801.90

Working Capital 38.0938.0938.0938.0938.09 1,660.931,660.931,660.931,660.931,660.93 13.23 573.94

Total Assets 300.17300.17300.17300.17300.17 13,093.7513,093.7513,093.7513,093.7513,093.75 309.95 13,451.50

Total Liabilities 210.67210.67210.67210.67210.67 9,189.379,189.379,189.379,189.379,189.37 236.70 10,273.40

Total Debt 72.1172.1172.1172.1172.11 3,145.403,145.403,145.403,145.403,145.40 78.06 3,388.10

Total Stockholders’ Equity 89.5089.5089.5089.5089.50 3,904.383,904.383,904.383,904.383,904.38 73.25 3,178.10

Consolidated Cash Flow Data:Consolidated Cash Flow Data:Consolidated Cash Flow Data:Consolidated Cash Flow Data:Consolidated Cash Flow Data:

Net Cash provided by / (used in) Operating Activities 25.4925.4925.4925.4925.49 1,098.961,098.961,098.961,098.961,098.96 32.91 1,690.90

Net cash provided by / (used in) Investing Activities (5.86)(5.86)(5.86)(5.86)(5.86) (255.36)(255.36)(255.36)(255.36)(255.36) (5.33) (245.10)

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Investors are cautioned that this discussion contains forward-looking statements that involve risks and uncertainties. When usedin this discussion, the words “anticipate”, “believe”, “estimate”, “intend”, “will”, “expect” and other similar expressions as theyrelate to us or our business are intended to identify such forward-looking statements. These forward-looking statements include allmatters that are not historical facts. They appear in a number of places throughout this annual report and include statementsregarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financialcondition, liquidity, prospects, growth, strategies and the country and industry in which we operate. We undertake no obligation topublicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Actualresults, performances or achievements could differ materially from those expressed or implied in such forward-looking statements.Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates.

The following Management’s Discussion and Analysis (MD&A) is intended to help the reader understand Crompton GreavesLimited. MD&A is provided as a supplement to (and should be read in conjunction with) our Financial Statements and theaccompanying notes to Financial Statements (‘‘Notes’’). This overview provides our perspective on the individual sections ofMD&A, as well as a few helpful hints for reading these pages.

1.1.1.1.1. OverviewOverviewOverviewOverviewOverview

Incorporated in 1937, we are a leading India based Electrical Engineering Company engaged in the business of manufacturingand marketing of products related to generation, transmission, distribution and utilisation of power and execution of turnkeyprojects. Our business is organized into four segments, which we call “Strategic Business units (SBU)”:

• PPPPPower Systems:ower Systems:ower Systems:ower Systems:ower Systems: This SBU is engaged in the business of Power and Distribution Transformers, Switchgears and EngineeringProjects.

• Industrial Systems:Industrial Systems:Industrial Systems:Industrial Systems:Industrial Systems: This SBU is engaged in the business of manufacturing and marketing of Electric Motors – FractionalHorse Power motors, LT Motors, Alternators, HT Motors; DC Machines and Rail Transportation.

• Consumer Products:Consumer Products:Consumer Products:Consumer Products:Consumer Products: This SBU is engaged in the business of manufacturing and marketing of Fans, Luminaires, Lightsources and Agricultural & Domestic Pumps.

Our Company generates revenues, income and cash flows principally by manufacturing and selling various electrical andindustrial products as well as from turnkey projects. We generally sell these products to distributors and large industrial usersfrom core sectors of the economy, including the State Electricity Boards in India and other Utilities.

We incur significant marketing expenditure to support our brands, including advertising costs, sponsorship fees and specialpromotional events. Retailers and distributors receive rebates, promotional and advertising support. Consumers receivecoupons, discounts and promotional incentives. These marketing expenditures help to enhance awareness of and increaseconsumer preference for our brands. Greater awareness and preference promotes long-term growth in profitable volume, percapita consumption and our market share.

Our cost of revenues primarily consists of material costs, salary and other compensation expenses, manufacturing expenses,depreciation, repairs and maintenance and other expenses related to production.

Our Selling, General and Administrative Expenses primarily consist of expenses relating to advertisements, rent, salaries ofmarketing & administrative personnel, traveling and conveyance, communication, legal and professional charges, and othermiscellaneous administrative costs.

2.2.2.2.2. AcquisitionsAcquisitionsAcquisitionsAcquisitionsAcquisitions

During the year the Company has entered into an agreement to acquire Pauwels Contracting N.V., engaged in the businessof Transformer And Contracting & Services of Pauwel Group of Belgium having manufacturing facilities at Belgium, Ireland,Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of Euro 2.10 Million towards

Management’s Discussion & Analysisof Financial Condition and Results of Operations

100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of the said business. Theacquisition has been effected through it’s wholly owned subsidiary, CG International B.V., incorporated in April, 2005 inAmsterdam, Netherlands. With this acquisition, our presence in the Global Market would further boost the demand of ourproducts, which may improve our top & bottom line in the near future.

3.3.3.3.3. Results of operationsResults of operationsResults of operationsResults of operationsResults of operations

Revenues:Revenues:Revenues:Revenues:Revenues:

Our total revenues were Rs. 21912.67 million in fiscal 2005, representing an increase of Rs. 2958.27 million or 15.61% overtotal revenues of Rs. 18954.40 million in fiscal 2004. Revenues continued to increase in most segments of our business. Theincrease in revenue was attributable, in part, to a steady increase in business from existing customers and from newcustomers, particularly in the divisions pertaining to power, industrial and consumer systems.

Cost of revenues:Cost of revenues:Cost of revenues:Cost of revenues:Cost of revenues:

Our cost of revenues were Rs. 17912.11 million for fiscal 2005, representing an increase of Rs. 2074.41 million or 13.10%over cost of revenues of Rs. 15837.70 million in fiscal 2004. Cost of revenues represented 81.74% and 83.56% of totalrevenues in fiscal 2005 and 2004 respectively. This decrease in our cost of revenues as a percentage of revenues wasattributable to:

(i) A decrease in the material consumption due to increase in the efficiency of production department;

(ii) Improved realisation of end products;

Cost of revenue consists primarily of raw materials, cost of labour, and other components, as well as provisions for warrantyclaims, contract losses and project penalties for which we have recognized corresponding revenues.

Gross profit:Gross profit:Gross profit:Gross profit:Gross profit:

As a result of the foregoing, our gross profit was Rs. 4000.56 million for fiscal 2005, representing an increase of 28.36% overgross profit of Rs. 3116.70 million for fiscal 2004. As a percentage of total revenues, gross profit increased to 18.26% forfiscal 2005 from 16.44% for fiscal 2004.

Selling, General & Administrative Expenses:Selling, General & Administrative Expenses:Selling, General & Administrative Expenses:Selling, General & Administrative Expenses:Selling, General & Administrative Expenses:

Our selling, general and administrative expenses were Rs. 2085.70 million for fiscal 2005, representing an increase of 40.40%over selling, general and administrative expenses of Rs. 1485.50 million for fiscal 2004. Selling, general and administrativeexpenses were 9.52% and 7.84% of total revenues for fiscal 2005 and 2004 respectively. This increase mainly occurred dueto charge on account of Baddebts, Liquidated Damages and advances written off during the year

FFFFFOREIGNOREIGNOREIGNOREIGNOREIGN E E E E EXXXXXCHANGECHANGECHANGECHANGECHANGE G G G G GAINAINAINAINAIN/(L/(L/(L/(L/(LOSOSOSOSOSSSSSS), ), ), ), ), NETNETNETNETNET

Exchange rate fluctuation consists of the difference between the rate of exchange at which the transactions are recorded andthe rate of exchange on the date the transaction is settled, and the gains and losses on revaluation of foreign currency assetsand liabilities outstanding at the end of the period.

Operating income:Operating income:Operating income:Operating income:Operating income:

Our operating income was Rs. 1534.45 million for fiscal 2005, representing an increase of 23.80% over the operating incomeof Rs. 1239.50 million for fiscal 2004. As a percentage of total revenue, operating income increased to 7.00% for fiscal 2005,from 6.54% for fiscal 2004.


Other revenues/gains in fiscal 2005 primarily comprised of interest and dividend income of Rs. 19.66 million and profit onsale of investments and property, plant and equipment of Rs. 69.34 million. Other revenues/gains in fiscal 2004 primarilycomprised of interest and dividend income of Rs. 52.50 million and profit on sale of investments and property, plant and

123123

equipment of Rs. 160.60 million. Other expenses comprised of interest expense of Rs. 231.24 million and diminution in thevalue of investments, other than temporary of Rs. 4.20 million in fiscal 2005 and Rs. 387.20 million and Rs. 8.40 millionrespectively in fiscal 2004.

The net Other Revenues/Gains (Expenses/Losses) increased to Rs. (146.44) million in fiscal 2005 from Rs. (182.50) million infiscal 2004. This has been mainly due to decrease in interest expense by 40% in fiscal 2005 as compared to fiscal 2004resulting from repayment/restructuring of debt obligations and effective treasury management.

Provision for income taxes:Provision for income taxes:Provision for income taxes:Provision for income taxes:Provision for income taxes:

Our provision for income taxes were Rs. 121.27 million for fiscal 2005 as compared to Rs. 253.20 million for fiscal 2004. Oureffective tax rate decreased to 8.74% for fiscal 2005 as compared to 23.95% for fiscal 2004. The decrease in effective tax ratewas primarily due to non-applicability of the deferred tax liability during this fiscal year.

Loss from discontinued operations, net of tax:Loss from discontinued operations, net of tax:Loss from discontinued operations, net of tax:Loss from discontinued operations, net of tax:Loss from discontinued operations, net of tax:

Loss from discontinued operations, net of tax, was Rs.96.08 million in 2005, as compared to Rs. 100.40 million in 2004.

A detailed discussion of the results of discontinued businesses is given in ‘‘—Notes to Financial Statements.’’

Income from continuing operations:Income from continuing operations:Income from continuing operations:Income from continuing operations:Income from continuing operations:

As a result of the foregoing factors, our income from continuing operations increased by 73.89% from Rs. 744.40 million forthe year ended March 31, 2004 to Rs. 1294.44 million for the year ended March 31, 2005.

4.4.4.4.4. Liquidity and Capital ResourcesLiquidity and Capital ResourcesLiquidity and Capital ResourcesLiquidity and Capital ResourcesLiquidity and Capital Resources

Our growth has been financed largely by cash generated from operations and, to a lesser extent, from borrowings. We havefinanced the majority of our working capital, capital expenditure and other requirements through our operating cash flow, andto a limited extent, through borrowings.

As of March 31, 2005, we had Rs. 759.50 million in cash and cash equivalents, Rs.1660.93 million in working capital andRs.3145.40 million borrowings of which only Rs. 605.10 million are payable within one operating cycle. Net cash provided byoperating activities were Rs.1098.96 million and Rs. 1690.90 million in fiscal 2005 and 2004 respectively. Net cash providedby/(used in) investing activities were Rs. (255.36) million and Rs. (245.10) million in fiscal 2005 and 2004 respectively. Netcash provided by/(used in) financing activities was Rs. (886.00) million and Rs. (1211.50) million in fiscal 2005 and 2004respectively.

Publicly traded Indian companies customarily pay dividends. For fiscal 2005, we declared and paid an interim dividend ofRs.366.60 million and dividend tax of Rs. 48.90 million. For Fiscal 2004, We declared a dividend (Inclusive of Dividend Tax ofRs. 46.90 Million) of Rs. 413.50 million, which was paid, partly in fiscal 2003 and partly in fiscal 2004.

We believe that our ability to obtain funding from the sources described above will continue to provide the cash flowsnecessary to satisfy our working capital and capital expenditure requirements, as well as meet our debt repayments andother financial commitments. However, our liquidity and capital requirements are affected by many factors, some of which arebased on the normal ongoing operations of our business and some of which arise from uncertainties related to the sectorsthat we target for our products and services. In future, we may require or choose to obtain additional debt financing. Wecannot be certain that additional financing, if needed, will be available on favorable terms. We routinely review potentialacquisitions..... During the year the Company has entered into an agreement to acquire PDuring the year the Company has entered into an agreement to acquire PDuring the year the Company has entered into an agreement to acquire PDuring the year the Company has entered into an agreement to acquire PDuring the year the Company has entered into an agreement to acquire Pauwels Contracting N.Vauwels Contracting N.Vauwels Contracting N.Vauwels Contracting N.Vauwels Contracting N.V., engaged in., engaged in., engaged in., engaged in., engaged inthe business of Tthe business of Tthe business of Tthe business of Tthe business of Transformer And Contracting & Services of Pransformer And Contracting & Services of Pransformer And Contracting & Services of Pransformer And Contracting & Services of Pransformer And Contracting & Services of Pauwel Group of Belgium having manufacturing facilities atauwel Group of Belgium having manufacturing facilities atauwel Group of Belgium having manufacturing facilities atauwel Group of Belgium having manufacturing facilities atauwel Group of Belgium having manufacturing facilities atBelgium, Ireland, Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of EuroBelgium, Ireland, Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of EuroBelgium, Ireland, Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of EuroBelgium, Ireland, Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of EuroBelgium, Ireland, Canada, Indonesia and United States for a final consideration of Euro 28.25 Million – consisting of Euro2.10 Million towards 100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of the2.10 Million towards 100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of the2.10 Million towards 100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of the2.10 Million towards 100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of the2.10 Million towards 100% transfer of equity capital and Euro 26.15 Million towards assumption & settlement of Debts of thesaid business. The acquisition has been effected through it’s wholly owned subsidiarysaid business. The acquisition has been effected through it’s wholly owned subsidiarysaid business. The acquisition has been effected through it’s wholly owned subsidiarysaid business. The acquisition has been effected through it’s wholly owned subsidiarysaid business. The acquisition has been effected through it’s wholly owned subsidiary, CG International B.V, CG International B.V, CG International B.V, CG International B.V, CG International B.V., incorporated., incorporated., incorporated., incorporated., incorporatedin April, 2005 in Amsterdam, Netherlands.in April, 2005 in Amsterdam, Netherlands.in April, 2005 in Amsterdam, Netherlands.in April, 2005 in Amsterdam, Netherlands.in April, 2005 in Amsterdam, Netherlands.

5.5.5.5.5. Reconciliation between Indian and UReconciliation between Indian and UReconciliation between Indian and UReconciliation between Indian and UReconciliation between Indian and U.S. GAAP.S. GAAP.S. GAAP.S. GAAP.S. GAAP

There are material differences between the financial statements prepared in accordance with Indian and U.S. GAAP. Thematerial differences are primarily attributable to U.S. GAAP requirements for the following:

— Accounting for Available-for-sale Investments at fair value;

— Valuation of retirement benefits, leave and medical benefits to employees

The table given below provides a reconciliation of our net income.

Reconciliation of Net Income between UReconciliation of Net Income between UReconciliation of Net Income between UReconciliation of Net Income between UReconciliation of Net Income between U.S. GAAP and Indian GAAP.S. GAAP and Indian GAAP.S. GAAP and Indian GAAP.S. GAAP and Indian GAAP.S. GAAP and Indian GAAP

(Rs. in Million)

As at March 31,

2005 2004

Profit (before dividend) for the year under Indian GAAP 1169.60 646.60

Adjustments to reconcile profits for the year as per

Indian GAAP with Net Income as per U.S. GAAP:

Provision for retirement benefits to employees 2.65 (10.20)

Provision for compensated absences 13.37 (23.60)

Provision for Medical & LTA benefits to employees 12.74 (10.00)

Reversal of amortised Termination costs - 55.20

Permanent diminution & realised/unrealized

gain/(loss) on investments - (7.50)

Diminution in value of advances - -

Charge for Deferred Expenses - (6.50)

Extinguishment of Deferred Sales Tax Liability - 191.20

Net Income under U.S. GAAP 1198.36 835.20

6.6.6.6.6. Quantitative and qualitative disclosures about market riskQuantitative and qualitative disclosures about market riskQuantitative and qualitative disclosures about market riskQuantitative and qualitative disclosures about market riskQuantitative and qualitative disclosures about market risk

General:General:General:General:General:

Market risk is the risk of loss of future earnings, related to fair values or to future cash flows that may result from a change inthe price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rate,foreign currency exchange rate, commodity prices, equity prices and other market changes that affect market risk sensitiveinstruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivablesand payables.

Our exposure to market risk is a function of our borrowing activities and revenue generating activities in foreign currency. Theobjective of market risk management is to avoid excessive exposure of our earnings and equity to losses.

RRRRRISKISKISKISKISK MANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENT PROCEDURESPROCEDURESPROCEDURESPROCEDURESPROCEDURES:::::

We manage market risk through our corporate treasury department, which evaluates and exercises independent control overthe entire process of market risk management. Our corporate treasury department recommends risk management objectivesand policies, which are approved by senior management. The activities of this department include borrowing strategies,implementing hedging strategies for foreign currency exposures, management of cash resources and ensuring compliancewith market risk limits and policies on a daily basis.

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Components of market risk:Components of market risk:Components of market risk:Components of market risk:Components of market risk:

Our exposure to market risk arises principally from exchange rate risk.

Exchange rate risk: Our exchange rate risk primarily arises from our foreign currency revenues, receivables and payables.Although we constantly evaluate our net exchange rate exposure arising from these transactions, we do not actively hedgeagainst such exposure. We may, in the future, adopt more active hedging policies. Changes in exchange rates may therefore,adversely affect our operating results.

7.7.7.7.7. Risk factorsRisk factorsRisk factorsRisk factorsRisk factors

RRRRRISKSISKSISKSISKSISKS RELARELARELARELARELATEDTEDTEDTEDTED TOTOTOTOTO OUROUROUROUROUR COMPCOMPCOMPCOMPCOMPANYANYANYANYANY

Any inability to manage our rapid growth could disrupt our business and reduce our profitabilityAny inability to manage our rapid growth could disrupt our business and reduce our profitabilityAny inability to manage our rapid growth could disrupt our business and reduce our profitabilityAny inability to manage our rapid growth could disrupt our business and reduce our profitabilityAny inability to manage our rapid growth could disrupt our business and reduce our profitability.....

We have experienced significant growth in recent periods. Our revenues increased by 15.61% in fiscal 2005 and by 11.05% infiscal 2004.In the last seven fiscal years we have benefited by re-locating our existing facilities to tax exempted locations inaddition to introducing various value-added products.

We expect our growth to place significant demands on our management and other resources. It will require us to continue todevelop and improve our operational, financial and other internal controls. In particular, continued growth increases thechallenges involved in:

– Recruiting and retaining sufficient skilled technical, marketing and management personnel;

– Providing adequate training and supervision to maintain our high quality standards; and

– Preserving our culture and values and our entrepreneurial environment.

Inability to manage our growth effectively could adversely affect our business and reduce our profitability.

Our success depends to a large extent on our management team and other highly skilled professionals. If we fail to retainOur success depends to a large extent on our management team and other highly skilled professionals. If we fail to retainOur success depends to a large extent on our management team and other highly skilled professionals. If we fail to retainOur success depends to a large extent on our management team and other highly skilled professionals. If we fail to retainOur success depends to a large extent on our management team and other highly skilled professionals. If we fail to retainand attract these personnel, our business may be unable to grow and our revenues could decline, which may decrease theand attract these personnel, our business may be unable to grow and our revenues could decline, which may decrease theand attract these personnel, our business may be unable to grow and our revenues could decline, which may decrease theand attract these personnel, our business may be unable to grow and our revenues could decline, which may decrease theand attract these personnel, our business may be unable to grow and our revenues could decline, which may decrease thevalue of our shareholders’ investment.value of our shareholders’ investment.value of our shareholders’ investment.value of our shareholders’ investment.value of our shareholders’ investment.

We are highly dependent on the senior members of our management team, including the continued efforts of our ManagingDirector, other executive members on the board and the management council members. Our ability to execute projectengagements and to obtain new customers depends in large part on our ability to attract, train, motivate and retain highlyskilled professionals, especially the electrical engineers and other senior technical, marketing and finance personnel. If wecannot hire and retain additional qualified personnel, our ability to bid on and obtain new orders and to continue to expandour business will be impaired and our revenues could decline. We believe that there is significant competition for professionalswith the skills necessary to manufacture the products and provide the services we offer. We may not be able to hire and retainenough skilled and experienced employees to replace those who leave. Additionally, we may not be able to redeploy andretrain our employees to keep pace with continuing changes in technology, evolving standards and changing customerpreferences.

WWWWWe operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.e operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.e operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.e operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.e operate in very competitive markets and could be adversely affected if we fail to keep pace with technological changes.

We operate in very competitive environment in several specific respects, including product performance, pricing, new productintroduction time and customer service. The relative importance of these factors differs across product areas that we serve.The markets for our products and services are characterized by evolving industry standards, rapidly changing technology inour power systems business and increased competition as a result of deregulation (particularly for our power systems). Forexample, for a number of years power transmission and distribution providers throughout the world have been undergoing

substantial deregulation and privatization. This has increased their need for timely product and service innovations thatincrease efficiency and allow them to compete in a deregulated environment. Additionally, the continual development ofadvanced technologies for new products and product enhancements is an important way in which we maintain acceptablepricing levels. If we fail to keep pace with technological changes in the industrial sectors that we serve, we may experienceprice erosion and lower margins.

Industry consolidation could result in more powerful competitors and fewer customers.Industry consolidation could result in more powerful competitors and fewer customers.Industry consolidation could result in more powerful competitors and fewer customers.Industry consolidation could result in more powerful competitors and fewer customers.Industry consolidation could result in more powerful competitors and fewer customers.

Competitors of our business divisions may consolidate. As our competitors consolidate, they likely will increase their marketshare, gain economies of scale that enhance their ability to compete with us and/or acquire additional products andtechnologies that could displace our product offerings.

Our customers may also undergo consolidation. Consolidation among our customers’ industries could affect our customersand their relationships with us. For example, if one of our competitors’ customers acquire any of our customers, we may loseits business. Additionally, as our customers become larger and more concentrated, they could exert pricing pressure on allsuppliers, including Crompton Greaves.

WWWWWe may be the subject of product liability claims.e may be the subject of product liability claims.e may be the subject of product liability claims.e may be the subject of product liability claims.e may be the subject of product liability claims.

A malfunction in or the inadequate design of products and systems that we design and manufacture could result in productliability claims. Additionally, we may be subject to product liability claims for the improper installation of products and systemsdesigned and manufactured by others.

Product liability claims against us typically involve claims of personal injury or property damage. If the claimant runs acommercial business, claims may also be made for financial losses arising from interruption of operations consequential toproperty damage. Because of our broad offering of products, these claims arise in different contexts, including the following:

• If our power systems and products are defective, there is a substantial risk of fires, explosions and power surges andsignificant damage to electricity generating, transmission and distribution facilities.

• If our industrial products and systems are defective, our customers could suffer significant damage to facilities that relyon these products and systems to properly monitor and control their manufacturing processes.

If a very large product liability claim were sustained, our insurance protection might not be adequate or sufficient to coversuch a claim in terms of paying any awards or settlements, and/or paying for our defense costs. If a litigant were successfulagainst us, a lack or insufficiency of insurance coverage could result in an adverse effect on our business, financial condition,results of operations and liquidity. Additionally, a well-publicized actual or perceived problem could adversely affect ourmarket reputation, which could result in a decline in demand for our products.

WWWWWe may engage in future acquisitions, investments, strategic partnerships or other ventures that may harm our performance,e may engage in future acquisitions, investments, strategic partnerships or other ventures that may harm our performance,e may engage in future acquisitions, investments, strategic partnerships or other ventures that may harm our performance,e may engage in future acquisitions, investments, strategic partnerships or other ventures that may harm our performance,e may engage in future acquisitions, investments, strategic partnerships or other ventures that may harm our performance,dilute the holdings of our shareholders and cause us to incur debt or assume contingent liabilities.dilute the holdings of our shareholders and cause us to incur debt or assume contingent liabilities.dilute the holdings of our shareholders and cause us to incur debt or assume contingent liabilities.dilute the holdings of our shareholders and cause us to incur debt or assume contingent liabilities.dilute the holdings of our shareholders and cause us to incur debt or assume contingent liabilities.

We may acquire or make investments in complementary businesses, technologies, services or products, or enter intostrategic partnerships with parties who can provide access to those assets. We may not identify suitable acquisition,investment or strategic partnership candidates, or if we do identify suitable candidates, we may not complete those transactionson terms commercially acceptable and favourable to us. If we acquire another company, we could have difficulty in assimilatingthat company’s personnel, operations and technology. In addition, the key personnel of the acquired company may decidenot to work for us. If we make other types of acquisitions, we could have difficulty in integrating the acquired products,services or technologies into our operations. These difficulties could disrupt our ongoing business, distract our managementand employees and increase our expenses. As of the date of this report however, we have no agreement to enter into anymaterial investment or acquisition transaction.

127127

Our business is affected by the global economic and political climate. A major terrorist event or prolonged military actionOur business is affected by the global economic and political climate. A major terrorist event or prolonged military actionOur business is affected by the global economic and political climate. A major terrorist event or prolonged military actionOur business is affected by the global economic and political climate. A major terrorist event or prolonged military actionOur business is affected by the global economic and political climate. A major terrorist event or prolonged military actioncould adversely affect our business, financial condition and results of operations.could adversely affect our business, financial condition and results of operations.could adversely affect our business, financial condition and results of operations.could adversely affect our business, financial condition and results of operations.could adversely affect our business, financial condition and results of operations.

Our business has been adversely affected by the global economic downturn. The business environment is influenced bynumerous political uncertainties, which will continue to affect the global economy and the international markets. The threat ofa major terrorist attack and the fear of prolonged military action have exacerbated volatility in the financial markets andcaused consumer, corporate and financial confidence to weaken. As a result, many companies have experienced difficultiesin achieving their revenue goals and have cancelled or delayed investments, expansions and recruitment.

In periods of slow growth or decline, our customers are more likely to decrease expenditure on the types of products andsystems we supply and we may experience decreased revenues as a result. Our Power Systems division is affected mainlyby the level of investments by utilities. If the current global economic and political climate fails to improve, this could have amaterial adverse effect on our business, financial condition, results of operations and liquidity.

PPPPPolitical instability or changes in the government in India could delay the liberalization of the Indian economy and adverselyolitical instability or changes in the government in India could delay the liberalization of the Indian economy and adverselyolitical instability or changes in the government in India could delay the liberalization of the Indian economy and adverselyolitical instability or changes in the government in India could delay the liberalization of the Indian economy and adverselyolitical instability or changes in the government in India could delay the liberalization of the Indian economy and adverselyaffect economic conditions in India generallyaffect economic conditions in India generallyaffect economic conditions in India generallyaffect economic conditions in India generallyaffect economic conditions in India generally, which could impact our financial results and prospects., which could impact our financial results and prospects., which could impact our financial results and prospects., which could impact our financial results and prospects., which could impact our financial results and prospects.

All successive Indian governments, in the recent past, have pursued policies of economic liberalization, including significantlyrelaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indianeconomy as producers, consumers and regulators has remained significant The current Government of India has beenconstituted very recently in May 2004. The immediately preceding Government of India had announced policies and takeninitiatives that support the continued economic liberalization policies that have been pursued by previous governments also.We cannot assure you that these liberalization policies will continue in the future. The rate of economic liberalization couldchange, and specific laws and policies affecting industrial & engineering companies and other matters affecting investmentin our securities could change as well. A significant change in India’s economic liberalization and deregulation policies couldadversely affect business and economic conditions in India generally, and our business in particular.

The laws of India do not protect intellectual property rights to the same extent as those of the United States, and we mayThe laws of India do not protect intellectual property rights to the same extent as those of the United States, and we mayThe laws of India do not protect intellectual property rights to the same extent as those of the United States, and we mayThe laws of India do not protect intellectual property rights to the same extent as those of the United States, and we mayThe laws of India do not protect intellectual property rights to the same extent as those of the United States, and we maybe unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result inbe unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result inbe unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result inbe unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result inbe unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result indevelopment of technologydevelopment of technologydevelopment of technologydevelopment of technologydevelopment of technology, products or services, which compete with our products., products or services, which compete with our products., products or services, which compete with our products., products or services, which compete with our products., products or services, which compete with our products.

Our intellectual property rights are important to our business. We rely on a combination of copyright and trademark laws,trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property. However, the laws ofIndia do not protect proprietary rights to the same extent as laws in the United States. Therefore, our efforts to protect ourintellectual property may not be adequate. Our competitors may independently develop similar technology or duplicate ourproducts or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information.

The misappropriation or duplication of our intellectual property could disrupt our ongoing business, distract our managementand employees, reduce our revenues and increase our expenses. We may need to litigate to enforce our intellectual propertyrights or to determine the validity and scope of the proprietary rights of others. Any such litigation could be time-consumingand costly. As the number of patents, copyrights and other intellectual property rights in our industry increases, and as thecoverage of these rights increase, we believe that companies in our industry will face more frequent patent infringementclaims. Defense against these claims, even if not meritorious, could be expensive and divert our attention and resources fromoperating our company. Although there are no pending or threatened intellectual property lawsuits against us, if we becomeliable to third parties for infringing their intellectual property rights, we could be required to pay a substantial damage awardand forced to develop non-infringing technology, obtain a license or cease selling the applications or products that containthe infringing technology. We may be unable to develop non-infringing technology or to obtain a license on commerciallyreasonable terms.

Assets - 2005

41%

6%14%

14%

25%

Cash

Trade Accounts receivable

Inventory

Property, Plant & Equipment

Other Assets

Liabilities & Stockholders' Equity-2005

24%

39%

7%

30% Stockholders' Equity

Other Liabilities

Accounts Payable

Total Debt

Consolidated Balance Sheet

(In Millions, except share data)Particulars As At March 31,


ASASASASASSETSSETSSETSSETSSETSCURRENT ASCURRENT ASCURRENT ASCURRENT ASCURRENT ASSETSSETSSETSSETSSETSCash & Cash Equivalents 17.4117.4117.4117.4117.41 759.50759.50759.50759.50759.50 18.48 801.90Trade Accounts Receivable, net of allowances 103.91103.91103.91103.91103.91 4,532.724,532.724,532.724,532.724,532.72 91.54 3,972.97Inventories 40.7540.7540.7540.7540.75 1,777.501,777.501,777.501,777.501,777.50 41.23 1,789.40Other Current Assets 20.0120.0120.0120.0120.01 872.50872.50872.50872.50872.50 20.84 904.50TOTTOTTOTTOTTOTAL CURRENT ASAL CURRENT ASAL CURRENT ASAL CURRENT ASAL CURRENT ASSETSSETSSETSSETSSETS 182.08182.08182.08182.08182.08 7,942.227,942.227,942.227,942.227,942.22 172.09 7,468.77NON - CURRENT ASNON - CURRENT ASNON - CURRENT ASNON - CURRENT ASNON - CURRENT ASSETSSETSSETSSETSSETSTrade Accounts Receivable, net of allowances 21.0821.0821.0821.0821.08 919.58919.58919.58919.58919.58 32.08 1,392.13Property, Plant & Equipment, net 76.2376.2376.2376.2376.23 3,325.173,325.173,325.173,325.173,325.17 81.86 3,552.61Investments 17.1117.1117.1117.1117.11 746.85746.85746.85746.85746.85 17.71 768.50Goodwill 0.170.170.170.170.17 7.507.507.507.507.50 0.37 15.90Other Intangible Assets, Net 1.491.491.491.491.49 65.0365.0365.0365.0365.03 1.52 66.19Other Non Current Assets 2.012.012.012.012.01 87.4087.4087.4087.4087.40 4.32 187.40TOTTOTTOTTOTTOTAL NON - CURRENT ASAL NON - CURRENT ASAL NON - CURRENT ASAL NON - CURRENT ASAL NON - CURRENT ASSETSSETSSETSSETSSETS 118.09118.09118.09118.09118.09 5,151.535,151.535,151.535,151.535,151.53 137.86 5,982.73TOTTOTTOTTOTTOTAL ASAL ASAL ASAL ASAL ASSETSSETSSETSSETSSETS 300.17300.17300.17300.17300.17 13,093.7513,093.7513,093.7513,093.7513,093.75 309.95 13,451.50LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYCURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIESDebt, current portion 13.8713.8713.8713.8713.87 605.10605.10605.10605.10605.10 11.02 478.40Accounts Payable 115.86115.86115.86115.86115.86 5,053.795,053.795,053.795,053.795,053.79 129.24 5,609.13Deferred Tax Liabilities 0.120.120.120.120.12 5.305.305.305.305.30 2.74 118.90Other Accrued Liabilities 14.1414.1414.1414.1414.14 617.10617.10617.10617.10617.10 15.86 688.40TOTTOTTOTTOTTOTAL CURRENT LIABILITIESAL CURRENT LIABILITIESAL CURRENT LIABILITIESAL CURRENT LIABILITIESAL CURRENT LIABILITIES 143.99143.99143.99143.99143.99 6,281.296,281.296,281.296,281.296,281.29 158.86 6,894.83NON - CURRENT LIABILITIESNON - CURRENT LIABILITIESNON - CURRENT LIABILITIESNON - CURRENT LIABILITIESNON - CURRENT LIABILITIESDebt, excluding current portion 58.2458.2458.2458.2458.24 2,540.302,540.302,540.302,540.302,540.30 67.04 2,909.70Accounts Payable 2.362.362.362.362.36 102.81102.81102.81102.81102.81 4.12 178.87Minority Interest 0.350.350.350.350.35 15.1015.1015.1015.1015.10 0.57 24.70Other Accrued Liabilities, excluding current portion 5.735.735.735.735.73 249.87249.87249.87249.87249.87 6.11 265.30TOTTOTTOTTOTTOTAL NON - CURRENT LIABILITIESAL NON - CURRENT LIABILITIESAL NON - CURRENT LIABILITIESAL NON - CURRENT LIABILITIESAL NON - CURRENT LIABILITIES 66.6866.6866.6866.6866.68 2,908.082,908.082,908.082,908.082,908.08 77.84 3,378.57TOTTOTTOTTOTTOTAL LIABILITIESAL LIABILITIESAL LIABILITIESAL LIABILITIESAL LIABILITIES 210.67210.67210.67210.67210.67 9,189.379,189.379,189.379,189.379,189.37 236.70 10,273.40STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITYCommon Stock $ 0.205 par value60000000 Equity Shares authorised;Issued & Outstanding - 52366656 Equity Shares 10.7210.7210.7210.7210.72 523.70523.70523.70523.70523.70 10.72 523.70Additional Paid-in Capital 44.7044.7044.7044.7044.70 2,277.602,277.602,277.602,277.602,277.60 44.70 2,277.60Accumulated Other Comprehensive Income 8.698.698.698.698.69 24.4224.4224.4224.4224.42 9.23 29.00Retained Earnings 25.3925.3925.3925.3925.39 1,078.661,078.661,078.661,078.661,078.66 8.60 347.80TOTTOTTOTTOTTOTAL STOCKHOLDERS’ EQUITYAL STOCKHOLDERS’ EQUITYAL STOCKHOLDERS’ EQUITYAL STOCKHOLDERS’ EQUITYAL STOCKHOLDERS’ EQUITY 89.5089.5089.5089.5089.50 3,904.383,904.383,904.383,904.383,904.38 73.25 3,178.10TOTTOTTOTTOTTOTAL LIABILITIES AND STOCKHOLDERS’ EQUITYAL LIABILITIES AND STOCKHOLDERS’ EQUITYAL LIABILITIES AND STOCKHOLDERS’ EQUITYAL LIABILITIES AND STOCKHOLDERS’ EQUITYAL LIABILITIES AND STOCKHOLDERS’ EQUITY 300.17300.17300.17300.17300.17 13,093.7513,093.7513,093.7513,093.7513,093.75 309.95 13,451.50

129129

0

100

200

300

400

500

600

20052004

US

$ (

In M

illio

ns)

Revenues

412.41

503.97

US

$ (

In M

illio

ns)

Net Income

0

5

10

15

20

25

30

20052004

18.17

27.55

US

$

EPS (Continuing Operations)

0.0

0.1

0.2

0.3

0.4

0.5

0.6

20052004

0.31

0.57

Consolidated Statement of Income

(In Millions, except share data)



RevenuesRevenuesRevenuesRevenuesRevenues 503.97503.97503.97503.97503.97 21,912.6721,912.6721,912.6721,912.6721,912.67 412.41 18,954.40

Cost of Revenues 411.96411.96411.96411.96411.96 17,912.1117,912.1117,912.1117,912.1117,912.11 344.60 15,837.70

Gross ProfitGross ProfitGross ProfitGross ProfitGross Profit 92.0192.0192.0192.0192.01 4,000.564,000.564,000.564,000.564,000.56 67.81 3,116.70

Selling, General & Administrative Expenses 47.9747.9747.9747.9747.97 2,085.702,085.702,085.702,085.702,085.70 32.32 1,485.50

Depreciation & Amortization 9.659.659.659.659.65 419.71419.71419.71419.71419.71 9.91 455.30

Foreign Exchange (Gains)/Losses (0.90)(0.90)(0.90)(0.90)(0.90) (39.30)(39.30)(39.30)(39.30)(39.30) (1.38) (63.60)

Operating IncomeOperating IncomeOperating IncomeOperating IncomeOperating Income 35.2935.2935.2935.2935.29 1,534.451,534.451,534.451,534.451,534.45 26.96 1,239.50


Interest & Dividend Income 0.450.450.450.450.45 19.6619.6619.6619.6619.66 1.14 52.50

Gain/(Loss) on Disposal of Property, Plant & Equipment (0.12)(0.12)(0.12)(0.12)(0.12) (5.40)(5.40)(5.40)(5.40)(5.40) 2.52 115.90

Gain on sale of Investments, net 1.721.721.721.721.72 74.7474.7474.7474.7474.74 0.97 44.70

Interest Expense (5.32)(5.32)(5.32)(5.32)(5.32) (231.24)(231.24)(231.24)(231.24)(231.24) (8.42) (387.20)

Permanent Diminution in value of Investments (0.10)(0.10)(0.10)(0.10)(0.10) (4.20)(4.20)(4.20)(4.20)(4.20) (0.18) (8.40)

Income FIncome FIncome FIncome FIncome From Continuing Operations before Trom Continuing Operations before Trom Continuing Operations before Trom Continuing Operations before Trom Continuing Operations before Taxes, Shareaxes, Shareaxes, Shareaxes, Shareaxes, Shareof Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interestof Equity in earnings of Affiliates & Minority Interest 31.9231.9231.9231.9231.92 1,388.011,388.011,388.011,388.011,388.01 22.99 1,057.00

Provision for Taxes (2.79)(2.79)(2.79)(2.79)(2.79) (121.27)(121.27)(121.27)(121.27)(121.27) (5.51) (253.20)

Equity in Earnings of Affiliates 0.690.690.690.690.69 30.2030.2030.2030.2030.20 (1.23) (56.70)

Minority Interest (0.06)(0.06)(0.06)(0.06)(0.06) (2.50)(2.50)(2.50)(2.50)(2.50) (0.06) (2.70)

Income FIncome FIncome FIncome FIncome From Continuing Operationsrom Continuing Operationsrom Continuing Operationsrom Continuing Operationsrom Continuing Operations 29.7629.7629.7629.7629.76 1,294.441,294.441,294.441,294.441,294.44 16.19 744.40

Loss From Discontinued Operations, net of tax (2.21)(2.21)(2.21)(2.21)(2.21) (96.08)(96.08)(96.08)(96.08)(96.08) (2.18) (100.40)

Income before Extraordinary ItemsIncome before Extraordinary ItemsIncome before Extraordinary ItemsIncome before Extraordinary ItemsIncome before Extraordinary Items 27.5527.5527.5527.5527.55 1,198.361,198.361,198.361,198.361,198.36 14.01 644.00

Extraordinary Income from Extinguishment of Debt ————— ————— 4.16 191.20

Net IncomeNet IncomeNet IncomeNet IncomeNet Income 27.5527.5527.5527.5527.55 1,198.361,198.361,198.361,198.361,198.36 18.17 835.20Earnings PEarnings PEarnings PEarnings PEarnings Per Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted)er Equity Share (Basic & Diluted)

Continuing Operations 0.570.570.570.570.57 24.7224.7224.7224.7224.72 0.31 14.22

Net Income 0.530.530.530.530.53 22.8822.8822.8822.8822.88 0.35 15.95

Weighted Average number of Equity Shares used incomputing earnings per equity share (basic & diluted) 52,366,65652,366,65652,366,65652,366,65652,366,656 52,366,65652,366,65652,366,65652,366,65652,366,656 52,366,656 52,366,656

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131131

Consolidated Statement of Cash Flows

(In Millions)



[A][A][A][A][A] OPERAOPERAOPERAOPERAOPERATING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIES

Income FIncome FIncome FIncome FIncome From Continuing Operationsrom Continuing Operationsrom Continuing Operationsrom Continuing Operationsrom Continuing Operations 29.7629.7629.7629.7629.76 1,294.441,294.441,294.441,294.441,294.44 16.19 744.40

Gain on sale of Property, Plant & Equipment 0.120.120.120.120.12 5.405.405.405.405.40 (2.52) (115.90)

Realised/Unrealised (gain)/loss on Investments, net (1.46)(1.46)(1.46)(1.46)(1.46) (63.47)(63.47)(63.47)(63.47)(63.47) (0.79) (36.30)

Depreciation & amortisation 9.659.659.659.659.65 419.71419.71419.71419.71419.71 9.91 455.30

Provision for Tax 2.792.792.792.792.79 121.27121.27121.27121.27121.27 5.51 253.20

Taxes Paid (1.33)(1.33)(1.33)(1.33)(1.33) (57.69)(57.69)(57.69)(57.69)(57.69) (0.17) (8.00)

Payment of Technical Know-how Fee ————— ————— (0.08) (3.80)

Share of loss of Associate Companies (0.69)(0.69)(0.69)(0.69)(0.69) (30.20)(30.20)(30.20)(30.20)(30.20) 1.23 56.70

Dividend From Subsidiary (0.07)(0.07)(0.07)(0.07)(0.07) (3.18)(3.18)(3.18)(3.18)(3.18) — —

Changes in Operating Assets & Liabilities:

Accounts Receivable (1.37)(1.37)(1.37)(1.37)(1.37) (87.20)(87.20)(87.20)(87.20)(87.20) (22.07) (538.60)

Deposits & Other Advances 1.851.851.851.851.85 75.7975.7975.7975.7975.79 3.14 253.10

Inventories 0.480.480.480.480.48 11.9011.9011.9011.9011.90 0.35 186.80

Trade & Other Payables (12.00)(12.00)(12.00)(12.00)(12.00) (490.55)(490.55)(490.55)(490.55)(490.55) 25.38 589.70

Cash provided by Operating ActivitiesCash provided by Operating ActivitiesCash provided by Operating ActivitiesCash provided by Operating ActivitiesCash provided by Operating Activities 27.7327.7327.7327.7327.73 1,196.221,196.221,196.221,196.221,196.22 36.08 1,836.60

Cash Flows FCash Flows FCash Flows FCash Flows FCash Flows From Discontinued Operationsrom Discontinued Operationsrom Discontinued Operationsrom Discontinued Operationsrom Discontinued Operations (2.24)(2.24)(2.24)(2.24)(2.24) (97.26)(97.26)(97.26)(97.26)(97.26) (3.17) (145.70)

Net Cash provided by Operating ActivitiesNet Cash provided by Operating ActivitiesNet Cash provided by Operating ActivitiesNet Cash provided by Operating ActivitiesNet Cash provided by Operating Activities 25.4925.4925.4925.4925.49 1,098.961,098.961,098.961,098.961,098.96 32.91 1,690.90

[B][B][B][B][B] INVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIES

Proceeds from sale of Property, Plant & Equipment 4.924.924.924.924.92 213.82213.82213.82213.82213.82 5.55 255.00

Sale of Subsidiary 1.571.571.571.571.57 68.0668.0668.0668.0668.06

Proceeds from sale of Investments 1.661.661.661.661.66 72.1572.1572.1572.1572.15 84.48 3,882.60

Government Subsidy Received ————— ————— 0.03 1.50

Adjustment on Associates becoming a Subsidiary 0.090.090.090.090.09 3.783.783.783.783.78 — —

Purchase of Investments (0.14)(0.14)(0.14)(0.14)(0.14) (6.20)(6.20)(6.20)(6.20)(6.20) 0.04 2.00

Purchase of Property, Plant & Equipment (12.31)(12.31)(12.31)(12.31)(12.31) (535.21)(535.21)(535.21)(535.21)(535.21) (7.55) (347.20)

Change in Minority Interest (0.22)(0.22)(0.22)(0.22)(0.22) (9.56)(9.56)(9.56)(9.56)(9.56) (87.88) (4,039.00)

Adjustment on disposal of Subsidiary (1.43)(1.43)(1.43)(1.43)(1.43) (62.20)(62.20)(62.20)(62.20)(62.20) — —

Net cash provided by Investing ActivitiesNet cash provided by Investing ActivitiesNet cash provided by Investing ActivitiesNet cash provided by Investing ActivitiesNet cash provided by Investing Activities (5.86)(5.86)(5.86)(5.86)(5.86) (255.36)(255.36)(255.36)(255.36)(255.36) (5.33) (245.10)

[C][C][C][C][C] FINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIES

Repayment of Debt (5.80)(5.80)(5.80)(5.80)(5.80) (236.05)(236.05)(236.05)(236.05)(236.05) (14.85) (1,034.50)

Payment of Interim/Final Dividend (14.95)(14.95)(14.95)(14.95)(14.95) (649.95)(649.95)(649.95)(649.95)(649.95) (3.85) (177.00)

Net cash used in Financing ActivitiesNet cash used in Financing ActivitiesNet cash used in Financing ActivitiesNet cash used in Financing ActivitiesNet cash used in Financing Activities (20.75)(20.75)(20.75)(20.75)(20.75) (886.00)(886.00)(886.00)(886.00)(886.00) (18.70) (1,211.50)

Effect of Exchange rate changes on cash 0.050.050.050.050.05 ————— (2.34) —

Net Increase in Cash & Cash Equivalents during the year (1.12)(1.12)(1.12)(1.12)(1.12) (42.40)(42.40)(42.40)(42.40)(42.40) 8.88 234.30

Cash & Cash Equivalents at the beginning of the year 18.4818.4818.4818.4818.48 801.90801.90801.90801.90801.90 11.94 567.60

Cash & Cash Equivalents at the end of the yearCash & Cash Equivalents at the end of the yearCash & Cash Equivalents at the end of the yearCash & Cash Equivalents at the end of the yearCash & Cash Equivalents at the end of the year 17.4117.4117.4117.4117.41 759.50759.50759.50759.50759.50 18.48 801.90

Supplementary Information:Supplementary Information:Supplementary Information:Supplementary Information:Supplementary Information:

Cash paid for Interest 5.555.555.555.555.55 241.28241.28241.28241.28241.28 8.34 383.30

Cash paid for taxes 1.331.331.331.331.33 57.6957.6957.6957.6957.69 0.17 8.00

Notes to Financial Statements

1.1.1.1.1. Company overview and significant accounting policiesCompany overview and significant accounting policiesCompany overview and significant accounting policiesCompany overview and significant accounting policiesCompany overview and significant accounting policies

1.11.11.11.11.1 Company overviewCompany overviewCompany overviewCompany overviewCompany overview

Crompton Greaves Limited is one of India’s largest private sector enterprises in the business of electrical engineering,providing a wide range of products, systems and services and has a market presence in power systems, industrialsystems, consumer products and digital equipments.

1.21.21.21.21.2 Basis of preparation of financial statementsBasis of preparation of financial statementsBasis of preparation of financial statementsBasis of preparation of financial statementsBasis of preparation of financial statementsThe accompanying financial statements are prepared in accordance with the U.S. Generally Accepted AccountingPrinciples (“GAAP”).

1.31.31.31.31.3 Use of estimatesUse of estimatesUse of estimatesUse of estimatesUse of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues andexpenses during the year. Examples of estimates include allowance for uncollectible accounts receivable, futureobligations under employee benefit plans and the useful lives of property, plant and equipment. Actual results coulddiffer from those estimates.

1.41.41.41.41.4 FFFFFunctional Currencyunctional Currencyunctional Currencyunctional Currencyunctional Currency

The functional and reporting currency of the Company is Indian Rupee (INR) as all the activities of the Company areconducted in India.

1.51.51.51.51.5 Principles of ConsolidationPrinciples of ConsolidationPrinciples of ConsolidationPrinciples of ConsolidationPrinciples of ConsolidationThe accompanying consolidated financial statements include the financial statements of Crompton Greaves and all ofits subsidiaries, which are more than 50% owned and controlled. All significant inter-company accounts and transactionsare eliminated on consolidation.

Investments in which the company owns over 20% but not in excess of 50% interest and where it can exercisesignificant influence are accounted under equity method and accordingly the prorata share of their income/loss isincluded in the Statement of Operations. However, the results of the following associates have not been included in theconsolidated financial statements, which in view of the management will have an inconsequential impact on profitabilityand financial operations of the company:

i) Paxonet Communications Inc. USA (Disposed off during the year)ii) Power Equipment Limited, Dubai

iii) Radiant Electronics Limited

The consolidated financial statements present the consolidated accounts of Crompton Greaves Limited with thefollowing Subsidiaries and other affiliates: -

As at March 31,20052005200520052005 2004

Country of Proportion ofProportion ofProportion ofProportion ofProportion of Proportion ofIncorporation OwnershipOwnershipOwnershipOwnershipOwnership Ownership

InterestInterestInterestInterestInterest InterestSubsidiaries:Subsidiaries:Subsidiaries:Subsidiaries:Subsidiaries:CG Capital & Investments Limited India 100.00100.00100.00100.00100.00 100.00CG Motors Private Limited India 100.00100.00100.00100.00100.00 —(Became subsidiary w.e.f. 15th June 2004)CG PPI Adhesive Products Limited India 81.4281.4281.4281.4281.42 81.42CTR Manufacturing Industries Limited. India ————— 82.06(Ceased to be subsidiary w.e.f.14th July 2004)Affiliates:Affiliates:Affiliates:Affiliates:Affiliates:Brook Crompton Greaves Limited India 49.0049.0049.0049.0049.00 49.00CG Actaris Electricity Management Limited India 49.0049.0049.0049.0049.00 49.00CG Lucy Switchgears Limited India 50.0050.0050.0050.0050.00 50.00CG Maersk Information Technology (P) Ltd. India 50.0050.0050.0050.0050.00 50.00CG Smith Software Private Limited India 50.0050.0050.0050.0050.00 50.00CG Motors Private Limited India — 49.0049.0049.0049.0049.00(Earlier Hitachi CG Motors Engineering Pvt. Ltd.)(Ceased to be an associate w.e.f.15th June 2004)

International Components India Limited India 50.0050.0050.0050.0050.00 50.00

133133

In 2004, dated 14th July, 2004, CG Capital & Investment a wholly owned subsidiary of Crompton Greaves disposed it’s82.06% holding in CTR Manufacturing Industries Limited for a consideration of Rs. 68.06 Million & net gain has beenrecognised as gain on sale of Investment under Income statement amounting to Rs. 16.10 Million. The consolidatedIncome statement includes the results of CTR Manufacturing Industries Limited upto the date of sale.

Crompton Greaves has acquired on 15th June 2004 the balance 51% stake in Hitachi CG Motors Engineering PrivateLimited, a 49:51 Joint Venture between the Crompton Greaves and Hitachi Limited, Japan for a consideration of Rs. 3.80Million. Consequently, Hitachi CG Motors Engineering Private Limited became a wholly owned subsidiary of the CromptonGreaves Limited. Subsequent to the purchase of entire shareholding, the name of the company has been changed toCG Motors Private Limited. The result of the said company upto 15th June 2004 have been included in the share of profit/ loss from associate companies and the results thereafter have been included in the Consolidated Profit & LossAccount as a Subsidiary.

1.61.61.61.61.6 InvestmentsInvestmentsInvestmentsInvestmentsInvestments

Investment securities in which the Company controls less than 20% voting interest are currently classified as “Available-for-sale securities”. Non-readily marketable equity securities for which there are no readily determinable fair values arerecorded at cost.

Investment securities designated as “available-for-sale” are carried at their fair value. Fair value is based on quotedmarket prices. Unquoted securities are carried at cost, adjusted for declines in value judged to be other than temporary.Temporary unrealized gains and losses, are reported as a separate component of stockholders’ equity until realized.Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities areincluded in the Statement of Income. The cost of securities sold is based on the specific identification method. Interestand dividend income is recognized when earned.

Investment securities designated as “Long-term” are carried at cost or amortized cost, as the case may be.

1.71.71.71.71.7 Revenue RecognitionRevenue RecognitionRevenue RecognitionRevenue RecognitionRevenue Recognition

The Company recognises revenue from the sale of manufactured products when persuasive evidence of an arrangementexists, the price is fixed and determinable, collectibility in reasonably assured and upon transfer of title including therisks and rewards of ownership to the customer. If contracts for sale of manufactured products require installation, whichcan only be performed by the company, revenues are deferred until installation of the products is complete. Revenuesfrom short term contracts to deliver services are recognised upon completion of required services to the customer.Revenues from contracts that contain customer acceptance provisions are deferred until customer acceptance occurs orthe contractual acceptance period has lapsed.

Revenues under long term contracts are recognised using the percentage-of-completion of method of accounting. Thecompany principally uses the cost-to-cost or delivery events methods to measure progress towards completion ofcontracts. Management determines the method to be used by type of contract based on its judgment as to whichmethod best measures actual progress towards completion.

Anticipated cost for warranties are accrued when revenues are recognised. Losses on contracts are recognised in theperiod when they are identified and are based upon the anticipated excess of contract costs over the related contractrevenues.

When the Company receives advance payments from customers for sale of products or provision of services, suchpayments are reported as advances from customers until all conditions for revenue recognition are met. Revenues fromproduct sales are shown net of sales tax and applicable discounts and allowances.

1.81.81.81.81.8 Cash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalents

The company considers all highly liquid investments with a remaining maturity at the date of purchase/investment ofthree months or less to be cash equivalents. Cash and cash equivalents comprise cash, cash on deposit with banks,and liquid investments with maturity upto three months or due on demand at the time of purchase.

1.91.91.91.91.9 InventoriesInventoriesInventoriesInventoriesInventories

Inventories consist primarily of raw materials, packing materials, stores, spares, work-in-process and finished goods andare valued at lower of cost or market. Cost is determined using the First-in First-out or Weighted Average cost methodsfor all categories of inventories. Inventoried costs relating to percentage-of-completion contracts are stated at actualproduction cost, including overhead incurred to date, reduced by amounts recognised in the cost of sales.

1.101.101.101.101.10 PropertyPropertyPropertyPropertyProperty, Plant & Equipment, Plant & Equipment, Plant & Equipment, Plant & Equipment, Plant & Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Interest costs incurred during theconstruction period of buildings are capitalized based on the average outstanding investment in the asset and the costof funds borrowed. The capitalized interest cost is included in the cost of the relevant asset and is depreciated over theestimated useful life of the asset. Repairs and maintenance is expensed when incurred.

The company depreciates property, plant and equipment over their estimated useful lives using the reducing-balancemethod other than buildings and plant & machinery, which are depreciated on straight-line method. The estimateduseful lives of assets are as follows:

Office Buildings : 30-60 yearsFurniture and fixtures : 15 yearsComputer equipment : 5 yearsPlant and equipment : 10 yearsVehicles : 10 years

1.111.111.111.111.11 Impairment of Long-lived assetsImpairment of Long-lived assetsImpairment of Long-lived assetsImpairment of Long-lived assetsImpairment of Long-lived assets

The company evaluates the recoverability of its long-lived assets and certain identifiable intangibles, if any, wheneverevents or changes in circumstances indicate that their carrying amounts may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to futureundiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, theimpairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fairvalue of the assets. Assets to be disposed are reported at lower of the carrying value or the fair value less the costto sell.

1.121.121.121.121.12 Research and DevelopmentResearch and DevelopmentResearch and DevelopmentResearch and DevelopmentResearch and Development

Research and development costs are expensed as incurred. Software development costs are expensed as incurreduntil technological feasibility is achieved. Capital expenditure on equipment and facilities that are acquired or constructedfor research and development activities and having alternative future use, is capitalised as tangible assets whenacquired or constructed.

1.131.131.131.131.13 Goodwill and Other Intangible AssetsGoodwill and Other Intangible AssetsGoodwill and Other Intangible AssetsGoodwill and Other Intangible AssetsGoodwill and Other Intangible Assets

In accordance with SFAS 142, goodwill is reviewed annually for impairment. Intangible assets that are deemed to havedefinite lives are amortized over their useful lives. No impairment is recorded if the fair value of the reporting unitdetermined on the basis of discounted cash flows is greater than the net assets including goodwill.

Other Intangible Assets consisting of Leasehold land, Specialised software and Technical Know-how are amortized asfollows: -

(a) Leasehold Land : over the period of lease

(b) Specialised software : over a period of five years

(c) Lump sum fees for technical know-how: over the period of five years from the year of commercial production

1.141.141.141.141.14 FFFFForeign currency translationoreign currency translationoreign currency translationoreign currency translationoreign currency translation

The accompanying financial statements are reported in US dollars (US $). The functional currency of the company isthe Indian rupee (“INR.”).

The translation of INR to US $ is performed for revenue and expense accounts using the weighted average exchangerate for the respective periods and for balance sheet accounts using the exchange rate in effect at the balance sheetdate, except for stockholders’ equity accounts which have been translated using the exchange rate as on April 1, 2002.The gains or losses resulting from such translation are reported as “Other Comprehensive Income”, a separatecomponent of Stockholders’ Equity.

Solely for the convenience of the readers, the Financial Statements as of and for the year ended March 31, 2005 &March 31, 2004 have been translated into US $ at the noon buying rate in New York City for cable transfers in Indianrupees, as certified for customs purposes by the Federal Reserve Bank of New York.

The following table sets forth, for the fiscal years indicated, informations concerning the number of Indian rupees forwhich one US $ could be exchanged based on the average of the noon buying rate in the City of New York, on each

135135

business day during the period, for cable transfers in Indian rupees as certified for customs purposes by the FederalReserve Bank of New York. The column titled “Average” in the table below is the average of the daily noon buying rateon each business day during the year.

Fiscal year EndedFiscal year EndedFiscal year EndedFiscal year EndedFiscal year Ended PPPPPeriod Starteriod Starteriod Starteriod Starteriod Start PPPPPeriod Enderiod Enderiod Enderiod Enderiod End AAAAAverageverageverageverageverage

March 31, 2002 46.65 48.83 47.71

March 31, 2004 47.45 43.40 45.96

March 31, 2005 43.40 43.62 43.48

1.151.151.151.151.15 FFFFForeign currency transactionoreign currency transactionoreign currency transactionoreign currency transactionoreign currency transaction

Foreign currency transactions are translated into Indian Rupees at the rate of exchange prevailing on the date of therespective transactions. Assets and liabilities in foreign currencies are translated into Indian rupees at the exchangerate prevailing on the balance sheet date. The resulting exchange gains/losses are included in the Statement ofIncome.

1.161.161.161.161.16 Earnings per shareEarnings per shareEarnings per shareEarnings per shareEarnings per share

In accordance with Statement of Financial Accounting Standards (“SFAS”) 128, Earnings Per Share, basic earnings pershare are computed using the weighted average number of common shares outstanding during the period. Dilutedearnings per share is computed using the weighted average number of common and dilutive common equivalentshares outstanding during the period, except where the result would be anti-dilutive.

1.171.171.171.171.17 Income taxesIncome taxesIncome taxesIncome taxesIncome taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognizedfor the future tax consequences attributable to differences between the financial statement carrying amounts of existingassets and liabilities, and their respective tax bases and operating loss carry-forwards. Deferred tax assets andliabilities are measured using enacted tax rates. The measurement of deferred tax assets is reduced by a valuationallowance if it is determined that the future tax benefits associated with the deferred tax asset will not be realized.

1.181.181.181.181.18 FFFFFair value of financial instrumentsair value of financial instrumentsair value of financial instrumentsair value of financial instrumentsair value of financial instruments

The carrying amounts reflected in the balance sheets for cash, cash equivalents, accounts receivable and accountspayable approximate their respective fair values due to the short maturities of these instruments.

1.191.191.191.191.19 Concentration of riskConcentration of riskConcentration of riskConcentration of riskConcentration of risk

Financial instruments that potentially subject the company to concentrations of credit risk consist principally of cashequivalents, trade accounts receivable and investment securities. By their nature, all such financial instruments involverisk including the credit risk of non-performance by counterparties. In management’s opinion, as of March 31, 2005and 2004, there was no significant risk of loss in the event of non-performance of the counterparties to these financialinstruments, other than the amounts already provided for in the financial statements, if any. Exposure to credit risk ismanaged through credit approvals, specific minimum credit standards, diversification of counterparties and monitoringprocedures. The company’s cash resources are invested with corporations, financial institutions and banks with highinvestment grade credit ratings. Limitations are established by the company as to the maximum amount of cash thatmay be invested with any such single entity.

1.201.201.201.201.20 Retirement benefits to employeesRetirement benefits to employeesRetirement benefits to employeesRetirement benefits to employeesRetirement benefits to employees

GRATUITY

In accordance with the Payment of Gratuity Act, 1972, Crompton Greaves provides for gratuity, a defined benefitretirement plan (the “Gratuity Plan”) covering eligible employees. The Gratuity Plan provides a lump sum payment tovested employees at retirement, death, incapacitation or termination of employment, of an amount based on therespective employee’s salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determinedby actuarial valuation, based upon which, the company contributes to the Crompton Greaves Limited Gratuity Fund(the “Fund”). Trustees administer contributions made to the Fund and invest in specific designated securities asmandated by law, which generally comprise central and state government bonds and debt instruments of government-owned corporations backed by government guarantees.

SuperannuationSuperannuationSuperannuationSuperannuationSuperannuation

Apart from being covered under the Gratuity Plan described above, certain employees of Crompton Greaves are alsoparticipants of a defined contribution plan. The company makes monthly contributions under the superannuation plan(the “Plan”) to the Crompton Greaves Limited Superannuation Fund based on a specified percentage of each coveredemployee’s salary. The company has no further obligations to the Plan beyond its monthly contributions.

Provident fundProvident fundProvident fundProvident fundProvident fund

Eligible employees also receive benefits from a provident fund, which is a defined contribution plan. Both the employeeand the company make monthly contributions to this provident fund plan equal to a specified percentage of thecovered employee’s salary as specified under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.The company makes monthly contributions under the provident fund plan to the Crompton Greaves Limited ProvidentFund. The company has no further obligations to the Plan beyond its monthly contributions.

1.211.211.211.211.21 DividendsDividendsDividendsDividendsDividends

The proposed final dividend on common stock is provided for in the Crompton accounts in the financial year to whichthey relate. Under US GAAP such dividend are not provided for until they become irrevocable.

2.2.2.2.2. Notes to the financial statementsNotes to the financial statementsNotes to the financial statementsNotes to the financial statementsNotes to the financial statements

2.12.12.12.12.1 Cash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalents

The cost and fair values for cash and cash equivalents as of March 31, 2005 and 2004, respectively are as follows:

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Cash and bank deposits 759.50759.50759.50759.50759.50 801.90

759.50759.50759.50759.50759.50 801.90

2.22.22.22.22.2 TTTTTrade accounts receivablerade accounts receivablerade accounts receivablerade accounts receivablerade accounts receivableTrade accounts receivables are stated net of allowance for doubtful accounts. The Company maintains an allowancefor doubtful accounts on present and prospective financial condition of the customer and aging of the accountsreceivable.Trade accounts receivable as of March 31, 2005 and 2004, net of allowance for doubtful accounts of Rs. 324.80 millionand Rs. 298.70 million amounted to Rs. 5452.30 million and Rs. 5365.10 million, respectively.The activity in the allowance for doubtful accounts receivable is given below: -

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Balance at the beginning of the period 298.70298.70298.70298.70298.70 245.70

Additional provision during the period 29.3029.3029.3029.3029.30 52.40

Transferred to / from Bad Debts A/c. -3.20-3.20-3.20-3.20-3.20 0.60324.80324.80324.80324.80324.80 298.70

2.32.32.32.32.3 Deposits & Other AdvancesDeposits & Other AdvancesDeposits & Other AdvancesDeposits & Other AdvancesDeposits & Other AdvancesDeposits and Other Advances consist of the following:

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Balance with Excise & Customs Authorities 46.4046.4046.4046.4046.40 44.30

Prepaid Expenses 120.40120.40120.40120.40120.40 111.70

Rent Deposit 27.1027.1027.1027.1027.10 32.50

Tender & Other Deposits 216.24216.24216.24216.24216.24 213.90

Loans & Advances to employees 26.8526.8526.8526.8526.85 29.80

Advance to Suppliers 161.93161.93161.93161.93161.93 104.90

Advance for purchase of Land 5.955.955.955.955.95 32.40

Octroi & Excise Duty Receivable 155.13155.13155.13155.13155.13 135.90

Other Advances 199.90199.90199.90199.90199.90 386.50959.90959.90959.90959.90959.90 1091.90

Less: Current Portion 872.50872.50872.50872.50872.50 904.5087.4087.4087.4087.4087.40 187.40

137137

2.42.42.42.42.4 InventoriesInventoriesInventoriesInventoriesInventories

Inventories consist of the following:(Rs. in Million)

As at March 31,

20052005200520052005 2004

Stores, Spare parts & Packing materials 27.3027.3027.3027.3027.30 33.80

Raw Materials 521.50521.50521.50521.50521.50 527.10

Work-in-Process 805.80805.80805.80805.80805.80 885.80

Finished Goods 422.90422.90422.90422.90422.90 342.70

1777.501777.501777.501777.501777.50 1789.40

2.52.52.52.52.5 InvestmentsInvestmentsInvestmentsInvestmentsInvestments

The carrying cost and fair values of Available-for-sale securities are as follows:(Rs. in Million)

As at March 31, 2005

Carrying cost Fair Value

AAAAAvailable-forvailable-forvailable-forvailable-forvailable-for-sale-sale-sale-sale-sale

Equity Securities: Quoted 6.50 24.40

Unquoted 296.85 274.95

Preference Shares 33.10 33.10

Units of UTI Scheme, 1964 16.30 18.20

Debentures & Bonds 161.20 161.20

Held-to-MaturityHeld-to-MaturityHeld-to-MaturityHeld-to-MaturityHeld-to-Maturity

Bonds 7.50 235.00

521.45 746.85

(Rs. in Million)


Carrying cost Fair Value

AAAAAvailable-forvailable-forvailable-forvailable-forvailable-for-sale-sale-sale-sale-sale

Equity Securities: Quoted 53.00 34.10

Unquoted 344.50 292.50

Preference Shares 33.10 33.10

Unit of UTI Scheme, 1964 16.30 18.80

Debentures & Bonds 155.00 155.00

Held-to-MaturityHeld-to-MaturityHeld-to-MaturityHeld-to-MaturityHeld-to-Maturity

Bonds 7.50 235.00

609.40 768.50

2.62.62.62.62.6 Intangible AssetsIntangible AssetsIntangible AssetsIntangible AssetsIntangible Assets

Intangible assets consist of Goodwill, Leasehold Land, Computer Software and Technical Know-how. These intangibleassets are amortised except goodwill, as per policy adopted by company.

Goodwill is reviewed annually for impairment, if any.

2.72.72.72.72.7 PropertyPropertyPropertyPropertyProperty, plant and equipment, net, plant and equipment, net, plant and equipment, net, plant and equipment, net, plant and equipment, net

Property, plant and equipment consist of the following:(Rs. in Million)

As at March 31,

20052005200520052005 2004

Freehold Land 64.0264.0264.0264.0264.02 66.21

Buildings 1898.051898.051898.051898.051898.05 1913.10

Plant & Machinery 4885.004885.004885.004885.004885.00 4836.40

Furniture & Fixture 983.00983.00983.00983.00983.00 970.10

Vehicles 101.40101.40101.40101.40101.40 107.40

Capital Work-in-Progress 80.1080.1080.1080.1080.10 80.80

8011.578011.578011.578011.578011.57 7974.01

Less: Accumulated Depreciation 4567.204567.204567.204567.204567.20 4421.40

Less: Impairment 119.20119.20119.20119.20119.20 —

3325.173325.173325.173325.173325.17 3552.61

Depreciation expense amounted to Rs. 419.71 million and Rs. 455.30 million for fiscal 2005 and 2004 respectively.

2.82.82.82.82.8 Other Accrued LiabilitiesOther Accrued LiabilitiesOther Accrued LiabilitiesOther Accrued LiabilitiesOther Accrued Liabilities

Other accrued liabilities comprise the following:(Rs. in Million)

As at March 31,

20052005200520052005 2004

Unclaimed Dividend 4.104.104.104.104.10 2.40

Proposed Dividend & Dividend Tax ————— 236.30

Interest Accrued on Loans 3.703.703.703.703.70 13.50

Security Deposits 38.8038.8038.8038.8038.80 20.40

Liability for Gratuity 15.7815.7815.7815.7815.78 23.50

Liability for Leave Encashment 216.83216.83216.83216.83216.83 211.80

Provision for Medical & LTA 17.2617.2617.2617.2617.26 30.00

Other Liabilities 570.50570.50570.50570.50570.50 415.80

866.97866.97866.97866.97866.97 953.70

Less: Current Portion 617.10617.10617.10617.10617.10 688.40

249.87249.87249.87249.87249.87 265.30

139139

2.92.92.92.92.9 DebtDebtDebtDebtDebt

Debt consists of the following:

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Debentures: VIII Series 00.0000.0000.0000.0000.00 55.50

IX Series ————— —

Rupee Term Loan from Banks 417.50417.50417.50417.50417.50 567.50

Rupee term Loan from Financial Institutions 550.00550.00550.00550.00550.00 125.00

Cash Credit Loans 00.0000.0000.0000.0000.00 35.70

Foreign Currency Loans 439.60439.60439.60439.60439.60 990.90

Packing Credit Foreign Currency Loans 1081.101081.101081.101081.101081.10 798.40

Interest free sales tax loans & special incentive loans from Govt. 266.60266.60266.60266.60266.60 270.60

Fixed Deposits 363.10363.10363.10363.10363.10 517.00

Other Deposits 27.5027.5027.5027.5027.50 27.50

Total 3145.403145.403145.403145.403145.40 3388.10

Less: Current Portion 605.10605.10605.10605.10605.10 478.40

2540.302540.302540.302540.302540.30 2909.70

An interest rate profile of long-term debt is given below:As at March 31,

20052005200520052005 2004

Debentures: VIII Series ————— 13.50%

Rupee Term Loan from Financial Institution / Banks 7% to 8.5%7% to 8.5%7% to 8.5%7% to 8.5%7% to 8.5% 10.20%

Cash Credit Loans 9% to 11%9% to 11%9% to 11%9% to 11%9% to 11% 9% to 11%

Foreign Currency Loans 5.00%5.00%5.00%5.00%5.00% 5.00%

Packing Credit Foreign Currency Loans 2.05%2.05%2.05%2.05%2.05% 2.05%

Fixed Deposits 12.00%12.00%12.00%12.00%12.00% 12.00%

The nature and description of securities provided for long-term debt are as under:

a) Debentures (VIII series) are secured by first charge / mortgage over specific movable/immovable properties of theCompany.

b) Term loans from banks and financial Institution are secured by way of equitable mortgage of Property (Land &Buildings) and by way of hypothecation of specific movable properties.

c) Cash credit loans and foreign currency loans are secured by hypothecation of Inventories and Trade AccountsReceivables.

2.102.102.102.102.10 Extraordinary Income:Extraordinary Income:Extraordinary Income:Extraordinary Income:Extraordinary Income:

During the fiscal year ended on March 31, 2004, the Company earned an extraordinary income of Rs. 191.20 million,being excess of debt extinguished over the amount paid to the Government in India in respect of certain deferred salestax loans pursuant to the said Government’s one-time scheme of giving concessions on prepayment.

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Total Debt outstanding 000.00000.00000.00000.00000.00 315.80

Amount Paid 000.00000.00000.00000.00000.00 124.60Extraordinary Income 000.00000.00000.00000.00000.00 191.20

2.112.112.112.112.11 Employee PEmployee PEmployee PEmployee PEmployee Postostostostost-retirement Benefits-retirement Benefits-retirement Benefits-retirement Benefits-retirement Benefits

GratuityGratuityGratuityGratuityGratuity

The following tables set out the funded status of the Gratuity Plan and the amounts recognized in the company’sfinancial statements in fiscal 2005 and 2004.

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Change in Benefit ObligationChange in Benefit ObligationChange in Benefit ObligationChange in Benefit ObligationChange in Benefit Obligation

Benefit obligations as at the beginning of the year 207.30207.30207.30207.30207.30 197.70

Effect of changes in assumptions used ————— —

Amortization of unrecognized actuarial loss ————— —

Service cost 12.8612.8612.8612.8612.86 11.30

Interest cost 18.6518.6518.6518.6518.65 20.80

Actuarial (Gain) / Loss 14.3414.3414.3414.3414.34 23.70

Benefits paid (-)21.38(-)21.38(-)21.38(-)21.38(-)21.38 (-)46.20Benefit obligations as at the end of the year 231.77231.77231.77231.77231.77 207.30Change in Plan AssetsChange in Plan AssetsChange in Plan AssetsChange in Plan AssetsChange in Plan Assets

Fair value of plan assets as at the beginning of the year 183.80183.80183.80183.80183.80 162.40

Expected return on plan assets 16.5516.5516.5516.5516.55 17.10

Gain / (Loss) on Plan Assets 6.556.556.556.556.55 (-) 2.00

Employer contributions 30.4730.4730.4730.4730.47 52.50

Benefits paid (-)21.38(-)21.38(-)21.38(-)21.38(-)21.38 (-)46.20Plan assets as at the end of the year 215.99215.99215.99215.99215.99 183.80Funded Status 15.7815.7815.7815.7815.78 (-)23.50Net gratuity cost for fiscal 2005 and 2004 comprises of the following components:Net gratuity cost for fiscal 2005 and 2004 comprises of the following components:Net gratuity cost for fiscal 2005 and 2004 comprises of the following components:Net gratuity cost for fiscal 2005 and 2004 comprises of the following components:Net gratuity cost for fiscal 2005 and 2004 comprises of the following components:

Service cost 12.8612.8612.8612.8612.86 11.30

Interest cost 18.6518.6518.6518.6518.65 20.80

Expected return on assets (-)16.55(-)16.55(-)16.55(-)16.55(-)16.55 (-)17.10

Actuarial (Gain) / Loss 7.797.797.797.797.79 25.70

Amortization of unrecognized transitional obligation ————— —

Amortization of unrecognized actuarial loss ————— —Net gratuity cost 22.7522.7522.7522.7522.75 40.70The assumptions used in accounting for the Gratuity Plan are set out below:The assumptions used in accounting for the Gratuity Plan are set out below:The assumptions used in accounting for the Gratuity Plan are set out below:The assumptions used in accounting for the Gratuity Plan are set out below:The assumptions used in accounting for the Gratuity Plan are set out below:

Discount rate 9.00%

Rate of increase in compensation levels 2.50%

Rate of return on Plan Assets 9.00%

141141

SuperannuationSuperannuationSuperannuationSuperannuationSuperannuationThe company contributed Rs. 23.10 million and Rs. 23.10 million to the superannuation plan in fiscal 2005 and 2004respectively.Provident FProvident FProvident FProvident FProvident FundundundundundThe company contributed Rs. 79.70 million and Rs. 84.50 million to the provident fund in fiscal 2005 and 2004respectively.

2.122.122.122.122.12 Stockholders’ EquityStockholders’ EquityStockholders’ EquityStockholders’ EquityStockholders’ EquityEquity SharesEquity SharesEquity SharesEquity SharesEquity SharesThe Company presently has only one class of equity shares. For all matters submitted to vote in the shareholdersmeeting, every holder of equity shares, as reflected in the records of the Company on the date of the shareholdersmeeting shall have one vote in respect of each share held them in case of a poll.DividendsDividendsDividendsDividendsDividendsShould the company declare and pay dividends, such dividends will be paid in Indian Rupees. Indian law mandatesthat any dividend be declared out of distributable profits only after the transfer of a specified percentage of net incomecomputed in accordance with current regulations to a general reserve. Moreover, the remittance of dividends outsideIndia is governed by Indian law on foreign exchange and is subject to applicable taxes.The Company recognizes a liability for dividends in the year to which it relates.The Company paid dividends of Rs. 366.60 million (dividend tax thereon Rs. 48.90 million) during the year endedMarch 31, 2005. The dividend per share was Rs. 7.92 (including Dividend Tax of Rs. 0.92 per share). For Fiscal 2004,we paid a dividend of Rs. 413.50 (dividend tax thereon Rs. 46.90 million).LiquidationLiquidationLiquidationLiquidationLiquidationIn the event of liquidation of the affairs of the Company, all preferential amounts, if any, shall be discharged by theCompany. The remaining assets of the Company, after such discharge, shall be distributed to the holders of equityshares in proportion to the number of shares held by them.Retained EarningsRetained EarningsRetained EarningsRetained EarningsRetained EarningsThe Company’s retained earnings as of March 31, 2005 and 2004 include restricted retained earnings of Rs. 10.70million and Rs. 26.40 million respectively, which are not distributable as dividends under the Indian Companies and Taxlaws. These relate to requirements regarding earmarking a part of the retained earnings for creation of other statutoryreserves.

2.132.132.132.132.13 Income taxesIncome taxesIncome taxesIncome taxesIncome taxesThe provision for income taxes comprises:

(Rs. in Million)As at March 31,

20052005200520052005 2004Current Taxes 121.97121.97121.97121.97121.97 139.10Deferred Tax -.70-.70-.70-.70-.70 114.10

121.27121.27121.27121.27121.27 253.20

The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities and a descriptionof the financial statement items that created these differences are as follows:

(Rs. in Million)As at March 31,

20052005200520052005 2004Deferred TDeferred TDeferred TDeferred TDeferred Tax Assetsax Assetsax Assetsax Assetsax AssetsCurrent: Expenses Allowable on Payment basis 0.040.040.040.040.04 (-)21.30VRS Expenditure of earlier years 148.90Carried forward tax losses (-)243.10Others 0.140.140.140.140.14 (-)37.70

0.180.180.180.180.18 (-)153.20

Deferred TDeferred TDeferred TDeferred TDeferred Tax Liabilityax Liabilityax Liabilityax Liabilityax LiabilityCurrent: Property, Plant & Equipment 5.485.485.485.485.48 5.10VRS Expenditure of earlier years (-)18.80Others (-)20.60

5.485.485.485.485.48 (-)34.30

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that someportion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependentupon the generation of future taxable income during the periods in which the temporary differences become deductible.Management considers the scheduled reversal of the projected future taxable income, and tax planning strategies inmaking this assessment. Based on the level of historical taxable income and projections for future taxable income overthe periods, in which the deferred tax assets are deductible, management believes that it is more likely than not thecompany will realize the benefits of those deductible differences. The amount of the deferred tax assets consideredrealizable, however, could be reduced in the near term if estimates of future taxable income during the carry forwardperiod are reduced.

All deferred tax expenses / (benefits) are allocated to the continuing operations of the company.

2.142.142.142.142.14 Scheme of Capital Reduction:Scheme of Capital Reduction:Scheme of Capital Reduction:Scheme of Capital Reduction:Scheme of Capital Reduction:

Pursuant to the approval by the stockholders of the Company at the Annual General Meeting held on July 22, 2003, theCompany had filed a petition in the High Court of Judicature at Mumbai and the said High Court had approved theCapital Reduction vide its Order dated September 15, 2003.Accordingly, the balances of the following accounts havebeen adjusted against Additional Paid-in Capital: -

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Technical Know-how 00.0000.0000.0000.0000.00 44.80

Deferred Tax Asset 000.00000.00000.00000.00000.00 794.60

Transferred to Retained Earnings 000.00000.00000.00000.00000.00 681.20

0000.000000.000000.000000.000000.00 1520.60

2.152.152.152.152.15 Discontinued OperationsDiscontinued OperationsDiscontinued OperationsDiscontinued OperationsDiscontinued Operations

In view of the financial and operational unviability of the Company’s Capacitor Division at Pune, Informatics Division atBangalore and Industrial Electronics Division at Nashik, the Company has discontinued the operations of thesedivisions effective from April 22, 2003. This decision will have an inconsequential impact on the Company’s futureoperations and the fair value of Long-lived assets.

The results of operations of these three divisions for all periods have been reported separately as “Loss from DiscontinuedOperations”.

Loss from discontinued operations, net of tax, was Rs. 96.08 million and Rs. 100.40 million in fiscal 2005 and 2004,respectively. The loss/(gain) from discontinued operations, net of tax, for the above items are detailed below.

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Capacitor Division, Pune 65.9665.9665.9665.9665.96 38.70

Informatics Division, Bangalore 27.9527.9527.9527.9527.95 45.50

Industrial Electronics Division, Nashik 2.172.172.172.172.17 16.20

96.0896.0896.0896.0896.08 100.40

2.162.162.162.162.16 Earnings per shareEarnings per shareEarnings per shareEarnings per shareEarnings per share

The Company has adopted SFAS 128, “Earnings Per Share”. In accordance with SFAS 128, basic earnings per shareis computed using the weighted average number of common shares outstanding during the period. Diluted earningsper share is computed using the weighted average number of common and dilutive common equivalent sharesoutstanding during the period, except where the results would be anti-dilutive.

The weighted average number of common shares and common & dilutive common equivalent shares outstandingduring the period ending March 31, 2005 and 2004 is 52,366,656.

143143

2.172.172.172.172.17 Related PRelated PRelated PRelated PRelated Party Tarty Tarty Tarty Tarty Transactionsransactionsransactionsransactionsransactions

The following transactions were carried out with related parties in the ordinary course of business:(Rs. in Million)

As at March 31,

20052005200520052005 2004

AffiliatesAffiliatesAffiliatesAffiliatesAffiliates Affiliates

Purchase of goods 263.90263.90263.90263.90263.90 91.70

Sales of goods & Service revenue 48.1048.1048.1048.1048.10 24.50

Purchase of fixed assets 0.600.600.600.600.60 0.00

Interest expense 3.503.503.503.503.50 9.30

Dividend received 13.5013.5013.5013.5013.50 9.60

Commission received 1.001.001.001.001.00 0.10

Rent Income 0.000.000.000.000.00 0.30

Due to related parties as at the year-end 91.9091.9091.9091.9091.90 96.00

Due from related parties as at the year-end 7.307.307.307.307.30 9.70

Inter-corporate deposits taken – Balance as at the year-end 27.5027.5027.5027.5027.50 27.50

Inter-corporate deposits placed – Balance as at the year-end 12.4012.4012.4012.4012.40 0.00

Remuneration to Managing Director, Commission to Directors 26.1026.1026.1026.1026.10 19.60

I. AffiliatesAffiliatesAffiliatesAffiliatesAffiliates

i) Brook Crompton Greaves Limited

ii) CG Lucy Switchgear Limited

iii) CG Smith Software (P) Limited

iv) Hitachi CG Motor Engineering (P) Limited (Ceased to be an associate w.e.f. 15th June,2004)

II. KKKKKey Management Pey Management Pey Management Pey Management Pey Management Personnel and their relativesersonnel and their relativesersonnel and their relativesersonnel and their relativesersonnel and their relatives

Mr. S. M. Trehan - Managing Director


Dr. O Goswami - Director

Mr. S Labroo - Director

Mr. K Thapar - Director

Mr. S. Bisht - Nominee Director

III. Other Related POther Related POther Related POther Related POther Related Partiesartiesartiesartiesarties

(i) Ballarpur Industries Limited

(ii) Greaves Cotton Limited

2.182.182.182.182.18 Segment InformationSegment InformationSegment InformationSegment InformationSegment Information

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information,Disclosures about Segments of an Enterprise and Related Information,Disclosures about Segments of an Enterprise and Related Information,Disclosures about Segments of an Enterprise and Related Information,Disclosures about Segments of an Enterprise and Related Information, establishes standards for theway that public business enterprises report information about operating segments and related disclosures aboutproducts and services, geographic areas, and major customers.

The company’s operations predominantly relate to providing electrical and industrial products delivered to customerslocated globally, across various industry segments. Revenues represented along industry classes comprise the principalbasis of segmental information set out in these financial statements. The accounting principles consistently used in thepreparation of the financial statements are consistently applied to record revenue and expenditure in individual segments,and are as set out in the summary of significant accounting policies.

Industry segments for the company are primarily PPPPPower Systemsower Systemsower Systemsower Systemsower Systems comprising enterprises providing Power and DistributionTransformers, Switchgears and other engineering products; Consumer Products Consumer Products Consumer Products Consumer Products Consumer Products comprising enterprises providingFans, Luminaires, Light sources and Agricultural & Domestic Pumps; Industrial Systems Industrial Systems Industrial Systems Industrial Systems Industrial Systems comprising enterprises providingElectric Motors, Alternators, DC Machines and other industrial products.

Revenue and expense in relation to segments are categorized based on items that are individually identifiable to thatsegment. Certain incomes & expenses such as interest and dividend income, interest expense, etc. are not specificallyallocable to specific segments as the underlying services are used interchangeably. Management believes that it is notpractical to provide segment disclosures relating to those items of incomes and expenses, and accordingly these areseparately disclosed as “unallocable items”

Informations on reportable segments are as follows: -

(Rs. in Million)


Power Consumer Industrial Others Unallocable TotalSystems Products Systems Items

Segment Revenue 8903.24 6828.60 5706.30 437.74 36.79 21912.67

Segment Expense 8161.25 6226.93 4932.60 549.50 654.38 20524.66

Segment Result 741.99 601.67 773.70 (111.76) (617.59) 1388.01

Less: Taxes 121.27

Income from Continuing Operations after Tax 1266.74

(Rs. in Million)


Power Consumer Industrial Others Unallocable TotalSystems Products Systems Items

Segment Revenue 7758.60 6207.30 4338.50 533.00 117.00 18954.40

Segment Expense 7026.90 5681.60 3882.10 567.60 739.20 17897.40

Segment Result 731.70 525.70 456.40 (34.60) (622.20) 1057.00

Less: Taxes 253.20

Income from Continuing Operations after Tax 803.80

The distribution of Company’s Revenues by geographical market is as under:(Rs. in Million)

As at March 31,

20052005200520052005 2004

In India 19300.6719300.6719300.6719300.6719300.67 17078.60

Outside India 2612.002612.002612.002612.002612.00 1875.80

21912.6721912.6721912.6721912.6721912.67 18954.40

The Company’s tangible fixed assets are located entirely in India and all activities related to production and operationsare carried out only in India.

2.192.192.192.192.19 LitigationLitigationLitigationLitigationLitigation

The Company is involved in lawsuits, claims and legal proceedings in respect of various commercial and tax matters,which arise in the ordinary course of business.

145145

No provision has been made in the books in respect of the following demands made against the Company, which havebeen disputed by the Company:

(Rs. in Million)

As at March 31,

20052005200520052005 2004

Excise Duty Demands 41.6041.6041.6041.6041.60 30.30

Sales Tax Demands 22.7022.7022.7022.7022.70 18.70

64.3064.3064.3064.3064.30 49.00

2.202.202.202.202.20 Commitments and contingenciesCommitments and contingenciesCommitments and contingenciesCommitments and contingenciesCommitments and contingencies

The Company is exposed to the following contingent liabilities:(Rs. in Million)

As at March 31,

20052005200520052005 2004

Claims against the Company not acknowledged as debts (net of tax) 59.2059.2059.2059.2059.20 5.50

Bills Discounted 610.00610.00610.00610.00610.00 395.00

Guarantees to bankers, financial institutions and others given onbehalf of affiliates 47.8047.8047.8047.8047.80 71.70

Income Tax Appeals / Reference Applications made by the Income

Tax Department against the orders passed by the Appellate

Authorities in favour of the Company 120.00120.00120.00120.00120.00 98.60

Excise matters in dispute decided in favour of the Company at

Appellate level for which the Excise Department is in appeal withthe Customs, Central Excise and (Gold Control) Appellate Tribunal 53.7053.7053.7053.7053.70 71.80

890.70890.70890.70890.70890.70 642.60

Products & Services

Power Systems Industrial Systems

Consumer Products

Transformers

Switchgear

Engineering Projects

Motors

Rail Transportation / Traction

Railway Signalling Products

Lighting

Luminaires & Accessories

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Power Transformers

Distribution Transformers

Amorphous Core Transformers

Dry Type Transformers

Locomotive Transformers

Traction Transformers

Furnace Transformers

Rectifier Transformers

Series and Shunt Reactors

OIP Instrument Transformers upto 400 kV

Condenser Bushings

Coupling/Grading Capacitors

Vacuum Circuit Breakers upto 36 kV

Gas Circuit Breakers upto 400 kV

Lightning Arresters

Vacuum Interrupters upto 52 kV, 40 kA

MV & LV Vacuum Contactors upto 12 kV and 400A

Gas Insulated Switchgear (GIS)

Power Quality Solutions

Dry type outdoor Instrument Transformers upto

36 kV

Polycrete Bushings upto 36kV and 3150A.

Polycrete support insulators upto 36 kV

Systems Engineering

Projects on turnkey basis from concept to

commissioning: Power Generation, Transmission &

Distribution 400 Volts to 400 kV

Industrial Electrification for Process Industries,

Power, Cement, Paper, Metallurgy, Steel,

Petrochemicals, etc.

Control and Automation Projects for Substations

Railway Traction Substations

Railway Overhead Electrification

AC Motors from 7 Watts to 10 Megawatts - All types

including Flame Proof for increased Safety, HT & LT

Industrial Duty AC Machines from frame size 315 to

630 upto 11 kV

DC Motors including Industrial Duty DC Motors

frame size 315 to 630

Alternators/AC Generators

Stampings & Laminations, Tools

Traction Motors & Alternators

Traction Controls for Diesel Electric Tower Car and

Multiple Units

Electrical Control Panels for Diesel Electric

Locomotives

Brushless DC Carriage Fans

Signalling Relays

Point Machines

Universal Axle Counters

Data Logger

Fluorescent Tube Lights, Compact Fluorescent &

T5 Lamps

Incandescent Lamps

Reflux Lamps, Reflux Systems

High Pressure Mercury/Sodium Vapour Lamps

Metal Halide Lamps

Halogen Lamps

Mirror Optics

Streetlights, Floodlights

Lamps


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Domestic, Commercial

Industrial

High Masts

Lighting Electronics

Special Lighting

Ceiling Fans in various models

Table, Pedestal and Wall Mounting Fans in

metal and plastic

Kitchen Fresh Air Fans

Cooler Kits

Industrial Fans: Exhaust Fans and Air Circulators

Special Purpose Fans

Geysers

Electrically Driven Pumps

Centrifugal Monoblock Pumpsets - Single/Two Stage

Self Priming Pumpsets - Monobloc and Coupled

Submersible Pumpsets for 75, 78, 100, 150, 200 & 250

mm borewell

Jet Centrifugal Pumps - Single or Multi Stage

De-watering Pumps

Vertical In-line Pumps

Open well Submersible Pumps

Diesel Engines & Diesel Engine driven Pumps

Petrol Kerosene Engine Pumps

Compressor Pumps & Air Compressors

Diesel Generating Sets

Exports of all Crompton Greaves manufactured and

factored products directly and via global EPCs operating

from India.

200 Ports C-DOT Rural Automatic Exchanges (TAX)

400-1400 Ports C-DOT Single Base Module RAX

C-DOT MAX-L Exchanges of Capacities upto

10K lines

C-DOT MAX-XL Exchanges of Capacities upto

40K Lines

Network Synchronisation Equipment (NSE)

Huawei D-TAX Exchange of Capacity upto

800K lines

2/34 Mbps Optimux Equipment

TDMA-PMP Digital MARR Systems

Optical Modems at 8 Mbps

STM-1 & STM4 equipments.

CorDECT Wireless Local Loop Equipments

High-bit-rate Digital Subscriber Loop (HDSL) systems

DLC on SDH's (Digital Loop Carrier on SDH)

Multiplexer Equipment

Coral Range of EPABX Systems of capacities upto 6000

ports with CTI and ACD facilities

Call Centres

VOIP Range products

Audio & Video Conferencing products

Fans & Geysers

Pumps

Switching

Transmission

Access Products

Private Switching

International

Others


Establishments

Registered Office

CG House, 6th Floor, Dr. Annie Besant Road,

Worli, Mumbai 400 030.

Tel. (022) 24237777 Fax (022) 24237788

Kanjur Marg (E),Mumbai 400 042.

Tel: (022) 25782974. Fax: (022) 55558305.

e-mail: [email protected]

T1+T2 MPAKVN Industrial Area

Malanpur (Dist. Bhind), Madhya Pradesh 477 716.

Tel: (07539) 283502-7. Fax: (07539) 283585.


Plot No. 29-32 New Industrial Area No. 1,

AKVN, Mandideep 462 046 M.P.

Tel: (07480) 233306/40/48. Fax: (07480) 233149.


A3, MIDC Area, Ambad, Nashik 422 010.

Tel: (0253) 2382271/75. Fax: (0253) 2381247.


D2-MIDC, Waluj, Aurangabad 431 136.

Tel: (0240) 2554662/2554371-72.

Fax: (0240) 2554697.


DLF Cyber-Green, Tower A, 3rd Floor, Sector 25,

DLF Phase III, Gurgaon 122 002- Haryana.

e-mail : [email protected]

Kanjur Marg (East), Mumbai 400 042.

Tel : (022) 55558477. Fax : (022) 25785226.


D5, Industrial Area, MPAKVN,

Mandideep 462046 (M.P.)

Tel : (07480) 233116, 233118, 505111.

Fax : (07480) 503119.


11B, Industrial Area No. 1,

Pithampur 454775, Distt. Dhar, (M.P.)

Tel : (07292) 253194, 253197, 253258.

Fax : (07292) 253211.


Vandhna Building, 11, Tolstoy Marg,

New Delhi 110 001.

Tel : (011) 23352147, 30416307.

Fax : (011) 23352134.


Works

Transformer Division

Switchgear Division

S6 & Power Quality

Engineering Projects Division

Large Machine Division

Machine 7 Division

Railway Signalling Division

Rail Transportation Systems

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Power Systems

Industrial Systems


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Stampings Division

LT Motors Division

FHP Motors Division

Fans Division:

Lighting Division

Pumps Division

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Tel : (022) 55558715. Fax(022)

25787970. e-mail : [email protected]

B-110,MIDC Industrial Area, Ahmednagar 414 111.

Tel : (0241) 2778521. Fax : (0241) 2778521.


A/6-2, MIDC Industrial Area,

Ahmednagar 414111

Tel : (0241) 2777372

Fax : (0241) 2777508


D-2-21,22,23 Tivim Industrial Estate,

Karaswada, Bardez, Goa 403 526.

Tel : (0832) 2257639, 2257409.Fax : (0832) 2257207.


·196-198, Kundaim Industrial Estate,

Kundaim, Ponda, Goa 403 115.

Tel: (0832) 2395510. Fax: (0832) 2395377.


Plot No. 1 Goa IDC Industrial Estate, Bethora,

Ponda, Goa 403 409.

Tel: (0832) 2331200, 2331256, 2331257.

Fax: (0832) 2330155.


Plot No. 214-A Kundaim Industrial Estate,

Kundaim, Goa 403 115.

Tel: (0832) 2395901, 2395814. Fax: (0832) 2395305.


Central Building, 2nd floor,


Tel: (022) 55558000. Fax: (022) 25787283/25783027.


Baroda Lamp Works, Kural Village,

Padra Taluka, Padra Jambusar Road,

Dist Baroda 391 430, Gujarat.

Tel: (02662) 242323/242278. Fax: (02662) 242326.


A-28, MIDC, Ahmednagar 414111.

Tel: (0241) 2777152, 2777155, 2778040, 5606500.

Fax: (0241) 2777893, 5606560.


H.O: 562/640, First floor, Janardhana Towers,

Bannerghetta Road, Bilekahalli, Bangalore 560 076.

Tel: (080) 51292390/99. Fax: (080) 51292389.

E-mail: [email protected]

Consumer ProductsOthers

� ✦ Manufacturing Plant: 10A, Jigani Industrial Area,

Jigani, Bangalore - 562 106;

Tel: (080) 782 5206 / 207. Fax: 782 5205.


International Division

✦ 'Jagruti", 2nd floor, Kanjur Marg (East),

Mumbai 400 042.

Tel: (022) 55558931, 55558365, 55558362/69.

Fax: (022) 25774066, 25780456


Regional Sales Offices

Northern Region

✦ Jaipur: Church Road, PO Box 173, Jaipur 302 001.

Tel: (0141) 2376919, 2376307. Fax: (0141) 2365371.


✦ Jalandhar: 416-417, 3rd Floor, Prestige Chambers,

GT Road, Jalandhar 144 001.

Tel: (0181) 2459467, 2459478. Fax: (0181) 2226342.


✦ Lucknow: Saran Chambers II,

3rd Floor, 5 Park Road, Lucknow 226 001.

Tel:(0522) 2239443, 2237007/8. Fax:(0522)2237009.


✦ New Delhi: Vandhna Building, 11 Tolstoy Marg,

New Delhi 110 001.

Tel: (011) 30416300, 23352161/2.

Fax: (011) 23324360, 23352134.


✦ New Delhi: Rail Transportation Systems Division

Vandhna Building, 11, Tolstoy Marg,

New Delhi 110001.

Tel: (011) 23352147, 30416307. Fax: (011) 23352134.


Eastern Region

✦ Kolkata: 50 Chowringhee Road, Kolkata 700 071.

Tel: (033) 22829681-85.

Fax: (033)22829942 (Marketing)

(033) 22824818 (Mktg.& Finance)


✦ Bhubaneswar: Janpath Tower 3rd floor,

Ashok Nagar Unit II, Bhubaneswar 751 009.

Tel: (0674) 2531128, 2531429, 2531277, 2533647.

Fax: (0674) 2533521.


Western Region

✦ Ahmedabad: 909-916, Sakar II, Near Ellis Bridge,

Ahmedabad 380006.

Tel: (079) 26581729, 26582780, 26587328.

Fax: (079) 26586047.


✦ Indore: 103-B, Apollo Trade Centre,

2B, Rajgarh Kothi, Mumbai Agra Road,

Indore 452 001.

Tel. (0731) 2498269, 2498271, 2498276.

Fax: (0731) 5067146.


✦ Mumbai: Western Region,


Tel:(022) 55558000. Fax: (022) 55558669, 25795158.


✦ Pune: Premium Point Building,

4th Floor Opp Modern High School,


J M Road, Shivajinagar, Pune -411005.

Tel:(020) 25534675 - 77. Fax: (020) 25534684.


✦ Nagpur (Satellite Office)

3, West High Court Road,

Lal Bahadur Shastri Chowk,

Dharampeth, Nagpur 440 010.

Tel: (0712) 2531271, 2560870-71.

Fax: (0712) 2537196.


Southern Region✦ Chennai: 'Crompton House' 3,

Dr. MGR Salai (Kodambakkam High Road),

Nungambakkam, Chennai 600 034.

Tel: (044) 28257375, 52247500.

Fax: (044) 28231973, 28234112.


✦ Bangalore: Janardhana Towers,

1st Floor, 562/640, Bannerghetta Road,

Bilekahalli, Bangalore 560 076.

Tel: (080) 51391908/909. Fax : (080) 51391900.


✦ Cochin : Cherupushpam Building, 5th floor, 300-6,

Shanmugham Road, Ernakulam, Cochin 682 031.

Tel: (0484) 2370860 - 63, 2360240.

Fax: (0484) 2373738.


✦ Secunderabad: Minerva Complex, 4th floor,

94, Sarojini Devi Road, Secunderabad 500 003.

Tel:(040) 27847270, 27847090.

Fax:(040)27842921.


[ Service Centres

Northern Region✦ Vandhna Building, 11, Tolstoy Marg,

New Delhi 110001.

Tel: (011) 30416304, 30416311, 30416927, 30416931

Fax: (011)23730920.


✦ Church Road, RO. Box 173, Jaipur 302 001.

Tel: (0141) 2365604. Fax: (0141) 2365371.


✦ Village Khajuria, Outside Jalandhar Octroi Post,

Phagwara Road, G.T. Road, Dist. Kapurthala,

Jalandhar 144002.

Tel: (0181)2632199,2632187


✦ Plot No. 339, Industrial Area, Phase-2,

Chandigarh 160002.

Tel: (0172)2657402


✦ C-22, Transport Nagar, Lucknow 226 012

Tel: (0522)2433132

e-mail: chandra.srivastava ©cgl.co.in

Eastern Region

✦ 21, RN Mukherjee Road, Kolkata 700 001.

Tel: (033) 2248916022488911. Fax: (033) 22489737.


✦ Janpath Tower (Basement), Ashok Nagar Unit II,

Bhubaneswar 751 009.

Tel: (0674) 2531128, 2531129. Fax: (0674) 2531592.


✦ Vishwasadan, Behind Jeevan Deep Bldg.,

Exhibition Road, Patna 800 001.

Tel:(0612)2239405


151

Western Region

✦ 909-916, Sakar II, Near Ellis Bridge Police Station,

Ahmedabad 380 006

Tel: (079) 26581729, 26582780, 26587328

Fax: (079) 26586047


✦ 103-B, Apollo Trade Centre, 2B, Rajgarh Kothi,

Mumbai Agra Road, Indore 452 001.

Tel. (0731) 2498269, 2498271, 2498276

Fax: (0731)5067146


✦ Kanjur Marg (East), Mumbai 400 042.

Tel: (022) 55558000. Fax: (022) 55558669.


Premium Point Building, 4th Floor,

Opp Modern High School, J M Road,

Shivajinagar, Pune-411005.

Tel: (020) 25534675 - 77. Fax: (020) 25534684.


✦ 3, West High Court Road,

Lai Bahadur Shastri Chowk,

Dharampeth, Nagpur 440 010.

Tel: (0712) 2531271, 2560870-71.

Fax: (0712)2537196.


Southern Region

✦ 37, NSK Salai, Vadapalani, Chennai 600 026.

Tel: (044) 24732627, 23721268.


✦ S.S. Agencies, 20, Main Road,

New Timber Yard Layout, 2nd Lane,

Mysore Road, Bangalore 560 026.

Tel: (080) 26755727. Fax: (080) 26755723.


✦ 13/2, Industrial Area, Rasulpura,

Secunderabad 500 003. Tel: (040) 55269001


✦ 35/1872 A.South Janata Road,

Palarivattom, Cochin 682 025.

Tel: (0484) 2338102. Fax : (0484) 2338856.


✦ 658-664, Rajalakshmi Plaza,

Gandhipuram, Coimbatore 641 012.

Tel: (0422) 2526453, 2521829 - 30

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